First draftBalance of payments considerations have driven the
automobile industry strategies of many late-industrializing
countries such as Thailand, Mexico, and Malaysia. These
countries do not intend to become leading suppliers in the
world automobile industry but rather, have designed (if only
by default) their assembly and parts operations with a view
towards protecting their balance of payments. Because an
automobile is a high-value import, and because demand for
automobiles rises steeply as per capita income rises, free
importation of automobiles often hurts a young economy's
balance of payments. Therefore, virtually all lateindustrializing
countries have some intention of developing a
production capability in autos in order to protect the supply
of and demand for foreign exchange
