The European Union (EU) is the largest home region for foreign directinvestment (FDI) in the world. Interestingly, however, the EU has only 12 percentshare of total FDI in Thailand. Therefore, this study explores what determinants haveaffected the decision-making processes of foreign firms, particularly EU firms, wheninvesting in Thailand. This study can be give a fundamental idea for setting FDIpolicies in order to induce more FDI into Thailand. This study was conducted by following the FDI models of Pupphavesa andPussarungsri (1994) and Wang and Swain (1995). In this study, annual time-series dataduring 1970-1997 were used. Two revised models, total FDI in Thailand, and FDI fromthe EU to Thailand, were employed in this study by using the Ordinary Least Squares(OLS) technique to estimate coefficients. Pupphavesa and Pussarungsri (1994) found that many factors such as size ofdomestic market, host country's tariff rates and Thai and Japanese foreign exchangerate have been the main determinants to induce FDI into Thailand. Moreover, Wang andSwain (1995) found that size of domestic market, host country's tariff rates,discount rate in host country, exchange rate and wages in host country have been themain determinants to stimulate FDI from EU into Hungary and China. In terms of the results of the revised models in this research, it was foundthat total FDI in Thailand can be induced by many factors. Such factors are, forexample, larger domestic market, increasing value of Thai exports to developedcountries, weakened Thai Baht, lower Thai tariff rates and Thai low-wage workers. Inparticular reference to EU firms, factors such as larger domestic market, increasingvalue of Thai exports to EU, weakened Thai Baht, increasing EU countries' growthrate, a lower Thai tariff rates and lower discount rate from the Bank of Thailand,will induce more FDI from EU into Thailand. The conclusion of this study suggests that some more relevant FDI policiesshould be set up in order to induce more FDI from the EU into Thailand. Such policiesare, for example, lower tax duties on raw and essential materials, especially in thechemical industry, and establishing more bilateral and multilateral agreements withEU countries. There are some limitations to this study, however. For example, this studyemploys many economic factors to estimate in the models. Nevertheless, non-economicfactors, such as geographical factor, language and culture, are not covered in thisstudy, since such non-economic factors cannot be fitted into the models.