Abstract
Purpose. The purpose of the study was to determine the relationship between military coups and inflows of foreign direct investment (FDI) in several dimensions--overall, regions (Asia, North America, and Western Europe), selected countries (Hong Kong, Japan, Singapore, Netherlands, the United Kingdom, Switzerland, West Germany, and the United States), economic sectors (Financial Institutions, Trade, Construction, Manufacturing, and Services), and economic subsectors (Food, Textiles, Metal Based and Non-Metallic, Electrical Appliances, Chemicals and Machinery and Transportation Equipment). Methodology. The time series data of FDI consisted of eighty-eight quarterly observation points from 1970 to 1991 and of fifty-two quarterly observation points from 1979 to 1991. Arthur Bank's Political Handbook of the World was used to identify seven military coups in Thailand between 1970 and 1991. A quasi-experimental design and intervention analysis with Box-Jenkins ARIMA (autoregressive-integrated moving average) models were used to interpret the data. Findings. The study found that except the 1981 and 1991 military coups in Thailand, others insignificantly affected the FDI inflows. The 1981 military coups resulted in a temporary level increase in the change of overall FDI inflows and North America FDI inflows; particularly the United States. The 1991 military coup resulted in temporary level increase and decrease in the FDI inflows. The coup resulted in a temporary level reduction in the changes of overall FDI inflows, Asia FDI inflows; particularly Hong Kong and Japan FDI inflows and FDI inflows of economic sector of trade. The coup also resulted in a temporary level increase in the changes of North America and Western Europe FDI inflows, particularly the United States, the United Kingdom and West Germany FDI inflows. The coups did not significantly affect FDI inflows of the economic subsector of manufacturing. Conclusions and recommendations. The findings were inconsistent with the previous survey and econometric approaches. Not all the military coups in Thailand affected the FDI inflows. The military coups did not affect the FDI inflows along geographical differences of foreign direct investors but nationalities. The military coup also affected the FDI inflows of a certain economic sector but not an economic subsector of manufacturing. A comparative study of the relationship between military coups and FDI inflows in other countries is the next step to find out whether or not this relationship is unique to one country or otherwise.