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This study aims to analyze the effect of inward foreign direct investment (FDI) on new job creation. This study pays attention to factors interrelated to China’s FDI by using the case of Thailand.

Using time series data from 2001 to 2014, this paper explores the driving forces and reduction potentials of employment in Thailand’s industrial sector with consideration for dynamic changes within the vector autoregression model.

The results show that government expenditure plays a dominant role in increasing employment in Thailand’s industrial sector and exports plays a dominant role in decreasing employment in Thailand’s industrial sector. All variables are co-integrated and the analysis of the impulse–response function also turns out to be synchronous. Furthermore, in the short term, exports are more critical than China’s FDI in industrial sectors in reduction potentials of employment in Thailand’s industrial.

Policies should be devised to increase skilled labour and improve the equality of infrastructure in the country to attract more FDI into the economy and for quick adjustment purposes in case of shock to the system.

The paper uncovers some important factors influencing employment in Thailand’s industrial sector under study and provides a guide-map for policymakers.

The purpose of this paper is to investigate the impacts of Chinese direct investment in Thailand on the Sino-Thai bilateral trade. The economic relationship between Thailand and China has been strengthened through both trade and Chinese direct investment in Thailand for past decades.

AR(p) model was used to examine the effects of Chinese direct investment on both Thailand exports and Thailand imports.

This paper shows that Chinese direct investment in Thailand has contributed to the decrease of intermediate goods of Thailand exports to China. On the other hand, Chinese direct investment has contributed to the increase of finished products of Thailand exports to China. In addition, Chinese direct investment in Thailand has contributed to increase of Thailand imports from China. This suggests that strengthening cooperation for economic growth in either of the two countries can generate mutual benefits through trade.

The studies focus only on the effects of foreign direct investment (FDI) on trade, while the effects of trade on FDI are neglected.

Policies should be devised to reduce reliance on exports of raw and semi-raw materials by turning on to final products with more value-added products and should improve the equality of infrastructure in the country to attract more FDI into the economy.

This paper provides evidence that Chinese direct investment in Thailand is an important determinant factor of the rapid growth of the bilateral trade. It also shows that the appreciation of Thai Baht against Chinese RMB is associated with a decrease in Thailand trade surplus in the bilateral trade.