| Over decades, an agricultural production has been the dominant industry driving Thai economic growth. Evidence indicated that more than 80 percent of Thai population engaged in agricultural activities. However, in order to improve people’s standard of living and domestic economy, Thai government not only adopt an export-oriented strategy, but also implemented investment policy to attract foreign investment, therefore, export and foreign direct investment are two important factors that Thailand has always relied on in order to accelerate economic growth. However, due to some problems such as Thailand’s political instability, labor shortage and the rising of labor costs which can hardly attract foreign investors to invest in Thailand. Moreover, Thai government implements relaxing capital control, these reasons above encourage Thai enterprises to participate in the international market.Due to the bank of Thailand has more relaxed controls on Thailand’s direct investment abroad, the outward foreign investment has expanded rapidly in the past three years, data shows that in 2012, first appeared in the case of Thai outward FDI flows exceeded than foreign direct investment flows, hence, Thai direct investment abroad plays an important role in Thailand economy that cannot be ignored. More importantly, FDI not only helps local enterprises expand into foreign markets, obtain materials and advanced technology, but also optimizes and upgrades industrial structure, improves international competitiveness and domestic economic growth. Hence, it is postulated that Thai outward FDI could have a significant influence on trade. To shed light on this incident, this paper aims to investigate the impact of Thai outward FDI on trade, both imports and exports.The main objective of this paper is to examine the impact of Thai outward FDI on home country trade effects, firstly paper describes the background and significance of research and reviews the related literatures; secondly provides the history and current situation of Thai outward FDI as well as Thai enterprises’ outward FDI motivation; Thirdly, explains the gravity model which is employed to study the impact of Thai outward FDI on trade volume and trade structure and discusses the influence factors; Lastly, paper provides the main problems of Thai outward FDI and policy implications in order to propose the development strategy for Thailand and Thai enterprises.This paper follows the standard paradigm of economy research, on the basis of relevant theoretical research, creates theoretical model and empirically analyzes through measuring tools, aims to investigate the impact of Thai outward FDI on trade volume and trade structure. The paper applies the traditional gravity model to examine the impact of Thai outward FDI on trade volume and structure by utilizing the data of 20 host countries invested by Thai enterprises, during the time period from year 2005 to 2013.The theoretical researches show that trade policy, exchange rate, industry characteristics, distance, the scale of market, factor prices and investment motivation are the influence factors of FDI on trade effects. The empirical result shows the complementary effect between Thai outward FDI and trade volume, both imports and exports. The host country’s GDP per capita and population show significantly positive on both imports and exports. The effect of distance on exports is significantly negative; however it is insignificant on imports. FTA has a positive effect on imports and exports, but only appears significant in imports model. Common border variable in two models has a positive impact on trade but not significant. Furthermore, regarding trade structure, empirical analysis shows that resource-intensive, capital-intensive or labor-intensive products, Thai outward FDI with these import-export of three categories products are significantly positive relation, indicates that Thai outward FDI will increase import and export flows, There is complementary effect of foreign direct investment on trade, moreover, effect on import is stronger than export, especially in resource-intensive product.Despite the rapid development of Thai outward FDI in recent years, the international investments are limited to some Thai multinational companies. According to the data from Capital market research institute, most Thai outward FDI has been made only by large enterprises while small and medium-sized enterprises tend to serve the domestic market. The limitation of engaging in the international market might stem from the lack of information, financial constraints and insufficient knowledge and skills. To promote the outward FDI, it is recommended that Thai government should establish a comprehensive information service system for overseas investment or set up an independent advisory agencies to provide some essential information regarding products, market as well as investment opportunities for Thai investors to understand the investment environment.The government and related financial institutions should make the loan application process more streamlined and simplified as well as provide financial supports or establish foreign direct investment special fund to assist the financial support for Thai enterprises, especially small and medium-sized enterprises. Furthermore, Thai government should focus on improving FDI’s tax policy, meanwhile, focus on training of public servants and provide tax information to Thai businesses. Finally, due to the lack of management skilled-labors situation, the government should more cooperate with universities and academic institutions to train high quality of labors, establish and improve training centers, international skilled-labor selection, employment mechanism, commissioned professional organizations, public and recruit multinational operation skilled-labors, observe and study abroad for setting up skilled-labor team.
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