Siwapong Dheera-aumpon

Department of Economics,

Kasetsart University, 

Bangkok, Thailand

E-mail: fecospd@ku.ac.th

ORCID 0000-0002-1840-6485

Corresponding Author

Cultural distance and foreign direct investment stock in Thailand: Evidence from panel data

Piyaphan Changwatchai

Department of Economics,

Kasetsart University, 

Bangkok, Thailand

E-mail: fecoppc@ku.ac.th

Abstract. Cultural distance can be defined as differences in cultural values and communication styles between the source and the host countries that can have negative impacts on stocks of FDI in the latter. Prior studies focused on the perspective of a source country and pooled data from various host countries but here we focus on the perspective of a host country and use data from a single host country, Thailand. To study the effect of cultural distance, data on 2006-2019 FDI stocks held in Thailand by foreign entities from 32 major source countries are collected. Results of a random effects regression model indicate that cultural distance between Thailand and a source country does not reduce but raises the stock of FDI. We conclude that culture in Thailand does not hinder the operations of foreign companies but instead enhances investment opportunities. In promoting FDI in Thailand, the government should aim at culturally distant source countries. In doing so, the government should emphasize that Thai culture is collective, feminine, and has high uncertainty avoidance.

Received: December, 2019

1st Revision: March, 2020

Accepted: November, 2020

DOI: 10.14254/2071-789X.2020/13-4/5

JEL Classification: F2, M2, Z1

Keywords: culture, collectivism, femininity, masculinity, uncertainty avoidance, FDI, Thailand