This document discusses institutions as the fundamental cause of long-run growth in Thailand. It outlines Thailand's history of a monarchy acting as a commitment mechanism to resolve conflicts between military and democratic powers. However, the aging king no longer plays this role, leaving no way to credibly commit to resolving disputes. As a result, Thailand has experienced recurring cycles of coups and protests that undermine economic institutions and growth.

1. INSTITUTIONS AS THE FUNDAMENTAL
CAUSE OF LONG-RUN GROWTH:
THAILAND
Neil Thompson

2. COMMITMENT PROBLEM
“Institutions as the Fundamental Cause of Long-Run Growth”.

Commitment problem – political powers cannot trust one

another to keep their promise.
De jure (military, monarchy, democracy) and de facto power

(protestors).
De jure can be selfish or compassionate.


3. THAILAND CULTURE AND ECONOMY IN BRIEF
61.5 million people. 10 million in Bangkok.

 Language- 100% Thai speaking.
 Religion- 95% Buddhist.
 Large amounts of FDI in the mid- late 90s.
 Export led growth; More sophisticated
manufactured goods to compete with China.
Textiles and footwear.
 Rapidly expanding domestic middle class market
and exports.
 Commodity exporting- rice, rubber and tin
 Tourism.
 Health facilities.

4. Key dates: 196
GDP GROWTH (ANNUAL %)
0s, 1973, 1988, 19
97

5. BRIEF HISTORY OF MONARCH
King Maha Mongkut (Rama IV) – Buddhist monk for

27 years.
 1854 – Ordained as King
 English and French colonialization.
 Trade liberalization – keeps national sovereignty.
 Economic restructuring, growth, prosperity.
 Created educational institutions.

6. BRIEF HISTORY OF MONARCH (CONT‟D)
King Bhumibol Adulvadej (Rama IX)

 Longest reigning monarch. (1950 - Present)
 Awarded the UN Secretary-General, Kofi
Annan, the UN‟s first Human Development Lifetime
Achievement Award.
 Dubbed the „Development King‟.
 Awarded the Legion of Merit by Eisenhower.

7. THAILAND TIME LINE

8. 1973 – STUDENT REVOLT
Irritated university students demand democracy.

 1577 students killed by military.
 Lese Majeste laws. Continue today.
 Military general Thanom orders massacre.
 Commitment problem – students demand
democracy, military has no way of creating one and
does not want to. Violence.
 Solution: the monarch as the mechanism.
 King holds meeting with Thanom, relinquishes
power, king appoints new PM.
 Improvement? Institutions created in 1974. 1976
back to military power.

9. 1992 – SHIFT IN MILITARY IDEOLOGY
Late 1980s saw many coups and attempted coups.

Power being fought from within military and
democratic movements.
 Military PM steps down, king as
mediator, democratically elected Chuan Leekpai.
 Commitment problem goes into hiding BUT still
exists.
 Mid -1990s – high economic growth. Institutions
and trust improved.
 Rise of the business elites and inequalities.

10. THAKSIN 2001 – 2006
Post – crisis: looking for a leader to secure

business structure. Quick repayments of IMF loans
but protectionist nature.
 Single member district electoral reform from block
vote (BV). Less votes to secure win.
 Democratically elected Thaksin Shinawatra; the
business elite. Pros and Cons.
 2006 –Military coup d'état, commitment problem
back to life.

11. THAILAND IN 2008
Protests – overtake government buildings and

airports. Disruption of economy.
 Military – gets involved initially, then retracts and
does nothing. Why? Violent history.
 King- ageing and does not speak either way.
 What drives these types of unrest in Thailand?
 How can it be solved?
 Why is this important?

12. THE LACK OF A COMMITMENT MECHANISM.
King is elderly and does not make appearances

often.
 Military does not want to be involved in politics but
cannot give away power convincingly.
 Cycle of coups and protests will continue.
 Economic institutions efficiency suffer, gains
suffer, growth and prosperity suffer.

13. REFERENCES
Acemoglu, Daron, Simon Johnson, James

Robinson. “Institutions as the Fundamental
Cause of Long-Run Growth.” Handbook of
Economic Growth (2004).
 McCargo, Duncan. “Democracy Under Stress in
Thaksin's Thailand.” Journal of Democracy
13:4,”
http://muse.jhu.edu/journals/journal_of_dem
ocracy/v013/13.4mccargo.html.