An empirical study of policy incentives and comparative advantage in the fisheries industry of Thailand

Abstract

This dissertation is a case study analysis of the relationship between trade policy and renewable resource utilization in the fisheries industry of Thailand. The main research objective is a determination whether protection policy has been directed to support the utilization of resources in an industry where the internationally comparative advantage lies, The theories of effective protection are combined with comparative advantage analysis using models of domestic resource cost and revealed comparative advantage to serve this purpose. The study indicates that the fisheries industry in Thailand is economically advantageous both in terms of foreign exchange earned compared to domestic resource cost spent, and in terms of export performance in the world market. The selected Thai fisheries activities in this study show the substantial degree of export potential. Thailand's protection system with regard to the fisheries industry, however, does not provide neutral incentives to either production or processing. In fact, a penalty of negative protection still exists in this industry. The indicators estimated from both the industrial survey data and the input-output structure exhibit similar conclusions. The growth of the Thai fisheries production and exports, therefore, cannot be attributed to the protection policy, rather it is the potential of the industry in terms of comparative advantage in resource use that enables it to survive and succeed. The study recommends the identification and measurement of the market failures that impede industrialization, and implementation of effective strategies to overcome these failures. The economic incentive system would be rationalized and strengthened to offset the negative protection. The problem regarding the proper management of the fishery resources in the future should also be urgently taken into consideration in order to maintain the degree of comparative advantage that the Thai fisheries industry currently holds in international trade.