Comments on “Trade, GVC and SMEs in

Thailand: A firm-level panel analysis”

by Upalat Korwatanasakul & Sasiwiwon

Warunsiri Paweenawat

Discussant: Ha Thi Thanh Doan, ERIA

ADBI Workshop on Trade, GVC and SMEs

Tokyo, February 6-7 2020
The views expressed in this presentation are the views of the author and do not necessarily reflect the views or policies of the Asian Development Bank
Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy
of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent
with ADB official terms.
Summary (1)
• This paper examines the determinants of GVC
participation and the impact of GVC participation
on firms’ performance.
• The paper utilizes Thai firm-level data covering
2004-2014 period

2
Summary (2)
• Key findings

• Negative correlation between firm size (SMEs vs non-

SMEs) and GVC participation
• R&D, foreign ownership and labor productivity are
robust determinants of GVC participation
• GVC participation increases firms’ revenue

3
Comment (1): Determinants of GVC
participation

SME dummy vs firm size

GVC participation:
Backward linkages: share of imported inputs/total cost
Forward linkages: share of exports/total revenue

Information about sales with MNEs?

Share of imported inputs/exports

X: R&D, share of foreign ownership and labor productivity.

Reverse causality between GVC participation and labour productivity

4
Comment (2): Impact of GVC
participation

• LHS (firm performance): Revenue # Productivity

• RHS: labor productivity is included (???)
• Link between augmented variables on the LHS and
revenue?

5
Comment (3): Policy implications
• Not derived from empirical analysis

6
Recommendations
• Replace SMEs dummy with size variable
• Construct productivity estimation as a proxy for
firms’ performance
• Consider potential determinants: financial
constraints, managerial skills, skill composition of
the workforce
• Address endogeneity issue
• Update relevant literature and elaborate the
mechanism to strengthen the storyline
• Policy implications