Policy analysis of protection on the Thai soybean processing industry
1996
Trichada Pittayaporn
Objective of this study is to asses the degree of protection and the economic efficiency of domestic resource use of the Thai soybean processing industry. Using policy Analysis Matrix (PAM) as analytical framework the present study attempts to estimate various concerned indices namely: the Nominal Protection Coefficient on Tradable Output (NPC), the Nominal Protection Coefficient on Tradable Input (NPI), the Effective Protection Coefficient (EPC) and the Domestic Resource Cost Ratio (DRC) in the production of soybean meal and crude soybean oil. Comparisons are made between cases in which domestic soybeans and imported soybeans are used as raw material in line with the concept of total DRC and direct DRC. The analytical result showed that EPCs are greater than one for both soybean meal and crude soybean oil. This indicates that the existing policy regime results in incentive in the production of soybean meal and crude soybean oil. The values of direct DRC and total DRC are less than one for using imported soybeans and soybeans form Uthai Thani, indicating comparative advantage in these two cases. On the contrary, DRCs are greater than one for using soybeans form Kamphaeng Phet, Nakon Sawan, Phichit and Phitsanulok, indicating comparative disadvantage in soybean oil processing. The policy implications are that using locally produced soybeans as raw material in oil processing can result in various degrees of comparative advantage and disadvantage depending on sources of raw material, and with the given situation the importation of soybeans to be used as raw material in oil crushing can enhance welfare.
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