Business Sentiment of Japanese Companies and Wages in Thailand

This study examines the relationship between Japanese companies' business sentiment toward Thailand and key economic factors, including wages, the industrial share of GDP, and international tourism. Using time series analyses—including the Vector Autoregression (VAR) model, Granger causality tests, and impulse response functions—this study analyzes data from 2003 to 2022 to identify the primary drivers of Japanese investment sentiment. The results indicate that business sentiment is significantly influenced by international tourism, reflecting Thailand’s market size and economic attractiveness. Contrary to survey responses, wage increases do not have a significant impact on Japanese companies’ business sentiment or their investment decisions. Additionally, business sentiment does not exert a direct influence on wages. These findings suggest that, in contrast to past assumptions that labor costs are a primary determinant of investment, Japanese companies now prioritize market size and economic stability when evaluating Thailand as an investment destination. This study contributes to the literature by reassessing investment drivers in an emerging market and providing insights for policymakers seeking to maintain Thailand’s competitiveness as a regional business hub.