Unpacking the efficiency of foreign direct investment: Evidence from the borders of Thailand

This paper aims to evaluate the efficiency level of foreign direct investment in 22 border provinces of Thailand from 2008 to 2018 and investigate the effects of border factors associated with FDI inflow using a stochastic frontier analysis approach. The results demonstrate that the actual FDI is far below the estimated efficient level and that there exists a considerable gap (74.3%) for increasing the efficiency in attracting foreign investment inflow to the border areas. Economic size, relative labour to land endowments, boundary distance, economic corridor connectivity, and regional economic integration have positive and significant effects on FDI that tend to improve the efficiency of FDI in Thailand's border provinces