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This paper investigates the effectiveness of industrial policy, and the role of state capacity to implement it, by making a comparison of automotive development in Thailand and Czechia, the largest vehicle producers in Southeast Asia and Central and Eastern Europe, respectively. The development of the industry in both countries primarily relied on foreign investment, despite Czechia’s long earlier history of domestic automotive development. The countries, however, have used very different types of industrial policy. Thailand introduced a series of  vertical  (sector-specific) industrial policies, pursuing a proactive industrial development strategy with state intervention, continuing even under the restrictions on trade-related policy measures imposed by the WTO since 2000. In contrast, Czechia has employed mostly  horizontal  (non-sector-specific) industrial policies with less state intervention, influenced by the restrictions of the European Union. Although both countries achieved considerable output and export growth, Thailand has a deeper and more locally owned supply chain. Thailand’s imaginative use of  de facto  local content requirements in connection with its  product champion  policy is instructive.

Industrial policy and automotive development: a comparative study of Thailand and Czechia