Spatial structures of manufacturing clusters in Thailand, Cambodia and Lao People’s Democratic Republic

Abstract

Applying the method proposed by Mori and Smith (2014), we identify the spatial structure of manufacturing clusters in Thailand, Cambodia and Lao People’s Democratic Republic (PDR). We find that the industries in which clusters are spread across the country (i.e. the industries that exhibit a globally dispersed and locally dense or locally sparse pattern) are similar among the three countries. In contrast, the industries in which clusters are spread across a narrower geographical area, such as a manufacturing belt (i.e. the industries that exhibit a globally confined and locally dense or locally sparse pattern) differ among them. In Thailand, they are mainly machinery and material industries, while in Cambodia and Lao PDR, they are light industries. This difference reflects the fact that the spatial structure of manufacturing clusters are determined not only by the characteristics of industries but also by the country’s stage of industrial development.

Keywords:

• Industrial agglomeration
• cluster analysis
• Thailand
• Cambodia
• Lao PDR

JEL Classification:

• L60
• R12
• R14

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 As shown in Section 4, the development of machinery industries in the border regions are not observed in this study because the census data used for Cambodia and Lao PDR are from 2011 to 2006, respectively.

2 It should be noted here that the purpose of the analysis is not to find the determinants of clustering of manufacturing industries but to identify the spatial configuration of manufacturing clusters.

3 For the derivation of economic area, see Section 3.3.

4 The computer programs for the analyses introduced by Mori and Smith (2014) are available at http://www.mori.kier.kyoto-u.ac.jp/data/cluster_detection.html (accessed August 2019).

5 We chose $\mathrm{\lambda }$ to ensure the least correlation between GE and LD.

6 In the text of this paper, only sectors with more than 10 establishments [with the exception of aircraft and spacecraft (ISIC 3530) in Thailand] are taken into consideration, while in Figures 2, 11 and 12 all sectors are displayed, regardless of the number of establishments. Note that when the number of establishments in the sector is very small—in fact many sectors in Cambodia and Lao PDR have only a few establishments (including many cases of having only one establishment)―the location of these establishments will automatically be identified as industrial clusters according to the methodology of Mori and Smith (2014). Due consideration should therefore be given to such a case.

7 As discussed in Footnote 6, aircraft and spacecraft (ISIC 3530) is an exception and has only six establishments. However, this sector is taken into consideration because it is an emerging high-tech industry, which may grow faster with the support of the government.

8 As discussed in Footnote 6, many industries in Cambodia have only a small number of establishments (including only one establishment in an extreme case). Thus, there is always the possibility that some Cambodian industries are seemingly geographically clustered not due to agglomeration externalities, but rather due to industrial underdevelopment.

Additional information

Funding

This research was supported by Economic Research Institute for ASEAN and East Asia (ERIA) under the FY2014 ERIA research project, Geographical Simulation Analyses and Detection of Industrial Clusters in East Asia.

Notes on contributors

Toshitaka Gokan

Toshitaka Gokan is Research Fellows at Institute of Developing Economies-Japan External Trade Organization (IDE-JETRO). He holds a Ph.D. (Economics) from Kyoto University, Japan. For two years, he was a visiting researcher in Center for Operations Research and Econometrics, Universite Catholique de Louvain. His research interests are on the spatial distribution of economic activities such as NEG. He wrote about the indexes on the spatial distribution and/or the application of these indexes such as ‘Measures for Geographical Concentration and Specialization with Administrative area Data’ in Economic Integration and the Location of Industries: The Case of Less Developed East Asian Countries, Palgrave Macmillan, edited by I. Kuroiwa 2012 and ‘the colocation of industries in Agro-Food-Tourism in Vietnam,’ in A Multi-industrial Linkages Approach to Cluster Building in East Asia, Palgrave Macmillan, edited by A. Kuchiki, T. Mizobe and T. Gokan, 2017. He also wrote about the formation of a marketplace with theoretical approach such as ‘Small Business and the Self-Organization of a Marketplace’ in Annals of Regional Science . 2017, Vol. 58 (1) pp. 1–19 with K. Ding and X. Zhu.

Ikuo Kuroiwa

Ikuo Kuroiwa is Chief Senior Researcher at Institute of Developing Economies-Japan External Trade Organization (IDE-JETRO). He holds a Ph.D. (Regional Science) from the University of Pennsylvania. For two years, he was a visiting researcher in Business School, National University of Singapore. His research interests include spatial economics and input-output analysis. In particular, he edited books on economic geography in the Greater Mekong Subregion (GMS), such as The Location of Industries in Newly Integrated East Asian Economies: New Economic Geography Perspective, Palgrave Macmillan (2011). He also wrote relevant academic papers, such as ‘Economic Integration, Location of Industries and Frontier Regions: Evidence from Cambodia’. Journal of Southeast Asian Economies, pp. 379–94, Vol. 31, No. 3, 2014 (co-work with Kenmei Tsubota); and ‘Thailand-plus-One’: a GVC-Led Development Strategy for Cambodia’. Asia Pacific Economic Review, pp. 30–41, Vol. 30, Issue 1, 2016.

Nuttawut Laksanapanyakul

Mr. Nuttawut Laksanapanyakul is Consultant at Thailand Development Research Institute (TDRI), a leading public policy think tank in Thailand. His expertise lies in the area of international trade, regional connectivity, and industrial policies. He has regularly written reports and disseminated key messages to policy makers and the general public through meetings, seminars, and media on the topics of current interest, for examples, preference utilization by Thai exporters and importers under the existing free trade agreements and how to boost it up, ASEAN integrated and seamless connectivity and trade facilitation, upgrading Thai industries and their participation in the ASEAN production network in an era of increasing protectionism, showcases of innovation in Thailand, and roles and capabilities of selected research, development, and innovation funding agencies and business promotion agencies in boosting up technology investment in Thailand. His recent publications include ‘Impact of Free Trade Agreement Use on Import Prices’, The World Bank Economic Review, 2018 with Kazunobu Hayakawa, Hiroshi Mukunoki, and Shujiro Urata and ‘Measuring the Usage of Preferential Tariffs in the World’, Review of World Economics, 2018 with Kazunobu Hayakawa and Fukunari Kimura.

Yasushi Ueki

Yasushi Ueki is Research Fellow, Institute of Developing Economies, Japan External Trade Organization (IDE-JETRO). He received his Ph.D. from Osaka School of International Public Policy, Osaka University in 2004. He served United Nations Economic Commission for Latin America and the Caribbean (ECLAC), Santiago, Chile as Expert in 2002-2005, and Economic Research Institute for ASEAN and East Asia (ERIA), Jakarta, Indonesia as Economist in 2014-2018. He is a visiting researcher of Research Institute of Automobile and Parts Industries, Waseda University. He majors in industrial and technological development. His recent studies have focused on production networks and technology transfer in East Asia. His recent publications include ‘Technology Transfer in ASEAN Countries: Some Evidence from Buyer-provided Training Network Data’, Economic Change and Restructuring, 2016, Vol. 49(2), pp. 195–219 with Fukunari Kimura and Tomohiro Machikita, and ‘Does Kaizen Create Backward Knowledge Transfer to Southeast Asian Firms?’ Journal of Business Research, 2016, Vol. 69(5), pp. 1556–1561 with Tomohiro Machikita and Masatsugu Tsuji.