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Decentralization	  and	
  Local	  Economic	  Development:	
  Case	  of	  Northeast,	
  Thailand	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  

	
  
	
  
	
  
Name:	
  POODEE,	
  Huttaya	
  51-­‐138210	
  IPE	
  2015	  	
  Graduate	
  School	
  of	
  Public	  Policy	
  University	
  of	
  Tokyo	
  

	
  

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Content
1: Introduction
p.1
2: Literature Review
p.8
3: Decentralization in Thailand
p.15
4: Local Economic Development in Northeast
p.27
5: Decentralization and Local Economic Development in Northeast Thailand
p.45
6: Conclusion
p.61
Reference
p.63

Tables and Figures
Tables1.The Ratio of Local to National Revenue
p.17
2.Local Government Revenue in the FYs 1999, 2004, and 2008 p.22
3.Percentage of Total Household Incomes, 1986-2004
p.32
4.Total Budget Allocation to Northeast Local Government
p.40
5.Functions and Responsibility of Local Government
p.44
6.Data about Decentralization and Local Economic Development inNortheast: 2009-2013
p.48
7.Variables in Research
p.48
Figures
1.Percentage of Workforce by Sector in Northeastern, 2009
2.Poverty Incidence by Region, measured by expenditure
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  

p.33
p.35

	
  

	
  

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Section I: Introduction
If we watch the political analysis news programs in Thailand thesedays, it is not difficult to run into two kinds of different arguments about
decentralization; pro and con. The pro team of decentralization explains
about the several positive effects that decentralization has generated to Thai
society since the 1999 Decentralization Act was promulgated. The con team,on the other hand, argues about the problems that lie behind thedecentralization and the need to reform it. The latter one also pointed out
many issues from corruptions in local level, inefficiency in fiscal andpersonnel management, low degree of local autonomy, and etc. Those
problems do exist in decentralization process. However, it is difficult to deny
the advantages of decentralization too. In Thailand, there are cases revealthat devolution of fiscal resources and political powers could improve thestandard living of local residents and makes local governments more
responsive and innovative to theirs electorates. Although the successful
cases are rare, but the survey in the recent research of Krueathep et al.
(2014) informs that majority of local people feel satisfied about the public
service provisions they received from the local governments more than same
services that previously provided by central government agencies. Kruathep
et al. (2014) also addresses that the decentralization process that took placein Thailand’s administration for 15 years should be considered as‘moderately successful’.
One of the advantages of decentralization that has been debated bymany scholars is the impact of decentralization on economic development.
However, many works related to decentralization and economic effects

	
  

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focused on the macro level (international comparison) more than the local
level within one country1. In the case of Thailand, most works about
decentralization focus on the degree of autonomy, efficiency in fiscal
management, capacity of subnational authorities, also with the suggestions
to reform2. However, there also exists a work that studied about therelationship of fiscal decentralization and macroeconomic growth inThailand too (Krueathep, 2010). In his case study about Thailand in 2010,
after employing the national-level data from year 1972 to 2008, Krueathep(2010) finds that there is no correlation between fiscal decentralization andmacroeconomic growth, because the size of local governments in Thailand is
too small to cause the impact; neither positive nor negative impact. This
work of Krueathep gives a basic ground for studying about the relationshipbetween the two variables of decentralization and economic growth.
However, the work of Krueathep does not focus on the regional or smaller
local level, which might yield the different results due to the different size.
What’s more, the work of Kurata & Ikemoto (2012) also studied about thedecentralization and economic development in Thailand, but their work tries
to compare the fiscal autonomy, fiscal capacity, and level of educational
decentralization among regions in Thailand more than evaluating whether or
not and to what extent that the decentralization affects regional economic
development. Considering that there is no research mainly focuses on this
topic in the regional level yet in Thailand, this paper intends to fill this gap
by studying about the relation between decentralization and local economic
development, focusing the case of Northeastern region of Thailand.
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
1

For example, the works of Oates (1993), Bird (1993), and Gramlich (1993).
Please see the works of Nagai et al. (2008), Rohitarachoon & Hossain (2012), and Suwanmala
and Weist (2009).	
  
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The author of this paper, however, acknowledges about wide scope ofthe terms ‘decentralization’ and ‘economic development’ and realizes that itis really important to provide the definitions of these two terms. Moreover,in the following part, the paper would also address about the researchquestion, objective and scope of the study, methodologies, along with the
hypothesis. Following this introduction, the second section will provide aliterature review about theories and empirical studies of decentralization.
The third section of this paper will begin with the explanation about what
decentralization is and how it works in Thailand. The forth section will givea brief background of the Northeastern economy, and its change anddevelopment, along sides with the significant historical events in Thai
political context. The fifth section of the paper would try to assess theimpact of the decentralization on the development of Northeastern economy
in an aggregated level. The conclusion section will offer some further
discussion about whether or not, and to what extent, that decentralization
contribute to the change and development of local economic development.
The limitation will also be addressed at the last part of the paper.

Research Question
This paper aims to answer two questions:
1) What is the relation between decentralization process and local economic
development in Northeast Thailand?
2) Does decentralization need prerequisite conditions in order to promote thelocal economic development? If yes, what are those basically needed
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Hypotheses
The paper hypothesizes that the decentralization process in Thailand
does not directly promote local economic development. However, it
indirectly generates the economic growth and development in local level by
increasing fiscal capacity and decision-making power of local governments.
Once local governments gain more fiscal resource and decision-making
power, they then could initiate and implement development projects to theircommunities. By spending the budget in the community, it implicitly
increases local employment, enhances household income, and boosts
economic activities in local level. However, there are some prerequisite
conditions that local governments need to acquire. They are as following;
1) Local governments need to be democratically directly elected
2) Local governments need to have autonomy and discretion to
implement their own policy at least one policy (Triesman, 2007).
3) Local public has tools to check and examine the local government
Moreover, the paper also hypothesizes that decentralization process is
not only one contribution to local economic growth in Northeast Thailand. It
is the collaboration of decentralization and national economic policies since
the turn of 21st century that caused change and impact on economic
development in the Northeast region.

Objective of the Study
The goal of the paper is to understand the relation between thedecentralization and local economic development in Northeast. Moreover,

	
  

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the paper would like to find whether the decentralization process in Thailand
needs any prerequisite conditions in order to promote the local economic
development or not. The paper aims that the findings could contribute to theprocess of policy reform in Thailand, especially in the realms of local
governance area.

Scope of the Study
Since the paper aims to study about the relationship between thedecentralization and local economic development in Northeast, Thailand,hence the period the it will heavily focus will be the period since
decentralization act is promulgated, which is from 1999 onwards. However,in order to give a clearer picture about the development in Northeast region
before and after decentralization took place, then it might be useful toportray and give some background about the economic development in theregion and also in Thailand prior to 21st century which is the period that
decentralization causes the impact on.

Methodology
The paper would reply on three sources of data as followed:
1) Laws, regulations and official documents from government
agencies in both central and local levels.
2) Journals, books, and articles related to the decentralization andeconomic development in Northeast region.
3) News from both television programs and online and offline
newspapers, along with the public surveys.

	
  

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This research will use the method as ‘descriptive analytical’ to unfold
the relationship between the decentralization and local economic
development. The economic data such as Regional GDP would also be
utilized, but would not use as only key data for explanations. Due to thelimitation of Thailand’s data in many aspects, from the data about
infrastructures to regional literacy rate, the paper then will also employ the
public survey as one mean to evaluate the impact of decentralization on local
economic development.

Definitions
Decentralization:
Simply, the decentralization means the devolution of functions,
resources, and decision-making power to the sub-national government.
However, decentralization can be divided in three or more types. The
common types of decentralization, which appear often are these following
three; administrative, fiscal, and political ones. Treisman (2007) mentioned
in his book that ‘administrative’ seems to be the lower form of thedecentralization, mostly involved the transfer of the administrative functions
but without decision-making power. ‘Fiscal’ decentralization involves thetransfer of fiscal resources to sub-national government, and also theauthority to collect the local taxes. The ‘political’ decentralization involves
the devolution of decision-making power, which means the sub-national
government has exclusive authority to make decision on at least one policy
issue. Considering what occurred in Thailand, and reviewing the 1999
Decentralization Act along with the 1997 and 2007 Constitutions, hence thedecentralization in Thailand can be categorized as administrative, fiscal, and

	
  

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political (Nogsuan, 2015)3. However, for the purpose of the convenience of
the audiences of this paper, if not stating other things, the term
‘decentralization’ means ‘administrative, fiscal, and political’ and may useinterchangeably throughout the rest of the paper.
Economic Development
The term ‘economic development’ is different from the term
‘economic growth’. As the World Bank (2012) defines, the economic
development involves with development in multiple areas, not only theincrease in GDP or GDP per capita. It encompasses the increase in economic
productivity as well as the improvement in human wellbeing; infrastructure,
literacy, and health. In Amartya Sen’s Development As Freedom (Sen,1999), he added political freedom and freedom of opportunity to be crucial
aspects of economic development. In this paper, the term ‘economic
development’ is not limited to only the increase in GDP, but also consists ofimprovement in human wellbeing, as well as the increase and satisfaction of
public in freedom of choices.

	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
3

	
  

Nogsuan, S. (2015, July 14th). Online interview.

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Section 2: Literature Review
This paper discusses about the relationship between decentralizationand economic development in Northeast region in Thailand. Therefore, it isimperative to divide the literature review into two parts. The first partconsiders the works that cover the historical review of Northeast, while thesecond part discusses about the decentralization and its impact on economic
development.

Literature on History and Development of Northeast Region
The relevant literature on this part consists of work by Thai scholars
and Western scholars. Somsri Chaiwanichaya’s dissertation The Thai
Government’s Policies to Develop the Northeast, 1951-1976 examines Thaigovernment policies to develop Northeast from 1951 to 1976 (Somsri,2005). She addresses that the development policies in the region were
determined and shaped by social contexts during that period, such as internal
politics, foreign politics, the economy and scarcity. During the 1960s to themid-1970s, Somsri argues that the development projects that Thaigovernment implemented were based on the national security objective, notdirectly for regional improvement objective. Nonetheless, the development
projects changes the regional economy from subsistence-based agriculture tohighly being involved with capitalism. Somsri’s work offers usefulbackground of the impacts of government’s policies towards the region in
the period prior to 1980s.
Charles F. Keyes’s book, Findings Their Voice: Northeastern

	
  

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Villagers and the Thai State, describe the history of Northeast (or in anothername: Isan) since the formation of the region and narrates until present day
that the region is the part of contemporary Thailand (Keyes, 2014). Keyes
argues that the relationship between Northeasterners and Thai state sinceincorporation is full of repression, antagonism, and exploitation. Despite thepoor natural endowment in the region, the locals learned to adapt andintegrate themselves to national and global labor market. The integration
with national and global labor system transforms them to become“cosmopolitan villagers”. In Keyes’s view, the northeasterners are notignorant rural villagers anymore, but have become the Thai citizens withsophisticated understandings of rights and justice (Keyes 2014). The work ofKeyes is useful because it provides an in-depth historical background of Isan
and also provides the new concept of Northeastern people; “cosmopolitan
villagers”, which is contrast to mainstream belief in Thai society.
Keyes’s another book Isan: Regionalism in Northeastern Thailand
provides the distinctive characteristic of northeasterners (Keyes, 1967). He
addresses that the northeastern people shares “regionalism” feeling, they
identify their identity to the region more than to Thai state. This regionalism
hence assisted the antagonism to exist until the late 1960s, which was theperiod that the book published. The book may not up-to-date, but Keyes’
regionalism concept is still valid to explain the identity of Northeastern
locals and their reaction to central government’s policies until present.
Pattana Kitiarsa’s book, Isan Becoming: Agrarian Change and theSense of Mobile Community, examines the change and development inNortheastern locals through their desires and ambitions. (Pattana, 2014).

	
  

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Similar to Keyes, he addressed that the integration to global labor systemsince 1980s has transformed northeasterners to become beyond subsistentpeasants. He also argued that the region has been rapidly developed since
Post-Cold War period, not before, or after.
The study of Pruek Taotawin (2012) is in line with the work by
Pattana. In his study “New Isan”: Changing of Development in Century,
Pruek argues that the development in Northeast (or Isan) is the outcome ofThai state’s political and economic policies since incorporation (Pruek,2012). Moreover, he analyzes the data from officials and concludes that
region has been developed and transformed from subsistence economy torelied on market economy before the beginning of twenty-first century.
Chris Baker and Pasuk Phonpaichit’s book A History of Thailand,presents a historical background for Kingdom of Thailand (Baker andPhongpaichit, 2005). This book also sketches the evolution of Thai economy
and politics, from the ancient era to the modern days. Though not
specifically focuses only on Northeast’s case, this work is helpful tounderstand the change and development in the country. It helps giving the
big picture and basic ground to understand Thailand and its dynamic
populace.
In the work of Satitniramai, Mukdawijitra, and Pawakapan (2013),
Re-examining the Political Landscape of Thailand, it presents one of themost up-to-date field researches about the political-socioeconomic changes
in Thailand (Satitniramai et al., 2013). It addresses the arrival of new middle
class, the new class of Thai populace that emerged from the institutional
reform and economic development in two previous decades. The research
	
  

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also reveals that as the decentralization took place at the turn of twenty-first
century, local people tends to favor decentralization process since it brings
many developments in their perspectives.
There are still many works related to the change and development inNortheast region, however, large body of works in this area mainly discuss
about the period of development before 2000. The scarcity of works about
Northeasern socioeconomic development in post-2000 is one of thelimitations of this paper.

Literature on Decentralization and Impacts on Development
The impact of fiscal decentralization on economic development could
measure in many aspects; from the rise in GDP to higher educational
attainment. However, this part intends to review only the literature thatmeasures the effect of decentralization on economic growth, macroeconomic
stability, and poverty reduction.
As observed, a large body of scholars has been studying about therelationship between the fiscal autonomy and its consequences. In terms of
economic growth, the study of Oates (1993) states that the fiscal
decentralization could encourage economic growth. Bird (1993) andGramlich (1993) also point out the benefit of decentralization to economic
performance. Three of them address that the devolution of fiscal power tolocal governments enhances economic efficiency and may have acorresponding effect on economic growth. However, the effect may
indirectly. As Martinez-Vazquez and McNob (2004) express the
	
  

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decentralization may impact on other economic variables instead of directly
affect the growth.
The traditional thought is that fiscal autonomy could bring efficiency
and lead to increased social welfare (Oates, 1972). Couderc and Ventelou(2005) and Brueckner (2006) theoretically address that fiscal autonomy cangenerate higher labor outputs and contribute to higher steady state growth
rates. Weingast (1995) also states that federalism which provides both
political and fiscal autonomy to the subnational government is the key factorof the economic prosperity in eighteenth century England, nineteenth andearly twentieth century US, and the China in the previous decades. In
empirical work of Qiao et al. (2008), it also states a positive impact of fiscal
decentralization on growth in China. The cross-section study of fifty-one
developed and developing countries by Iimi (2005) supports the traditional
wisdom. He finds that economic growth is greatly associated with the fiscal
decentralization. The empirical study at local level by Stansel (2005)
experiences the same result. It witnesses positive relationship between local
decentralization and economic growth in metropolitan areas in the US.
Contrasts to the above-mentioned studies, many empirical evidences
reveal the negative impact of fiscal autonomy to economy. Xie, Zou, andDavoodi (1999), Zhang and Zou (1998), Lin and Liu (2000), and Thiessen(2003) experience this negative evidence. The study from Davoodi and Zhou
(1998) also states that fiscal decentralization significantly contributes toslower growth in economy. Some researches address that no correlation
exists nor the impacts are not statistically significant. Woller and Phillips(1998) are unable to find the strong relationship between fiscal

	
  

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decentralization and growth in their sample. While Martinez-Vazquez andMcNob (2004) state that there is no direct effect of fiscal autonomy oneconomic growth, but the indirect effect on macroeconomic instability does
exist.
The studies that evaluate the effect of fiscal decentralization on themacroeconomic stability are numerous, too. The results, as expected, alsovary. Fornasari, Webb, and Zhou (2000) find that the increase in subnational
government deficits and the central government expenditures might lead tothe deficit in the successive period. Treisman (2000) and Rodden, Eskeland,and Litwack (2003) are unable to find the clear relationship between
decentralization and inflation. Contrary to the aforementioned, MartinezVazquez and McNob (2004) finds the positive impact of fiscal autonomy onmacroeconomic stability.
Regarding the poverty reduction, the effects of fiscal decentralization
to poverty and income inequality are mixed. The work of Martinez-Vazquez(2011) suggests that the outcomes may varied, and mainly depend on thecharacteristics of each fiscal decentralization process. The study of Arze delGranado, Martinez-Vazquez, and McNab (2005) found that the expenditures
spent on education and health service increased when fiscal decentralization
was introduced. The increased budget spent on education and health service
is related to the poverty alleviation, because they provide the basic necessary
services. Thus, this study presents the positive relationship between thefiscal autonomy and poverty reduction.
The empirical evidence of improvement in public programs in
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describe the impact of decentralization. The studies of Von Braun and Grote(2002), Lindaman and Thurmaier (2002), and Sepulveda and MartinezVazuez (2010) are in line with the above-mentioned studies. The threeworks found the positive impact of decentralization on poverty whenmeasured by the Human Development Index.
The critics of decentralization on poverty alleviation are numerous
too. In many cases, the allocation of budget aimed to improve the public
services may result in opposite way. The case study in Argentina by
Ravallion (1998) found the decentralization generates the inequality inpublic spending in poor areas. West and Wong (1995) also discover that
decentralization resulted in lower levels of public services in poorer areas of
the PRC. Azfar and Livingston (2002) found no evidence of improved
efficiency and equity of local publics service delivery associated withdecentralization in Uganda.
In brief, the results of decentralization on growth, macroeconomic
stability, and poverty reduction are difficult to be drawn in a general
conclusion. They are mixed, and varied case by case.

	
  

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Section 3: Decentralization in Thailand
Thailand is a unitary state that has a long history of centralization.
Since the state changes the regime from ‘absolute monarchy’ to become‘constitutional monarchy’ in 1932, Thailand experienced long decades of
Bureaucratic Polity (Riggs, 1966), which means the centralized bureaucracy
held authority in administrating the state. The centralized bureaucraticsystem, however, had been challenged by the idea of decentralization thatspreading throughout Thailand and the globe in the 90s. There were both
domestic and international factors that facilitated the decentralization seed to
grow in the land of strongly centralized state such as Thailand(Chardchawarn, 2010). The domestic factors involved the fast and higheconomic growth in the country in the late 1980s and the first half of 1990s,
which led to the rise of civil society movement in the beginning of 1990s,
and the public distrust of the centralized government and bureaucraticsystem which dramatically increased since the 1997 financial crisis (Kurata& Ikemoto, 2012). The international factors consisted of the World Bank’s
attempt to promote decentralization to the developing country in the 1990s
combined with the emergence of 1997 Asian Financial Crisis, which spreadthe distrust of the centralized government (Chardchawan, 2010). All of thesefactors helped leading to the structural reform in Thailand. In October 1997,
the 1997 Constitution was promulgated after the long call and countlessnegotiations by many interest groups (Satitniramai, 2012). The 1997
Constitution was named as ‘People’s Constitution’ since provided essential
tools for public to can participate in the formal political arena. One of the
crucial tools was that it stated that the decentralization act should beestablished within two years after the promulgation of the Constitution

	
  

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(Satitniramai, 2012). In 1999, therefore, the Decentralization Act had been
implemented and many functions, resources, and decision-making power
were transferred from the central government to local governments
throughout country. In 2001, the ratio of local revenue to national revenue
increased to around 20.68 per cent, compared to the previous decade in the
1990s, the time that Thailand was at its economic growth peak, which
accounted only 13.8 per cent (see Table 1). It could imply that at the end of
20th century, and the beginning of 21st century, centralized Thailand has beentransformed and head to the new era of decentralization, increases the powerof local governments, and decrease the influence of the bureaucrats.

Decentralization: Concept
Decentralization is the complicated concept (Supasaward, 2012). It isalso a dynamic concept and contains diverse meanings, objectives, andforms (Cheema & Rondinelli, 2007: 2). To simplify, decentralization
involves the devolution of functions, resources, and decision-making powerfrom central government to sub-national governments (Kumar 2006: 13;
Crook and Manor 1998: 13). In general, there are three types (or forms) ofdecentralization. These can be seen as follows.

	
  

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Table 1: The Ratio of Local to National Revenue
Fiscal Year

Percentage

1987

6.8

1992

8.2

1997

9.1

1999

13.8

2001

20.68

2002

21.88

2003

23.6

2004

21.9

2005

22.7

2006

23.1

2007

21.4

2008

25

2009

24.3

2010

24.2

2011

26.1

2012

26.8

2013

27.3

Source: Office of the Decentralization to the Local Government Organization Committee

1) Administrative decentralization: It seems synonymous to‘deconcentration’ concept, which is decentralized in the operation but still
centralized in the decision-making process to central government (MartinezVazquez, 2011). In other word, it transfers only the functions to the lower
level government, but without the authority and autonomy.
	
  

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2) Fiscal decentralization: It seems to become popular in many
countries in recent decades. In this type of decentralization, the local units
possess the authority to collect taxes and make a decision about theexpenditures (World Bank, 2001). Fiscal decentralization normally allows
local governments to manage the budget, but cannot initiate and create thenew project according to the local needs. In other word, it needs to follow
and do the projects that the central government suggest or order.
3) Political decentralization: This type of decentralization holds
more decision-making power than previous two types. According toTreisman’s (2007) definition, local units, which own politicallydecentralized power, would have exclusive authority to make decision on atleast one policy issue.
In Thailand’s case, it covers three types of decentralization;
administrative, fiscal, and political. The central government transfers thefunctions, fiscal, and decision-making power to the local governments, andthe local governments can collect the local taxes and initiate its own
development projects to meet the local needs without the intervention fromthe central government.
It should be addressed that theoretically decentralization is believedthat it can bring more efficiency since the local governments are closer tolocal residents and supposed to know the local needs and preferences andallocate and extract resources more efficiently than central government(Barrett et al., 2007: 2; Hadenius, 2003: 2). However, in reality, thedecentralization in Thailand experiences the inefficiency and not fully

	
  

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perfect, but it is not the purpose of this research to evaluate the imperfectionof the decentralization in Thailand. This paper would discuss only the parts
that related to the performances and roles of local governments that would
have relationship with the local economic development.

Structure of Local Governments: Roles & Responsibilities
Since the 1999 Decentralization Act took place, the roles andresponsibilities of local governments increase. To fully understand how local
governments work, and what kinds of functions and services that this formof government provides, it is important to look at the structure of them.
Generally, the structure of the local governance consists of two
branches: the Council and the Executive. The head of local governments
belong to the Executive. Prior to the Revision of Decentralization Act in
2003, the electorates elected the Council, and then the Council selected the
Executive. This structure, however, changed in 2003. Since the revised act
was enacted, the electorates can now directly elect both the Council and the
Executive branches (Satitniramai, 2012). What is more, in the new structure,
the Executive branch and the Council can comment and give suggestions,but cannot dismiss each one. In effect, the Executive branch gains more
power, stability, and legitimacy. At the same time, it has to account andresponse to public needs more than in the past. Furthermore, as the
Executive branch does not need the approval from the Council branch inrunning the local development plans, thus the Executive cannot deny theaccountability from the policies that it imposed (Satitniramai, 2012).
Now we know that, in local governance structure, the Executive
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powerful and has to take responsibilities and accountability to the local
people. But what are the functions and responsibilities that the local
government has to carry and provide? In the decentralization act, it
addresses that the roles and functions that the local governments have to
response are as follow.
1) Infrastructure: Provision and management of traffic and transport,
public works, public facilities, urban planning, building management, andetc.
2) Health and Hygiene: Provision and management of basic healthservices, livelihood promotion, and habitat development, etc.
3) Education: Provision and management of basic education frompre-schools to secondary schools, and etc.
4) Economic Promotion: Promote economic activities and related
tasks in the community.
5) Culture and Nature: Preservation the community’s traditional
culture, parks, and forests, and collecting the community’s garbage.
6) Security and Safety of Community: Mitigation and prevention ofnatural disasters, maintenance of the order and security of life and property
in the community, and etc.4
It should be addressed that the roles and functions that transferred to
local governments are quite basic but significant. These roles in the past
were managed and controlled by the bureaucratic system, which, in a sense,
seemed to be inefficient and ill equipped in term of management andallocation.
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
4

Summarize from the Office of the National Decentralization Committee (ONDC), cited in Nagai
et al., 1997: 13.

	
  

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15 Years of Decentralization and Its Success (or Failure)
Since the decentralization act has been imposed in the 1999, thedecentralization took place in Thailand for 15 years. The time 15 years canbe considered both short or long. However, considered the process ofdecentralization, which took place long before in advanced countries, 15
years of decentralization in Thailand (in 2014) could be considered as the
beginning period, and may need to reform.
One key element of decentralization is to increase the share of local
governments in national revenue. Since 2001, local governments throughout
country receive increased fiscal resources comparing to the period prior todecentralization. However, local governments in Thailand still have limited
capacity to manage and initiate the big development projects. The reason
that lies behind is that the capacity to collect the local taxes is low, while thelaw allows not many important types of taxes for the local government tocollect.

	
  

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Table 2: Local Government Revenue in the FYs 1999, 2004, and 2008
Source of local

FY 1999

FY 2004

FY 2008

revenue(Preliminary(Estimate(Estimatemillion baht)

million baht)

million baht)

17,516.8

25,006.8

35,223.1

42,731.6

82,623.30

128, 676.4

3.Shared taxes-

41,100.00

65,000.00

4.Grants

37,499.3

91,438.0

147,840.0

1.Locally
Collected Taxes
and non-tax
revenues
2.Centrallycollected taxes
for local
government

Source: Modified from Charas Suwanmala and Dana Weist, “Thailand’s Decentralization:
Progress and Prospects” in Shinichi Ichimura and Roy Bahl (eds.) Decentralization Policies in
Asian Development (London: World Scientific, 2009), pp.210-211.

From the Table 2, it can be seen that there are four sources ofrevenues that the local governments can gain. It can be divided the four into
the details as follows.
	
  

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1) Locally Collected Taxes (accounts around 10 per cent with thedecreasing trend)(a)Land and Building Tax(b)Land Development Tax(c)Signboard Tax(d)Slaughter and swallow nest duties(e)Bird nest tax(d)Tobacco/petroleum tax(e)Locally collected non-tax revenues (Fees, Fines, Revenue form property
and infrastructure services, and etc.)
2) Centrally Collected Taxes for Local Government (accounts around 3540 percent with the decreasing trend)(a)VAT (partial)(b)Specific Tax(c)Liquor Tax(d)Excise Tax(e)Vehicle Tax(f)Property Registration Duties(g)Gambling Tax(h)Royalties for minerals(i)Royalties for Petroleum(j)Other

	
  

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3) Shared Taxes (VAT (partial)): (accounts around 20 percent with thestable trend)4) Grants: (accounts around 20 – 40 percent with the increasing trend)(a)General(b)Specific
From the information above, it can be seen that the capacity to collectlocal taxes of local governments is low, accounts only around 10 percent orless than that. There are two main reasons: the legal framework does notallow local government to collect the important with high volume taxes, andmost of local governments in Thailand are small scale (sub-district local
governments) which located in suburban or rural areas, not in highly
economic areas5. Hence, the revenues that the local government can collectfrom the local residents are not high, compare to the urban areas.

Local Governments: Fiscal Capacity and Autonomy
In the works of Kurata and Ikemoto (2012), which studied about thedecentralization and regional disparity in fiscal capacity in Thailand statedthat the local fiscal capacity in the Northeast region is the lowest, and needto rely more on the grants from the central government. In fact, the trend of
dependency on grants is increasing for all regions, from north, south, andcentral (Satitniramai, 2012).

	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
5

The number of local governments in Thailand (or as known as “Local Administrative
Organizations”) in total is 7,851, while the sub-district level local governments account around
5,667 units.

	
  

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Asides from being low fiscal capacity, Kurata and Ikemoto (2012)claimed that the local governments in Northeast also has low autonomy. I
would like to argue this point that, if we compare to the advanced country’s
standard, the autonomy of local governments in the Northeast, and otherregions in Thailand, might be lower, but if we compare to the previous status
before the 1999 Decentralization Act, the current local governments in
Thailand gain more decision-making power than before. And by focusing on
this, it means the local governments can initiate and implement many new
development projects to match the community’s needs, though it
experienced the constraints in the fiscal resources.
Another argument I would like to make here is, the power of local
government is gradually growing compared to the power of the long existed
bureaucrats. During 15 years of decentralization period, the bureaucrats tried
exerting influences to the local administration (Chardchawan, 2012). Theirinterventions are one of the obstacles that sometimes caused the local
governance to step backward. But if we put the 1999 as the marked point, inthe 21st century Thailand, the role of bureaucrats is relatively declining
compared to the previous decades, while the role of local governments
increase, not dramatically but, gradually overtime.6
Last but not least, the role of public participation since the 1999
Decentralization Act took place is increasing too. As mentioned before,
currently the local residents can directly elect both the Executive and the
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
6

Krueathep et al. (2014) has divided the decentralization in Thailand into three phases; 19992001 as the golden era, 2002-2006 as the decline era of decentralization and the return ofbureaucrats, and 2006-2014 (before the May 2014 Coup in Thailand) as the intervention period ofbureaucrats and national politicians into local governance level. Although he points out theinsertion of the bureaucrats and national politicians at local level, but the role of local
governments gains more decision-making power gradually if compared to the period in 1990s.
Please see more details in Krueathep et al., 2014.

	
  

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Council members in the local governments. Furthermore, the 1997
Constitution and the 1999 Decentralization Act also guarantee the public
participation and involvement in the local governance by stating andproviding the tools for the public to recall the local governments. And during
15 years since decentralization, there are many cases of the local
governments that were dismissed by the public’s will7. This can beconsidered as the progressive movement in the local level, more than thenational level, which there is no national politician has been recalled by the
public’s will yet.
In sum, since the 1999 Decentralization Act, Thai local governancehas entered new period. There has been a dramatic change in local
governance structure, the role of local governments increases, while the roleof bureaucrats declines. Although the 15 years period could be considered asa short time for decentralization, if we consider that Thailand has more thanhundred years of being centralized state. During this relatively short-15 year
period, however, the decentralization process contributes to the change anddevelopment in Thailand, especially in faraway regions, which the paper
would discuss in the following section.

	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
7

From 1999 to 2009, there were 9 cases that the local electorates tried to dismiss the local
governments that they considered had abused of power. Out of 9 cases, there were 3 successful
cases that the public could achieve in dismissing the local governments. Please see more details
in Satitniramai, 2012.	
  

	
  

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Section 4: Local Economic Development in Northeast
Background in 1980s and 1990s
The Northeast or Isan is the poorest region in Thailand. It has been
the most backward region since incorporation into the modern Thai state in
the late nineteenth century. Today, the GDP per capita in the region is still
lowest, but improves dramatically also. The reason that why this paperchooses the Northeast region as a case study here is because since it is themost backward region, hence the development policy which imposed in theregion may stand out and easily to assess. Moreover, during the period of
21st century, the Northeast region has change dramatically due to manyfactors. The obvious changes are the development in the economic
condition, and also the change in perception and desire of the local people
within the region. These changes occurred along with the launch of thedecentralization process, which imposed throughout the country. To someextents, the decentralization and the change and development in the
Northeast region might have some relations, and is useful to study more
about this.
Before going to far, let me give the background and basic information
about the Northeast first. Geographically speaking, Northeast situates in the
Khorat Plateau, on the left bank of Mekong River, next to Laos andCambodia’s borders. It is the largest region in Kingdom of Thailand, which
occupied an area of 168,854 square kilometers and contributed nearly one
third of total land area. As of 2014, Northeast contains 20 provinces and21,775,407 people (Ministry of Interior, 2014). Again, the region’s
populaces account for one third of the total of Thai population. In term of
	
  

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election arena, Northeast takes up 12,443,324 constituencies and 12 electoral
districts (Ministry of Interior, 2014), which is the largest in comparison withthe rest of the other regions. Nonetheless, in terms of economic growth, asmentioned before, the Northeast is far behind from the others. The per capita
income of the region is below the average per capita income of the whole
kingdom. The relatively slower development compared to other regions has
existed in the long history of Northeast since it was incorporated into Thaistate in the late nineteen century (Keyes, 1967). However, the situation
changed in the late 1980s.
In the late 1980s to the beginning of the 1990s, Thailand had
experienced the highest economic growth in the world at that period.
Northeast region, which is the most backward region in the country also
benefitted from this growth. However, it did not mean that the highest
growth had caused and brought several development projects to the region.
In contrast, the highest growth of Thai economy at that period had brought
the Northeastern laborers to seek jobs and careers outside the region. The
people of the Northeast migrate seasonally in the past, but just for a shortperiod of migration. But the boom of the Thai economy facilitated the lengthof migration to be longer than in the previous decades. However, the big
development projects rarely expanded and benefitted the region directly.
Though the economic boom period in Thailand seemed to concentrate
only in Bangkok, Central, and Eastern regions, but the Northeasterners
experienced spillover effects from the national development plans too.
During 1980s and the mid of 1990s, there were three national development

	
  

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plans launched; the Fifth (1982-1986), the Sixth (1987-1992), and theSeventh (1992 – 1996). Each plan had its main objective, and to someextent, had generated developments to the Northeast. Overall, the number ofpeople who lived below poverty line declined sharply over two decades, theper capita incomes increased (NESDB, 2015), the enrollment rate ofsecondary education expanded, and the infant mortality rate fell (NSO,
2015). In the regional economic composition, there were changes in grossregional products share. In 1997, agricultural sector accounted less than 20
percent of gross regional product, while the trade and service contributed
around 60 percent. Agricultural sector did not contribute largest in the grossregional product anymore (Ministry of Interior, 2013).
In conclusion, development in Northeast during 1981 to 2000 largely
was the result of national development plans. The national schemes thatplanned in Bangkok, by the Bangkok based planners and their expatriate
colleagues contributed for remarkable national and regional economic
growth. The growth enhanced the standard of living, and also reduced thenumber of people who lived below the poverty line. Northeast region
involved more in trade and service, leading to the rise in the per capita. The
number of who enrolled in the secondary school increased. However, thegrowth generated income disparities among the Northeast urban and rural
areas. Together with the development, there emerged the civil society
movements and the call for public participation in the government policymaking processes. Aside from development, this seems to be a very goodroot to grow the decentralization seed in Thai traditional political system.

	
  

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Economic Development in Northeast in the 21st Century
In the late twentieth century, there emerged two important events thatconsequently impacted Thailand in the following decade. First is theoutbreak of the 1997 Asian Financial Crisis that caused devastation in
Thailand and neighbors’ economy. Second is the arrival of the 1997
Constitution, which was claimed as the “People’s Constitution”(Satitniramai, 2012). It is said that the latter one was made possible becauseof the eruption of the former: financial crisis. The deep damage of the crisis
provided no choice to politicians but to introduce the sign of hope in thename of new constitution. Unlike the predecessors, the 1997 Constitution
offered new tools that would strengthen power of the prime minister, and at
the same time, promote the public participation. In other word, theConstitution had changed the rules of the game. The impact of change inrules spread immensely throughout the nation. As a part of Thailand, theNortheast has been affected by the change in the rules too. The outcomes,
however, seem to be profoundly dramatic in this poorest and neglected
region. At the beginning of twenty-first century, the institutional reform (orthe establishment of the 1997 Constitution) has formed a new foundation toThai politics. This foundation would gradually take deeply root and become
the fertile ground for many dramatic changes in the Isan in the following
decade.
There are three important changes occurred in Isan in the twenty-first
century. First, there emerges the “new” economic class, which has beencalled as “the new middle class” (Satitniramai et al., 2013). Second, the
	
  

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attitudes of the local people towards the central government and theauthorities have been changed. Third, the political awareness among thepeople, especially in the Northeast has risen. These changes combined
together have transformed Isan substantially like never happened before in
the past.
4.1) Economic Change: The emergence of the new middle class
The Isan economy has transformed extensively in the twenty-first
century. Although the agricultural sector still accounts more than 50 percent
in the labor forces, the share of agricultural products declines gradually andaccounts same amounts as the industrial sector does. In contrast, the service
and trade sector grows fastest and contributes for over three fifths of thegross regional product in 2013 (NESDB, 2015). In addition, the border trade
between Thai and Laotian borders increases dramatically (Taotawin, 2012).
Though per capita gross domestic product in the region still ranks lowest,
but the growth rate of Isan economy in the second half of the 2000s
performs highest. From 2007 to 2011, the economic growth in Isan reached
40 percent, against 23 percent for the whole kingdom and 17 percent for
greater Bangkok8. However, the economic performance in 2014 was
slowdown due to the overall slump that resulted from political turmoil in theprevious years.
What’s more? In contrast to the previous decades, thenortheasterners in the twenty-first century no longer live in the subsistent
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
8

Carsten, P., & Temphairojana, P. (2013, June 15). Thailand’s boom: To the northeast, the spoils.
Reuters. Retrieved from http://www.reuters.com/article/2013/06/16/us-thailand-northeastidUSBRE95F00H20130616, last accessed May 01st, 2015.

	
  
	
  

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agricultural-based economy. As mentioned earlier, though the number ofpeople who work in the agricultural sector still accounts more than 50
percent of the labor forces, but the share of agricultural income in householdincome accounts less than 50 percent (see Table 3). In other word, thehouseholds in the northeast rely on the non-agricultural income (wage,
salary, remittance, etc.) for more than 50 percent of total household incomes.
The income from agricultural sector is not their primary source of income
anymore.
Table 3: Percentage of Total Household Incomes, 1986 – 2004
Incomebyregion

1986

1988

1990

1992

1994

1996

1998

1999

2000

2001

2002

2004

0.65

0.7

0.66

0.66

0.62

0.53

0.67

0.7

0.61

0.59

0.68

0.58

0.25

0.2

0.2

0.24

0.29

0.28

0.24

0.2

0.29

0.3

0.23

0.32

0.62

0.61

0.64

0.53

0.49

0.54

0.5

0.47

0.48

0.47

0.54

0.49

0.28

0.25

0.25

0.32

0.36

0.46

0.32

0.29

0.33

0.33

0.29

0.35

0.66

0.53

0.55

0.52

0.37

0.65

0.44

0.37

0.36

0.42

0.38

0.38

0.23

0.25

0.26

0.26

0.34

0.26

0.32

0.38

0.34

0.31

0.31

0.34

0.6

0.69

0.67

0.66

0.64

0.39

0.66

0.56

0.58

0.54

0.59

0.62

0.29

0.22

0.25

0.25

0.27

0.33

0.25

0.33

0.31

0.34

0.31

0.26

CentralFarm/total
incomeWage/total
incomeNorth
Farm/total
incomeWage/total
incomeNortheast
Farm/total
incomeWage/total
incomeSouth
Farm/total
incomeWage/total
income

	
  

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Note: Total cash income is not included in-kind income. Part of wage income is the payment to hire
agricultural worker, but cannot be separated in the survey data.
Source: Calculated from NSO, Socio-economic survey, various years. Taken from “Re-examining thePolitical Landscape of Thailand” (Satitniramai et al., 2013), Table 5, pp.91.

Figure 1: Percentage of Workforce by Sector in Northeastern, 2009

Source: Bank of Thailand, Northeaster Office

While many of labor forces gradually involve in non-agricultural
sector, but the image of the Isan people that has been repeated in themainstream media Thailand maintains the same as the poor peasants.
	
  

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Though the number of the poor in the Northeast accounts highest if
compared to the others, but the poverty rate declines considerably since
1990s (see Figure 2). The number of people who live below the poverty line
drops, while there emerges of the ‘new’ middle class (Satitniramai et al.,2013). The new middle class is, in fact, the lower middle class9. It is thephenomenon that occurred nationwide due to the economic growth, social
structural change, and institutional reform in the last decade. The new
middle class earns average income per person between 5,000 – 10,000 baht(around 15,000 – 30,000 yen) and accounts for 40 percent of households inThailand (Satitniramai et al., 2013). Though the data does not indicate thathow many of the northeasterners are counted in the new middle class
category, but since the number of the northeastern populous that are out ofthe poverty incidence increases sharply, then it can be assumed that the shareof the northeasterners in the new middle class populous may sizeable. Thisnew middle class accounts as a great number of the electorates. In contrast to
the long established and “old” middle class (middle and upper middle class),
the new class is different in term of careers and educations. Most of people
in the new middle class are in the informal economy and live without thesocial safety net. Therefore, the new class tends to prefer the social-welfare
related policy such as the “30 baht (100 yen) Universal Healthcare”, which
initiatives by the Thaksin Shinawatra administration in 2002. In other words,
their social safety net increases by the policy that was the outcome of theelection campaign of the political party. Hence, this causes the new middle
class to favor the electoral and formal politics.
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
9

The term “lower middle class” is used by Nithi Eawsriwong in the interview with the Nation(2011): http://www.nationmultimedia.com/2011/03/18/national/Lowermiddle-class-needinclusion-Nithi-30151182.html.

	
  

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Percentage	
  
90.	
  

Poverty	
  Incidence	
  by	
  Region	  (Percentage)	
  

80.	
  
Bangkok	
  

70.	
  

Central	
  
60.	
  

North	  50.	
  Northeast	
  

40.	
  

South	  30.	
  Whole	
  Kingdom	
  

20.	
  
10.	
  
0.	
  

Figure 2: Poverty Incidence by Region, measured by expenditure
Source: NSO, 2015

Another economic change that occurred in Isan during the twentyfirst century is that the rise of household debts among the northeasternhouseholds. In 2009, 75.2 percent of the Northeast households have debts,
dramatically increases from 49.5 percent in the 1994 (NSO, 2010). Many
scholars and mass medias blamed the surge of the household debts as theresults from the populist policies, which are the legacy of the Thanksin
administration. One of the policies that was usually blamed is the “Micro
	
  

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Finance Village Fund”, that distributing the financial resources to thecommunity and allowing the local people to access to capital loans. It is notclear if the “Village Fund” has facilitated the local residents to access theloans and caused rise in the household debts. However, contrast to what
scholars and mass medias have believed, the 60.8 – 66 percent of household
debts in 2004-2009 were used as the investment, not for the household
expenditures (Satitniramai et al., 2013).
The increase in investment debts seems in line with the increase inlocal enterprises such as café, food stands, and vehicle repair shops in the
Northeast. During 2001 – 2005, the number of local enterprises in the
Northeast increases significantly; from 154,090 shops to 171,202. At thesame time, the average number of the household labors in the region also
declines; from 3.59 persons per household in 1999 to 2.87 persons perhousehold in 2007 (Taotawin, 2012). What could we infer from the data? It
may not obvious, but the decrease in household labors may reflect thatpeople shift from the agricultural sector to another sectors such as trade andservice. The increase in the local enterprises seems to get a long with theforesaid assumption.
At present the trade and service sector in Isan grows sharply andaccounts third fifths of total regional GDP (Carsten, P., & Temphairojana, P,
2013). The Isan locals gradually shift from the agricultural sector to involve
more in other sectors such as industrial and trade and service. This shift
causes local people to be in need of more communication and good
infrastructure. The growth in economy has created the new class that comeswith the “new” needs and aspirations, which needs the institution to

	
  

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response to in the faster speed level.
And it is this point in time that the populist policies anddecentralization can contribute to the local needs.

4.2) Political Change: Populist Policies, Decentralization, and the Rise of
Local Political AwarenessDefinitely, we cannot understand what happened in Isan in thetwenty-first century without mentioning what happened in Thailand in thesame period. The establishment of 1997 Constitution opened the new
direction to Thailand. Unlike the previous constitutions, the 1997
Constitution reinforced the power of prime minister, as well as advanced the
public participation. The 2001 government that was in power after the
promulgation of 1997 Constitution was able to introduce many
unprecedented policies, which, in the later decade, substantially impacted on
socioeconomic of Thailand. These policies were claimed as populist. It was
believed that the impact of populist policies generated more benefits to thegrassroots than to the old establishments and the existing middle class. There
were many policies that were innovated at the beginning of the 2000s underThaksin administration, but the most important are two ongoing policies; the“30 baht (100 Yen) Universal Healthcare” and the “Micro Finance Village
Fund”. The 30 baht Universal Healthcare (later renamed and restructured tobe “Universal Health Coverage”) allowed all Thai citizens out ofgovernment officials and social security systems to can access to thehealthcare by paying only 30 baht (around 100 yean) per visit. Although the

	
  

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domestic scholars and the mass medias massively criticized the policy, many
Thai people, especially the grassroots, prefer it. The policy was claimed thatit help reducing the household expenditures. In the same way, the Village
Fund helps the people to access to micro credits. It was believed that once
the household expenditures in health sector decreased while the households
could access to more financial resources, the purchasing power would
increase, thus multiplying economic growth. The outcome may not thatspectacular as the Thaksin administration expected, but the policies
generated the moderate growth after the devastated crisis in 1997. The
poorest region such as the Northeast Thailand, as a consequence, gained therelatively high benefit both from the two populist policies as well as enjoyed
the growth in Thai economy in the first decade of the new century.
The policies that provided the access to social welfare (such as the
30 baht Universal Healthcare) and capital (such as the Micro FinanceVillage Fund) gradually caused people to aware about their power as thepolitical voters. As aforesaid sections portrays, the Northeast villagers andthe grassroots were left out of the process of the policy-making process forso long in the history of Thai bureaucratic polity. In his most-cited article,“A Tale of Two Democracies: Conflicting Perceptions of Elections and
Democracy in Thailand”, a Thai scholar Anek Laothamatas (1996)
explained that the rural people were the basement of the election, but thedecision making process would occur in the Bangkok and most of the time
decided for the benefit of the urban people. Hence, the populist policies
under the Thaksin administration, for the first time in history, generated thebenefit to the people in the rural areas such as the many parts in the
Northeast. People did enjoy of what they received and aware that what they
	
  

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got were the results of the promised policies which the elected government(Thaksin administration) assured to make them possible during the election
campaign in 2001. They then realized that their vote could elect the
government that could bring change and development to their lives. The
local people, especially in the Isan, who gained the benefits from the
populist policies of the Thaksin administration, then were aware of the theirpower in the electoral and formal politics.
The awareness has been really strong in the North and Northeast
region. There are many reasons to explain why the two regions revealed thestrong satisfaction towards the Thaksin administration’s populist policies,
but the main reason may be that these two regions are the most lack behindregions in Thailand. Thus, once the resources were distributed to therelatively poorer regions, the impacts then seemed really strong in theperception of the people in the two regions. The national policies of theThaksin administration, in their views, not only channeled the resources, butalso offered the new and better opportunity to their lives.
The awareness of their political powers was also encouraged by thefiscal decentralization process that officially took place in 2001. During the1999 - 2001, the share of local governments’ expenditures to the total
expenditure of central government increased to more than 20 percent (for theratio of local revenue to national revenue, please see Table 1; and for budget
allocation to Northeast, please see Table 4). In other words, the local
governments had more fiscal resources to manage the development plans in
the communities. In 2003, the amendment in the related law ofDecentralization Act allowed the local residents to directly vote the head of

	
  

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local government (in Executive branch). In this rule, the voters thus could
decide to vote or not vote for the head of local government candidates. The
chief of the local government, in exchange, need to be accountable andresponsible to the local voters otherwise they would lose the chances to win
in the next local election. In this way, the local residents are aware of theirpolitical powers in both local and national level, and engage more in theformal politics than in the previous centuries.

Table 4: Total Budget Allocation to Northeast Local Government(million Baht)
Year

2009

2010

Local

90,966.42

89,234.36

2011

2012

2013

105,236.48 130,205.64 148,711.91

Revenue
Source: Department of Local Administrative Office, Ministry of Interior

The realization of the political rights of the Isan people might partiallybe the result of the more access to education and technology. Like
everywhere in the twenty-first century world, the local people in thenortheast could easily access to the information and gained new perceptionsof the modern world through new media. In addition, the migration among
the Isan laborers to find the work aboard which occurred since the 1980s had
expanded their horizontal knowledge about the modern world. Unlike
traditional believe that widespread in the Bangkok people and among the
television dramas, the Isan locals in the twenty-first century are not ignorant,passive, and lack of knowledge of the modern world anymore. In contrast,

	
  

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the Isan locals more engage in the politics, and eager to learn more about themodern concept of democratic value. The Isan locals in the twenty-first
century are not the ignorant peasants but are Thai citizens with sophisticatedunderstanding of right and justice (Keyes 2014).
4.3) Pattern of Relationship Change: Silent No More10
It is believed that the relationship between Thai state and thenortheasterners has changed in the twenty-first century. Isan is still relatively
poor, but the largest numbers of populaces and the constituencies havecaused Isan to be in the consideration of the Thai rulers. In fact, many
parties have considered Isan region to be the great support base for theirvotes for many decades, but the Thai rulers have never taken into accountthe needs and aspirations of local people. However, the rise of Thaksin
administration in 2001 has changed the rule of the game. In the 2001 generalelection, Thaksin’s newly established party, Thai Rak Thai (TRT), gainedhuge supports from the northeastern electorates.11 The same result repeateditself in the 2005 general election. The Northeasterners reelected the TRT(and its succeeding proxy parties in 2007 and 2011) because they realized
the party has taken their needs and aspirations into considerations. It seems
to be the first time that the local people in the neglected region becomeaware of their political power. This awareness has contributed to the change
in the relationship between the northerners and the Thai rulers. The
northeasterners in the twenty-first century are more aware of their rights, and

	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
10

The term “Silent No More” was used as the chapter title in Charles F. Keyes’s 2014 book,“Finding their voice: Northeastern villagers and the Thai state”.
11
Also from the northern electorates.	
  

	
  

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would not hesitate to express their needs and aspirations in the politicalarenas.
The awareness of political right does not only affect the relationshipbetween the Isan residents and the Thai rulers in the central government. It
also causes change in the relationship between the local residents and theirlocal authorities. Prior to the twenty-first century, the relationship between
the local people and the authorities was vertical, not horizontal. The
authorities would govern and order, and if any inefficiency occurred the
local residents could not challenge or complain. In contrast, since the rule of
the game has changed, the local authorities need to concern more about the
public attitudes.
As has been told, the promulgation of the 1997 Constitution provided
useful tools that eventually lead to the arrival of the 1999 Decentralization
Act. Hence, the decentralization took place in Thailand at the turn of twentyfirst century. The local governments gain more decision-making power andfiscal resources. Moreover, there has been the change in the rule in the local
level. The local governments now are directly elected from the local
residents.
It should be addressed that many local residents in Isan in this century
shift to involve in non-agricultural sector; mainly in the local enterprises.
Henceforth, the improvement in basic infrastructure and communication canbe really beneficial to their trades and services. The expansion in educationand the progress in health service could bring the positive impact to theirlives too. Of all mentioned above are the roles and tasks that the local
governments are highly responsible to.

	
  

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According to the 1999 decentralization act and related laws, there are
6 specific functions that the local governments in each community need totake care of; infrastructure, education, health and hygiene service, economic
promotion, culture and nature preservation, and security and safety incommunity (see Table 5). Since local governments are directly elected, thenit is important for them to response to the local voters’ needs. To serve thelocal residents, each local government needs to design and implement thedevelopment plans and policies that most suits the community. Undeniably,
it is possible that the public may not feel satisfied about the local
government’s role. Indeed, the public attitudes toward the local governments
can be varied due to the competency and capability of those governments.
In the public attitudes survey that published in 2014 reveals that mostof local respondents in the survey, who lived in the communities for four
decades and experienced the public services both from the bureaucrats (prior
to 2001) and from local governments (since 2001); feel satisfied with theroles and tasks of the local governments in public service provision(Krueathep et al., 2014). In a question asking about whether thecommunities want the central government to take back the specific roles andtasks from the local governments or not, the majority answer is ‘do not wantto’. Moreover, of all the tasks under the local governments’ responsibilities,
the education and health services are two tasks that people feel satisfied withthe most. The main reason is, the local residents feel that education andhealth services under the responsibility of the local governments helps
lessening their household expenses. Once household expenses reduce, thelocal residents could accumulate more capital or use the capital for otherimportant businesses.

	
  

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Table 5: Functions and Responsibility of Local Government
Fields	  1)	
  Infrastructure	
  Functions	  -­‐Provide	  and	  manage	
  local-­‐level	
  roads	
  and	
  streets	
  -­‐Provide	  and	  manage	
  water	  supply	
  and	  public	  sewerage	
  2)	
  Education	  and	
  Health	
  service)	
  -­‐Provide	  and	  manage	
  the	
  education	  in	
  community;	
  nursery,	
  kindergartens,	
  elementary,	
  junior	
  high,	  and	
  high	  school	
  -­‐Provide	  and	  manage	
  health	
  and	
  hygiene	
  service	  3)	
  Health	
  and	  Hygiene	
  Service	
  -­‐Provide	  and	  manage	
  health	
  and	
  hygiene	
  service	  4)	
  Economic	
  Promotion	  -­‐Promote	
  agriculture,	
  forestry,	
  commerce,	
  industry,	
  and	
  other	  forms	
  of	
  economic	  activities	
  in	
  community	  5)	
  Culture	
  and	  Nature	
  -­‐Preserve	
  community’s	
  cultures	
  and	
  nature	  and	
  maintain	
  community	
  parks	  and	
  forests	  -­‐Garbage	
  collection	  and	  manage	
  the	  cleanness	
  of	
  the	
  community	  6)	
  Order	  and	
  Security	  -­‐Manage	
  disasters,	
  maintain	
  the	
  security	
  in	
  the	
  community	
  -­‐Promote	
  public	
  participation	  Source: Summarized from the Decentralization Act 1999

	
  

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Section 5: Decentralization and Local Economic
Development in Northeast Thailand
From all above changes that the paper has already portrayed in theprevious sections, then here comes the question about what is therelationship between the decentralization and local economic developmentin Northeast Thailand. Moreover, if the decentralization would promote thelocal economic development, what kinds of prerequisite conditions that itneed to acquire. Actually, there are many ways to evaluate the relation
between the decentralization process and local economic development. In
the local or regional level, many case studies that aim to study about the
impact of decentralization on the local economic development would likely
to use the statistical method to evaluate. In the following sub-section, thispaper would analyze the data using statistical analysis (OLS) to draw the
relation too. However, due to the lack of the systematic data in the regional
level in Thailand, hence the statistical analysis might not yield enoughthorough findings.

5.1) Decentralization and Regional Economic Growth in Isan:
Statistical Analysis
In this sub-section, the paper would like to examine the relationshipbetween the economic growth in Isan and decentralization, by employing a
multiple regression analysis, utilizing time-series regional-level data during
2009-2013.
In the work of Krueathep (2010) when he examines the relationshipbetween fiscal decentralization and macroeconomic growth in Thailand, he
	
  

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employs the multiple regression model to analyze the national level timeseries data during 1972 and 2008 (37 observations). He finds that there is no
statistical (systematic) relationship between fiscal decentralization and
Thailand’s macroeconomic growth (Krueathep, 2010). In other words, it is
no clear link to address whether or not the fiscal decentralization in Thailand
exacerbate or support the economic growth. However, at the end of thepaper, Krueathep (2010) also states that further research about case studies
in another level, such as regional and local level, is needed to conduct tofulfill more understandings too. Since regional level appears in a smallerscale than in the national level, the results and findings might be different
from his previous research.
In contrast to Krueathep (2010)’s thorough national dataset, in theregional level, unfortunately the paper finds that the availability of fiscal
data on local government is so limited. The data from Department of Local
Administration (DOLA) reveals the aggregated data about Isan’s local
governments revenue only from year 2009 to 2013 (5 observations). Due tothe limitation in our data, the examination might not yield thecomprehensive results as expected. To thoroughly examine, it may be
important to employ another method also, which we would discuss this in
the latter part of the paper.

Data and Statistical Analysis
Due to the limitation in accessing the relevant dataset, the paper
would employ only accessible variables such as "Regional GDP" and"Revenue of Local Governments". Though imperfect, but these two data are

	
  

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representing the economic development and the level of fiscal
decentralization. In term of "Regional GDP", there exists the data from 1981
to 2013 (Table 6). Unfortunately, the data about "Revenue of Local
Governments in Isan" exists only from year 2009 to 2013, which might beconsidered as insufficient to run the regression model. In term of othervariables, which might contribute to the regional economic development in
the Northeast, the adequate data consists only the data from "Investment"and "Population". The data about the "Education Attainment" in the
Northeast region exists, but only two years: year 2002 and 2008. The data
about "Regional Household Income" does exist, but represents only every
two years: 1996, 1998, 2000, 2002, 2004, 2006, 2007, 2009, 2011, and 2013.
The data about "Unemployment Rate in Isan" also exists, but due to theunique characteristic of Thailand's economic structure which the informal
economy is very large, then "Unemployment Rate" could not adequately
represent the correlation. Data for this study are compiled from multiple
sources: Bank of Thailand, National Economic and Social Development
Board of Thailand, National Statistical Office of Thailand, and Ministry of
Education of Thailand. From all limitations mentioned above, the paper
would utilize the following data, which represents in the Table 7.

	
  

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Table 6. Data about Decentralization and Local Economic Developmentin Northeast: 2009-2013
GRP
Year (mil THB)2009 692,137
2010 732,027
2011 785,713
2012 846,000
2013 871,454

GRP Growth
Rate %
6.568822133
5.763332883
7.33383296
7.672919363
3.008666941

Isan Local
Revenue(mil.THB)
90966.4289234.36
105236.48
130205.64
148711.91

Ratio Isan
Population
Local to National (1,000 persons)
26.91
19,20725.41
18,95525.59
18,91727.05
18,87427.78
18,828Investment(mil.THB)
11,373.7
67,768.1
32,490.9
68,864.1
78,363.5

Table 7: Variables in Research
Variable

Explanation

Fiscal Decentralization

Aggregated

Local

Governments

Revenue in Isan
Local Economic Growth

Regional GDP (nominal)

Regional Investment

Investment in Isan (nominal)

Population

Population in Isan (person)

Although the limitations, the paper employs the multiple regression
analysis (OLS) and examine the relevant existing data in above table. In thefirst model, which examining whether and to what extent that
"Decentralization", "Investment" and "Population" contribute to economic

	
  

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growth in Isan, the empirical result indicate that there is a positive effect andnot significant of decentralization on local economic growth (c=1.946;
p=0.13), while the effect of investment and population on local economic
growth are negative and also not significant (c(inves) = -0.336, c(pop) = 254.879; p(inves) = 0.60, p(pop) = 0.23).
While examining whether only decentralization variable impacts on
the economic growth in Isan or not, the result finds that there is a positiveeffect and significant of decentralization on economic growth in Isan, with
the R-squared 91.15 percent, c = 2.773, while p = 0.01.
At the same time, while testing whether the investment in Northeast
from 2009-2013 contributes to local economic growth or not, the result
indicates the positive effect and insignificant of investment on economic
growth (c = 1.912; p = 0.16). However, due to the availability of investment
and Regional GDP data which we have since 2002 to 2013, we decide to run
separately examination. In contrast to the earlier evaluation, the result of thedata from year 2002 to 2013 indicates that there is a positive effect andsignificant of investment on Isan's economic growth (c = 3.126 ; p = 0.01).
To examine the effect of decentralization and investment on the local
economic growth, we decide to exclude the number of Isan population fromthe examination process. The result of the data from year 2009 to 2013
reveals that there is a positive effect, but not significant of both
decentralization and investment on economic growth in Isan, with the c(decen) = 2.418, c (inves) = 0.5 ; and p (decen) = 0.07 , p (inves) = 0.51.

	
  

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While when we try the same thing with the log data of those three, the result
is different; there is a positive effect of both decentralization and investment
variables (c (logdecen) = 0.341, c (loginves) = 0.032 ), but only
decentralization variable results in a significant way at p-value level 5% (p(logdecen) = 0.04, p (loginves) = 0.24).
From the examinations above using the statistical analysis, the results
seem varied and do not suggest the results in the same direction. In somemodels, it could be conclude that the decentralization has no correlation at
all with the growth in local economy, while in other models; we see that thecorrelation is highly significant. Since the lack of data that we experience,
and also with the concern that the impact of decentralization (which took
place after 1999 Decentralization Act) may take longer time to evaluate,
then the paper should better employ another method to explain instead ofusing only the statistical analysis.

Relation Between Decentralization and Local Economic
Development
It is mentioned before that the roles and functions that the local
governments need to response and provide to the local residents are quite
basic but significant. These functions and roles include; (i) Infrastructure
provision; (ii) Health and Hygiene management; (iii) Educational provision;(iv)Economic promotion; (v) Culture and Nature preservation; and (vi)Security and Community safety services. From the six roles and tasks thatthe local governments have been transferred to, there are two responsibilities
that are quite related to local economic development the most; (i)

	
  

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infrastructure and (ii) economic promotion. The other four functions may
generate the different outcomes depend on the location of the localities12.
Once we decide that the roles and functions of the local governmentsthat have potentials to generate the local economic development consist offour functions (as aforementioned), then the next tasks we have to do is toreview whether or not these tasks contribute to local developments. From
this point, it might be better to analyze and evaluate step-by-step using theexisting data, which we have. However, due to the limitation of the existingdata and documents in some aspects, such as the improvement in local
infrastructures during this 15 years since decentralization, the evaluation andanalysis process may be imperfect.

The Relationship Between Decentralization And Local
Economic Development
	  Due to the lack of official data in regional level, it is indeed difficult

to examine what kind of relationship that decentralization policy and local
economic development have between each one. Anyway, this paper findsthat the opinion survey recently conducted nationwide by Krueathep et al.
(2014) is, to some extent, could suggest the helpful answer. In this survey,
Krueathep et al. (2014) selected 110 local governments from all regions in amanner that could represent the whole population of local governments in
Thailand proportionately. In his samples, the number of local governmentsfrom Northeast accounts for 32.7 percent of total samples, while the ratio of
total local governments in Northeast accounts around 38.6 percent of total
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
12

For example, if the localities locate near the tourist attraction areas such as the sea, then the roleof cultural and natural preservation of the local governments would be really important tocontribute to the local economic development.

	
  

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local governments. It is clear that the sample size that Krueathep selected
could satisfactorily represent the whole population of local governments.
Therefore, employing the survey from Krueathep’s 2014 research could
suggest about the success or failure of local governments in term of local
economic development to some extent.
This section would begin with the examination of the roles of local
governments in relation to local economic development. Since the 1999
Decentralization Act was promulgated, the roles and functions that local
governments need to be responsible are included 6 tasks: infrastructure
provision, economic promotion, health and hygiene service, educational
provision, culture and nature preservation, and security and community
safety (Decentralization Act, 1999).
In these six basic yet significant roles, there are two roles that appear
by tasks to be directly contributed to local economic development. Those
two roles are infrastructure provision and economic promotion. The rest fourroles may help improve the standard of livings in communities, but seem notdirectly facilitate the local economy. This is assumed from their potential
tasks which given by 1999 Decentralization Act. However, in reality they
may result in different and various consequences. As follows, the paper
would try to examine whether the local governments succeed in executing
the roles and tasks to enhance local economic growth and development or
not. The first task to be examined is infrastructure provision, while the rest
five tasks will follow up one by one.

	
  

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Infrastructure
One of the functions that the central government transferred to the
local governments is to provide infrastructure in each jurisdiction.
Infrastructure provision is considered as important key to bringdevelopment, especially in the rural areas (United Nations, 2004). The
improvement in infrastructure can support socio-economic development;from improved quality of living, increased per capita income, enhanced
trade activities, etc. Prior to decentralization, most of infrastructure delivery
projects were executed and managed by the state agencies, which sometimes
delivered in ill-equipped and slow manners especially in rural areas. Since
the 1999 Decentralization Act has increased the share of local to national
expenditures from around less than 10 percent to more than 20 percent, thelocal governments therefore access to more fiscal resources. It is believedthat many local governments in Thailand have largely chosen to install
infrastructure projects over other social services because the local
governments perceived infrastructure delivery as less complex than others.
(Webster, D., & Theeratham, P. , 2004). Nevertheless, after implementing
the decentralization process in country for 15 years (in 2014), the local
residents give a response that they prefer the roles of local governments indelivering the infrastructure and do not want the state agencies to take backthis responsibility by 61.46 percent13 (Krueathep et al., 2014). What's more,
66.76 percent of survey respondents answered that they have positive
attitude towards local governments' new infrastructure projects. The groups
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
13

The survey which conducted nationwide asked whether the local populations agree that thestate agencies could perform better than the local governments in the realm of infrastructure
provision or not, the local respondents disagreed for 61.46 percent. See more details in Krueathep
et al., (2014), Chapter 19: p.39.

	
  

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that tend to favor the provision of infrastructure from local governments arepeople who live in the urban areas, while the people in rural areas feelsatisfied more than 60 percent but still concern about the lower capacity of
local governments in rural areas due to the smaller revenues they acquire(Krueathep et al., 2014).
Though the paper has a limitation to provide the data in the issues ofimprovement in local infrastructure provision (road networks improvement,household access to waterworks, electricity, telecommunication, etc.) due tothe lack of available data from the related official agencies, but a relatively
high satisfaction of local respondents in the survey could inform us that,during 15 years, the local governments provide a better and efficient
infrastructure service to localities. Again, according to the United Nations(2004), the improvement of infrastructure provision is the important key togenerate development.
Economic Promotion
Economic Promotion is one of the main roles of local governments inorder to generate the economic development in the jurisdictions. Due to thelegislation of decentralization act, the local governments have their own
decision-making power to initiate any projects that could enhance economic
activities and increase employment in the localities. Principally, theeconomic promotion projects in communities could be varied due to thediverse characteristics and locations of each jurisdiction, but most of local
governments plans represent many similar projects: community market,
career training and advising, community saving groups and funds, and also
the pawnshop which operated by the local governments (Krueathep et al.,

	
  

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2014: Chapter 21). In some big local governments, the projects related toinvestment and industry promotion may be introduced and managed, but the
projects occur in some industrialized areas are rarely seen. However, thesurvey in 2014 reveals that 73 percent of respondents think local
government’s economic promotion role helped boosting local economy andincreasing employment, while 61.2 of the respondents also think this role
helped increasing household income and decreasing the local migration toanother advanced communities, and 68.5 percent reply that the economic
development in the communities is the contribution from eager and capable
personnel of the local governments (Krueathep et al., 2014: chapter 17,p.14).
Overall, the local residents feel that the role of local governments inpromoting local economy is moderately successful and help contributing to
the localities than deteriorating.
Education Provision
Education is believed to be one of the keys of human development. In
Thailand, educational system has been highly centralized for centuries, aswell as many other public services. However, since the promulgation of1999 Decentralization Act, the attempt to decentralize in education was
introduced. Though the attempt was little achieved, since many related
actors in this educational decentralization process tried to oppose (Krueathep
et al., 2014), but in the pre-primary school level, the role of subnational
government in serving the public service provisions to locality is consideredsuccessful and gain many applauses.

	
  

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The survey of Krueathep et al. (2014) shows that in primary andsecondary education, 47.8 percent of students choose to enroll in the schoolthat operated and regulated by Ministry of Education, while only 15.9
percent enroll in the school that operated and managed by the local
governments. However, in the pre-primary school level, 77.1 percent enroll
in the Child Development Centers or Nursery Schools which run by the local
governments, while 22.9 percent enroll in the institutions operated by the
Ministry of Education. The survey reveals that the households prefer the
local governments' education service in the pre-primary school level, but inhigher level, they tend to prefer the service from Ministry of Education.
In overall level of educational services, 81.8 of households informedthat the education provision from local governments helped reducing
household expenditures. 84.1 percent responded that they preferred theeducational service provided by their local government, and would notchoose to enroll their children in another localities with higher standard
schools. In the realm of satisfaction, the survey respondents feel satisfied
with the educational service from local governments in a medium to higher
level (Krueathep, 2014: chapter 17 page 5-6)
Though it could not directly evaluate the impact of local government's
educational service on the local economy, but from the survey it could beconcluded that the local residents are satisfied and find that the service fromlocal governments generated benefits to community.
Health and Hygiene Service
The role of local government in providing the health and hygiene
service in locality can be considered as highly successful. In the survey by

	
  

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Krueathep (2014), 70 percent of local respondents responded that they could
easily access to basic health services provided by local government.
Moreover, 60.8 percent of respondents think that local government
personnel have high skills and knowledge and capable to provide goodstandard health services.
The same survey also reveals that the health and hygiene service
provision of local government help improved and developed the standard ofliving in locality. Around 77.1 percent of the respondents answered that thisservice from local government help reducing healthcare expenditures inhouseholds, 80.2 percent thought the service facilitate households to live a
better and healthy lifestyle, and 80.6 percent feel satisfied with the services
that they received from the local government.
Culture and Nature Preservation
This role of local government consists of the tasks of garbage
collection, preservation of parks and nature in the community, reduction ofpollution, and etc. The tasks may not directly boost the local economic
growth, but they are important since they involve in generating goodenvironment in the locality that could represent the good standard of living.
From the survey of Krueathep (2014), the local respondents reveal that there
are only 16.5 and 8.9 percent of local governments that seriously take care of
sewage management system and air pollution in the communities
respectively. Nevertheless, the satisfaction level of respondents towards
local government’s role in culture and nature preservation is quite high.
There is 62.1 to 73.5 percent of respondents feel that the local governments
work really hard to preserve culture and nature within the communities.

	
  

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Moreover, 73.3 percent answered that their communities become cleaner due
to local governments’ performance (Krueathep, 2014: chapter 17, p.17-19).
Security and Community Safety
In “Security and Community Safety” role, the local governments
would take care in the business of community security, safety, and natural
disaster. In this role, the respondents in Krueathep’s survey (2014) feelmoderately satisfied by local government’s management. Around 74.4
percent of local residents trust the capacity of local governments in maintainpeaceful environment and safety in communities, while 62.2 percent repliedthat their standard of living improved and secured by the performance of
local governments.
Six Roles of Local Governments and Contribution to Local Economic
Development
From the survey in 2014, we find that the local respondents feelsatisfied about each role in different level. The respondents in the sample
sizes mostly feel that the role of local government in infrastructure providing
helps contributed to local economic growth and development, while the rolein executing economic promotion could generate the development, but nothighly as it should be. In contrast, the roles in educational provision andhealth and hygiene service contribute relatively highly in reducing
household expenditures, which could imply that these two roles help
enhancing household saving and implicitly contributing to local economic
growth and development. The last two roles; culture & nature conservationand security & community safety; made local respondents feel satisfied, but

	
  

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they are not directly contribute to local economic development. After theprocess of examination of six roles of local government, it suggests that
although many roles do not directly help boosting local economy, but theseroles of local government succeed in bringing the basic public services tocommunities and also improving the standard of living, which are importantof local economic development.

The Relationship Between Decentralization and Local
Economic Development and Prerequisite Conditions
From the above examination in each role of local governments,
combined with the factors of changes and development in Northeast
economy since the turn of 21st century, the paper finds that thedecentralization process in Thailand does not directly promote local
economic development in this poorest region. However, it indirectly
generates the economic growth and development in local level by increasing
fiscal capacity and decision-making power of local governments. Be
effective in 2001, once the local governments throughout Thailand, also
including northeast, start gaining more fiscal resources and decision-making
power, they then could initiate and implement development projects to theircommunities. By implementing many projects related to six roles that weretransferred from central government, the local governments implicitly boost
local employment, enhance household income, and boost economic
activities more than in the previous era. These growth and changes have notoccurred by only one factor, it is the collaboration of decentralization andnational economic policies since the turn of 21st century that caused this

	
  

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impact in Northeast economy. With the limitation of data in regional level, it
is indeed difficult to examine what factor contributes more and to what
extent. Nevertheless, it can be implied that the decentralization also plays thefacilitating role in boosting the growth and development in Northeast.
However, not all the decentralization could bring the development. To
generate the local economic development, there are some prerequisite
conditions that decentralization process and local governments need toacquire. They are as follow:
1) Local governments need to be democratically directly elected
2) Local government need to have autonomy and discretion to
implement their own policy at least one policy (Triesman, 2007).
3) Local public has tools to check and examine the local government

	
  

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Section 6: Conclusion
Put simply, decentralization is the devolution of functions, fiscal
resources, and decision-making power from central to subnational
governments. It means that the subnational government can access to moreresources and powers to initiate and implement the development projects inlocality. This cannot directly imply that it will generate the local economic
development, since there are many contributing factors involved in thegrowth and development in local economy: economic conditions in national
and international levels, spillover effect, investment rate, human capital in
the region, infrastructure, transportation and communication, and etc. Due tothe lack of official regional data in many aspects of economic developmentin the Northeast region, the paper holds a limitation to directly examine
about the relationship between the decentralization and the local economy.
Nonetheless, since decentralization transfers basic but significant functions
from central to subnational governments, some of these functions;infrastructure, educational, and health provisions; involve in boosting local
economy. Though the paper could not show the data about the improvement
in infrastructure (length of good road network, numbers of households
accessed to electricity and waterworks, household with internet access, andetc.) and the decrease in household expenditures, but using the nationwide
survey from Krueathep's comprehensive research about decentralization in
Thailand (2014) could at least show the satisfaction which local residents
feel towards the subnational government's services. The satisfaction suggests
about the local residents' trust on local government, and also reveals that the
local residents feel that the local government's role helps improving local
economy and their standard of living (Krueathep, 2014).

	
  

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Acknowledging about the limited of official data in regional level ofThai local administration, the filed research and data collection in local level
and across regions are recommended to conduct in the further research.
Though the public survey and opinion may yield some useful results, but thesystematic studies with the relevant economic development data could give aclearer picture to the relationship of decentralization and regional
development more than without one.
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  	
  	
  
	
  

	
  

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