Thailand has been modestly enhancing the role of subnational entities for some time, but decentralization has been a priority only since the Seventh National Economic and Social Development Plan (1991-96). The plan emphasized developing local infrastructure, providing credit to expand and improve local services, and helping local authorities mobilize capital and pursue development projects.

The May Five democracy movement emerged in the mid-1990s to demand stronger democratic institutions more insulated from the military, which has long played a pivotal role in Thai politics. The Eighth Plan (1997-2002) advocated stronger local institutions, the 1997 Constitution formally enshrined decentralization, and later legislation detailed how it would work. The country has formally adopted many reforms but implemented few of them, and political consensus on further progress remains unclear.

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In Thailand, local governments prepare and execute their own budgets, but they are subject to central direction. A significant share of local expenditures is centrally mandated, with the largest portion devoted to personnel expenses (representing 30 percent of local budgets, on average).

Central directives govern staff numbers, salaries and benefits. Major reforms, however are intended to eventually move this highly centralized civil service to one where local governments have considerable authority over personnel management. In 2002, subnational government spending accounted for about 10 percent of the total government spending, an amount which is expected to increase.