A Short Account of the Rise and Fall of the Thai Technocracy

Abstract

(ProQuest: ... denotes non-US-ASCII text omitted.)In the 1990s, it became conventional to attribute the extraordinary success of the Thai economy to careful and conservative management by technocrats. After World War II, Thailand had been one of the most backward economies in Asia, lacking even basic insti- tutions implanted elsewhere by colonial governments. For the next half century, the economy grew at a cumulative average rate of over 7% a year, without once coming even close to a year of the negative growth experienced by most other Southeast Asian coun- tries during the oil shocks. Inflation never got out of hand. Trade deficits were always manageable. Oil shocks were severe but never disastrous. In the great boom which began in 1986-87, the growth rate surged into double digits without suffering from infla- tion or other diseases of over-heating. Given that Thailand's politics were punctuated by coups and crises, and that the country was famous for the weakness of the rule of law, some explanation was needed for the smooth, sustained record on economic growth. The technocrats were paraded as that explanation. According to this view, the Thai techno- crats managed to operate with some independence from vested interests and some i nsulation from political flux, and had developed traditions of conservative economic management which worked. This view was canonized in a book entitled Thailand's Macroeconomic Miracle, published by the World Bank in 1996. The book concluded, By investing technocrats with the power to say 'no' to politicians, a state can institutionalize long-term fiscal and monetary restraint, despite the short-term incentive for politicians to act otherwise (Warr and Bhanupong 1996, 234).A year later, Thailand led the region into the Asian financial crisis. A year following that, a report commissioned by the Thai government to explain the genesis of the crisis placed the blame firmly on technocrats (Nukul 1998). This Nukul Report reversed every main point of the theory of the technocrats' stabilizing role. It argued that they had not understood the modern global economy, had been manipulated and intimidated by politi- cians, had failed to coordinate among themselves, and had taken unfathomable risks with Thailand's reserves in futile attempts to avert the crisis. How could two such contrast- ing views of Thailand's technocrats appear within such a short space of time? What has been the outcome of this crisis for the role of the technocrats since 1997?This article provides a brief overview of the rise and fall of technocrats in Thailand across the second half of the twentieth century. The first generation of Thai technocrats consisted of a tiny handful of trained economists who established a basic framework of economic management in the post-war era. Their role was boosted by the arrival of US aid and patronage in the development era which began in the late 1950s. The role of the technocrats changed and expanded during the 1980s when the domestic economy began to become more complex, and when the world economy became a source of destabilizing shocks after the end of the Bretton Woods era. The second generation of technocrats acquired influence because of the demand for their skills, and because of the backing they received from international institutions. They became not only economic managers but prominent advocates for changing the direction of economic policy. In the third genera- tion which emerged during the great boom, technocrats had to cope with the conse- quences of market liberalization on one side and the emergence of parliamentary democ- racy on the other.Before the TechnocratsThailand's first framework of modern government was created in the last two decades of the nineteenth century, and patterned on colonial models which King Chulalongkorn (Rama V) had inspected in India and Indonesia. In these models, the two main functions of government were taxation and control. …