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Effect of Decentralization Strategy on Macroeconomic Stability in Thailand
Kanokpan Lao-Araya. Examines how the Thai central govít. (TCG) can finance decentralization & make local govíts. (LG) accountable for their own finances. The TCG medium-term fiscal stance is not conducive to planned fiscal decentralization, & LG will not assume responsibility for providing public services previously provided by the TCG. This study proposes that the TCG must increase the value added tax rate over. Thailand has adopted an unbalanced approach to fiscal decentín. LG are guaranteed rev. from transfers from the CG but need not assume increased responíy. for providing public serv. This encourages LG to spend irresponsibly in expectation of bailouts by the TCG. This study recommends that the TCG impose budget constraints on LG.
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