The ability to substitute between capital and labor pertaining to the frozen goods industry in the South of Thailand

Research Name :
The ability to substitute between capital and labor pertaining to the frozen goods industry in the South of Thailand

Researcher :
Assistant Professor Nantawan Changkid

Item type :

Funding :

Abstract :
            The general objectives of this research are to study the situation of the frozen goods industry and examine the ability to substitute between capital and labor in the frozen goods industry in the south of Thailand. The objectives are also to measure the government’s approach and their policies towards the entrepreneurship of the frozen goods industry. The questionnaires were distributed to forty-four respondents  who are entrepreneurs in eight southern Thailand provinces. Statistics that were used to analyze were of percentage, mean, standard deviation and the elasticity of substitution between input factors. The results were as follows: The majority of investors in the frozen goods industry are investors of frozen fish and canned tuna for exporting. Since 2007, the growth of production has declined. This may have been due to the price of raw material rising. Moreover, some types of the raw material were scarce. At the same time, the higher value of the Thai currency was one of the export obstacles. The majority of entrepreneurs in the south of Thailand produce fish. They invest in agreements with other businesses, which join on with financial institutes. Most of them have six to ten years experience and are exporters who earn less than one hundred million baht annual income. The elasticity of substitution between capital and labor was elastic (1.78), which suggests high labor-capital input substitution. In this case, the relative proportion of each input changed a lot in the face of changing relative input prices. A one percent change in relative factor prices resulted in a 1.78 percent change in the labor-capital ratio. The rising relative cost of capital and declining real wage rates provided the economic signals that can lead to the substitution of labor for capital input in the frozen goods industry. The government’s policy towards the entrepreneurs in the frozen goods industry regarding their perception was at a medium level. However, their support and evaluation for higher quality products as well as marketing for competition were at a high level, while knowledge management of the agricultural workers who provide the raw materials was at a low level.

Keywords :
capital and lalor, frozen goods industry, south of thailand, the ability to substitue

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