Common use of Policy Environment Clause in Contracts

Policy Environment. The framework employed in this dissertation suggests that the policy environment under the unified military period should be only moderately particularistic. That is, it should be evident that those with centralized power limit the use of state policies for personal benefit because of external pressures. As indicated in previous chapters, I differentiate between micro and macroeconomic policies. Overall, this period plays out as predicted, with a policy environment that was relatively stable and featured broadly-targeted policies in some areas but was prone to particularism in others. Macroeconomic Policy Macroeconomic policy was both stable and decided by military-approved technocrats that by and large placed economy-wide stability and growth over the interests of any particular firms, families, or cronies. Fiscal and monetary policies were geared towards maintaining a stable exchange rate and avoiding inflation (Muscat, 1994). The policy adjustments and fluctuations that occurred over this period were relatively predictable responses to changing external and internal conditions. For example, the government responded to budgetary and current-account deficits in the late 1960s with mild demand-restraint measures, relying on substantial foreign reserves as a cushion (Muscat, 1994). Muscatt notes, “Implicit in this combination of balancing trends and limitations of policy changes to the cautious and incremental is a very important point easily overlooked: with a sound basic framework in place, incrementalism ensured that the government also avoided major mistakes” (Muscat, 1994: 103). The Sarit and Xxxxxx regimes were forced to balance between maximizing par- ticularistic benefits and ensuring overall economic stability. This balancing act was played out in the relationship between the military leadership and Dr. Puey, the senior technocrat. Xx. Xxxx’x task was to achieve the policy goals set forth by the military: stability and growth. But the top brass also sought to enrich themselves and their political supporters in the military. Xxxxx and Xxxxxx, not being trained in economics, had to rely on conservative technocrats like Dr. Puey to determine how many particularistic policies they could pursue before it endangered overall eco- nomic stability and growth. But because conservative technocrats prefer almost no particularistic policies, the Junta required some way to determine when a recommen- dation made by the technocrat is absolutely critical to overall economic health and when it is simply reflected the technocrat’s conservatism. I argue that Dr. Puey, like his predecessor and his successor, used the threat of resignation to signal that some particularistic policy would place growth and stability at risk. It is important to note that this is not evidence that Dr. Puey had actual veto power. Xxxxx and later Xxxxxx could have had him removed, arrested, or killed without any institutional impediments and little-to-no immediate political cost to themselves. Trade policy was designed to achieve import substitution objectives and maintain government revenues. These goals were also clearly indicated but less consistently followed through on than monetary policy goals. Throughout the Sarit and Thanom governments, tariffs were erected with little economic logic beyond revenue maxi- mization, leading to higher nominal rates of protection on consumer goods than on capital goods and raw materials (Muscat, 1994). Inconsistencies in the application of these policies arose in the issuing of exemptions and rebates through sectoral policy. Economic actors making decisions about the specificity of assets they wished to hold faced a stable, mostly untargeted trade policy environment. Sectoral Policy While sectoral policy was consistent in its overall approach, it was designed to achieve political as well as economic ends. The upper echelons of the military served as political patrons for wealthy Chinese families. Xxxxxxx notes that the bureaucracy widely regarded as having failed to achieve the ability to “operate efficiently and in the public interest, in areas of economic activity outside of the public utilities and educational and other functions the private sector could not fulfill on a large scale“ (1994: 94). Economic actors making decisions about the specificity of assets they wished to hold faced a stable, particularistic sectoral policy environment. “Corruption and clientelistic networking remained pervasive [in the Sarit regime]. . . maintaining ties with powerful politico-bureaucrats was still highly valued by business people for such links helped overcome bureaucratic inconvenience or delay and delivered certain privileges and even contracts” (Laothamatas, 1992: 31). “The [Board of Investment] BOI intentionally backed a group of larger- scale firms in the promoted industries by regulating either the minimum value of initial investments or minimum production capacity, almost all the owners of existing factories were automatically excluded from the programmes. Those who would possibly have had access to this policy were only the merchant class in general and a group of large-scale importers of manufactured goods, because they had already accumulated some capital and knowledge concerning imported goods, importers also had access to foreign exporters, and hence foreign manu- facturer, through their importing business” (Xxxxxxx, 1989). These large firms were also very well connected to Sarit and the military. “Sarit. . . held interests in nine companies that obtained promotional benefits from BOI; nine of Sarit’s political associates also received BOI status. One source recorded that in 1969 there were 143 government officials or family members who had seats on the boards of 347 firms” (Muscat, 1994: 113). Sarit had granted control of sectoral policy to loyal supporters and created a system of uncoordinated and conflicting sectoral policy initiatives. 2 2This balkanized sectoral policy-making apparatus proved an effective way to distribute the spoils of rule and was continued through later periods, changing slightly to meet the needs of new rulers in different situations. The scope of these particularistic sectoral policies was bounded by the hard bud- get constraints imposed by Xxxxx’s technocrats. Thus the military rule period had lower levels of clientelism than in earlier years. “Despite the lack of transparency in sectoral policy and the many incentives for rent-seeking, government-business rela- tions changed in both style and substance after 1960. During this period, clientelism between officials and private firms actually declined. There was increasingly more equality between bureaucratic elites and business, and more formal, policy-based con- sultation than during the nationalist period” (Xxxxxxxxxxx, 1993: 134). As expected, the government maintained limits on the extent of particularistic policy. Macroeconomic policy was managed in a relatively predictable manner to achieve broad growth and stability. Size and political clout were prime determinates of BoI promotion but promotional privileges were relatively limited in scope, consist- ing mainly of tax holidays and tariff exemptions on inputs. In a case with stable, mildly particularistic institutions this framework predicts a mix of coordinated and hierarchical economic governance institutions.

Policy Environment. The framework employed in this dissertation suggests that the policy environment under the unified military period should be only moderately particularistic. That is, it should be evident that those with centralized power limit the use of state policies for personal benefit because of external pressures. As indicated in previous chapters, I differentiate between micro and macroeconomic policies. Overall, this period plays out as predicted, with a policy environment that was relatively stable and featured broadly-targeted policies in some areas but was prone to particularism in others. Macroeconomic Policy Macroeconomic policy was both stable and decided by military-approved technocrats that by and large placed economy-wide stability and growth over the interests of any particular firms, families, or cronies. Fiscal and monetary policies were geared towards maintaining a stable exchange rate and avoiding inflation (Muscat, 1994). The policy adjustments and fluctuations that occurred over this period were relatively predictable responses to changing external and internal conditions. For example, the government responded to budgetary and current-account deficits in the late 1960s with mild demand-restraint measures, relying on substantial foreign reserves as a cushion (Muscat, 1994). Muscatt notes, “Implicit in this combination of balancing trends and limitations of policy changes to the cautious and incremental is a very important point easily overlooked: with a sound basic framework in place, incrementalism ensured that the government also avoided major mistakes” (Muscat, 1994: 103). The Sarit and Xxxxxx Thanom regimes were forced to balance between maximizing par- ticularistic benefits and ensuring overall economic stability. This balancing act was played out in the relationship between the military leadership and Dr. Puey, the senior technocrat. Xx. Xxxx’x Dr. Puey’s task was to achieve the policy goals set forth by the military: stability and growth. But the top brass also sought to enrich themselves and their political supporters in the military. Xxxxx Sarit and XxxxxxThanom, not being trained in economics, had to rely on conservative technocrats like Dr. Puey to determine how many particularistic policies they could pursue before it endangered overall eco- nomic stability and growth. But because conservative technocrats prefer almost no particularistic policies, the Junta required some way to determine when a recommen- dation made by the technocrat is absolutely critical to overall economic health and when it is simply reflected the technocrat’s conservatism. I argue that Dr. Puey, like his predecessor and his successor, used the threat of resignation to signal that some particularistic policy would place growth and stability at risk. It is important to note that this is not evidence that Dr. Puey had actual veto power. Xxxxx Sarit and later Xxxxxx Thanom could have had him removed, arrested, or killed without any institutional impediments and little-to-no immediate political cost to themselves. Trade policy was designed to achieve import substitution objectives and maintain government revenues. These goals were also clearly indicated but less consistently followed through on than monetary policy goals. Throughout the Sarit and Thanom governments, tariffs were erected with little economic logic beyond revenue maxi- mization, leading to higher nominal rates of protection on consumer goods than on capital goods and raw materials (Muscat, 1994). Inconsistencies in the application of these policies arose in the issuing of exemptions and rebates through sectoral policy. Economic actors making decisions about the specificity of assets they wished to hold faced a stable, mostly untargeted trade policy environment. Sectoral Policy While sectoral policy was consistent in its overall approach, it was designed to achieve political as well as economic ends. The upper echelons of the military served as political patrons for wealthy Chinese families. Xxxxxxx Muscatt notes that the bureaucracy widely regarded as having failed to achieve the ability to “operate efficiently and in the public interest, in areas of economic activity outside of the public utilities and educational and other functions the private sector could not fulfill on a large scale“ (1994: 94). Economic actors making decisions about the specificity of assets they wished to hold faced a stable, particularistic sectoral policy environment. “Corruption and clientelistic networking remained pervasive [in the Sarit regime]. . . maintaining ties with powerful politico-bureaucrats was still highly valued by business people for such links helped overcome bureaucratic inconvenience or delay and delivered certain privileges and even contracts” (Laothamatas, 1992: 31). “The [Board of Investment] BOI intentionally backed a group of larger- scale firms in the promoted industries by regulating either the minimum value of initial investments or minimum production capacity, almost all the owners of existing factories were automatically excluded from the programmes. Those who would possibly have had access to this policy were only the merchant class in general and a group of large-scale importers of manufactured goods, because they had already accumulated some capital and knowledge concerning imported goods, importers also had access to foreign exporters, and hence foreign manu- facturer, through their importing business” (XxxxxxxSuehiro, 1989). These large firms were also very well connected to Sarit and the military. “Sarit. . . held interests in nine companies that obtained promotional benefits from BOI; nine of Sarit’s political associates also received BOI status. One source recorded that in 1969 there were 143 government officials or family members who had seats on the boards of 347 firms” (Muscat, 1994: 113). Sarit had granted control of sectoral policy to loyal supporters and created a system of uncoordinated and conflicting sectoral policy initiatives. 2 2This balkanized sectoral policy-making apparatus proved an effective way to distribute the spoils of rule and was continued through later periods, changing slightly to meet the needs of new rulers in different situations. The scope of these particularistic sectoral policies was bounded by the hard bud- get constraints imposed by XxxxxSarit’s technocrats. Thus the military rule period had lower levels of clientelism than in earlier years. “Despite the lack of transparency in sectoral policy and the many incentives for rent-seeking, government-business rela- tions changed in both style and substance after 1960. During this period, clientelism between officials and private firms actually declined. There was increasingly more equality between bureaucratic elites and business, and more formal, policy-based con- sultation than during the nationalist period” (Xxxxxxxxxxx, 1993: 134). As expected, the government maintained limits on the extent of particularistic policy. Macroeconomic policy was managed in a relatively predictable manner to achieve broad growth and stability. Size and political clout were prime determinates of BoI promotion but promotional privileges were relatively limited in scope, consist- ing mainly of tax holidays and tariff exemptions on inputs. In a case with stable, mildly particularistic institutions this framework predicts a mix of coordinated and hierarchical economic governance institutions.

Policy Environment. The With shifting regimes and sudden changes in the rules of the political game, this framework employed in this dissertation suggests that the policy environment under inability of the unified military many veto player governments to over- come problems of collective action and the subsequent regime-uncertainty in this period should be only moderately particularistic. That iscreate a highly particularistic policy environment, it should be evident that those with centralized power limit despite the use of state policies for personal benefit because of external pressures. As indicated in previous chapters, I differentiate between micro and macroeconomic policies. Overall, this period plays out as predicted, with a policy environment that was relatively stable and featured broadly-targeted policies in some areas but was prone to particularism in otherssystemic vulnerabilities. Macroeconomic Policy Macroeconomic policy in this period was uncoordinated and narrowly targeted. The technocrats, who had been insulated by Sarit and Thanom were suddenly exposed and expected to meet politically-motivated ends distinct from stable growth. Thai monetary policy became decidedly expansionary under the civilian administration, with politicians directing the BoT to take a more activist role in both stable expanding the money supply. The benefits were targeted toward particular industries and decided by military-approved technocrats that by and large placed economy-wide stability and growth over the interests of any particular firms, families, or cronies. Fiscal and monetary policies were geared towards maintaining a stable exchange rate and avoiding inflation ge- ographic regions (Muscat, 1994). The policy adjustments and fluctuations that occurred over this period were relatively predictable responses to changing external and internal conditions. For example, Finance Minister Boonchu estab- lished a ‘money for transformation’ program that allocated money directly to local government(Anuchitworawong, 2007; Xxxxxx, 1998). Significant banking reforms were enacted in 1979, with the government responded purpose of diluting family ownership and limiting the power and discretion of the key banks (Xxxxx, 1998). Fiscal policy became much less con- servative in this period with money flowing much more freely, with little regard to budgetary and current-account deficits in de- creasing revenues. By the late 1960s with mild demand-restraint measures, relying on substantial foreign reserves as a cushion end of the period significant imbalances developed (Muscat, 1994). Muscatt notes, “Implicit in this combination of balancing trends Trade policy remained dedicated to maximizing state revenues and limitations of policy changes to protecting vulnerability as exogenous and independent. The conclusion considers the cautious and incremental is a very important point easily overlooked: with a sound basic framework in place, incrementalism ensured possibility that the government also avoided major mistakes” (Muscatlevel of vulnerability might impact the number of veto players. powerful firms that had been targeted for promotion under import substitution. Sectoral policy Once the civilian administration had gained control over the policymaking apparatus, 1994: 103)they were expected to deliver policy benefits to those that had elected them. The Sarit dual challenge of reduced US assistance and Xxxxxx regimes were forced a massive spike in oil prices meant that competition to balance between maximizing par- ticularistic benefits and ensuring overall economic stabilitydisburse side-payments was especially fierce. This balancing act was played out in At the relationship between the military leadership and Dr. Pueysame time, the senior technocrat. Xx. Xxxx’x task was size of the coalition made a the creation of a comprehensive system to achieve the policy goals set forth by the military: stability and growth. But the top brass also sought provide public goods to enrich themselves and their political supporters in the military. Xxxxx and Xxxxxx, not being trained in economics, had to rely on conservative technocrats like Dr. Puey to determine how many particularistic policies they could pursue before it endangered overall eco- nomic stability and growth. But because conservative technocrats prefer almost no particularistic policies, the Junta required some way to determine when a recommen- dation made by the technocrat is absolutely critical to overall economic health and when it is simply reflected the technocrat’s conservatism. I argue that Dr. Puey, like his predecessor and his successor, used the threat of resignation to signal that some particularistic policy would place growth and stability at risk. It is important to note that this is not evidence that Dr. Puey had actual veto power. Xxxxx and later Xxxxxx could have had him removed, arrested, or killed without any institutional impediments and little-to-no immediate political cost to themselves. Trade policy was designed to achieve import substitution objectives and maintain government revenues. These goals were also clearly indicated voters all but less consistently followed through on than monetary policy goals. Throughout the Sarit and Thanom governments, tariffs were erected with little economic logic beyond revenue maxi- mization, leading to higher nominal rates of protection on consumer goods than on capital goods and raw materials (Muscat, 1994). Inconsistencies in the application of these policies arose in the issuing of exemptions and rebates through sectoral policy. Economic actors making decisions about the specificity of assets they wished to hold faced a stable, mostly untargeted trade policy environment. Sectoral Policy While sectoral policy was consistent in its overall approach, it was designed to achieve political as well as economic endsimpossible. The upper echelons of the military served as political patrons for wealthy Chinese families. Xxxxxxx notes that the bureaucracy widely regarded as having failed to achieve the ability to “operate efficiently and in the public interest, in areas of economic activity outside of the public utilities and educational and other functions the private sector could not fulfill on result was a large scale“ (1994: 94). Economic actors making decisions about the specificity of assets they wished to hold faced a stable, highly particularistic sectoral policy environment. “Corruption and clientelistic networking remained pervasive [High tariffs combined with case-by-case exemptions favored large, connected firms, across the industrial sector. The BoI continued to provide tax-relief based promotion in the Sarit regime]period of instability. Exporting firms were allowed to offset taxes for inputs by applying for exemption status, getting tax rebates after the fact, or using bank guarantees. . maintaining ties with powerful politicoThe BoT also extended a re-bureaucrats was still highly valued by business people for such links helped overcome bureaucratic inconvenience or delay and delivered certain privileges and even contracts” discounting credit option to promote exports (Laothamatas, 1992: 31see Table 3.2.2). “The [Board return to power of Investment] BOI intentionally backed the military in 1976 reaffirmed to the business community the importance of maintaining close ties to powerful officers. As the military struggled to create an institutional configuration that would, at the same time, allow them to distribute side-payments to an expanded coalitional base and take over a group greater share of larger- scale firms in the promoted industries by regulating either the minimum value of initial investments or minimum production capacity, almost all the owners of existing factories were automatically excluded military budget from the programmes. Those who would possibly have had access to this policy were Americans, the only the merchant class in general and a group of large-scale importers of manufactured goods, because clear signal they had already accumulated some capital and knowledge concerning imported goods, importers also had access to foreign exporters, and hence foreign manu- facturer, through their importing business” (Xxxxxxx, 1989). These large firms were also very well connected to Sarit communicated was uncertainty and the militarycontinued importance of political access. “Sarit. . . held interests Items 1974 1976 1978 1980 1981 EEI Products (Millions of Baht) 11.8 2.7 20.3 290.9 442.7 EEI Rediscount as % of Industrial Products 0.28 0.02 0.13 1.04 1.24 EEI Rediscount as % of all Products 0.15 0.02 0.09 0.63 0.82 Source: BoT and Customs Department (cited in nine companies that obtained promotional benefits from BOI; nine of Sarit’s political associates also received BOI status. One source recorded that in 1969 there were 143 government officials or family members who had seats on (Narongchai, 1982) p.2.19) Table 3.4: BoT Rediscounting Credit for the boards of 347 firms” (Muscat, 1994: 113). Sarit had granted control of sectoral policy to loyal supporters and created a system of uncoordinated and conflicting sectoral policy initiatives. 2 2This balkanized sectoral policy-making apparatus proved an effective way to distribute the spoils of rule and was continued through later periods, changing slightly to meet the needs of new rulers in different situations. The scope of these particularistic sectoral policies was bounded by the hard bud- get constraints imposed by Xxxxx’s technocrats. Thus the military rule period had lower levels of clientelism than in earlier years. “Despite the lack of transparency in sectoral policy and the many incentives for rent-seeking, government-business rela- tions changed in both style and substance after 1960. During this period, clientelism between officials and private firms actually declined. There was increasingly more equality between bureaucratic elites and business, and more formal, policy-based con- sultation than during the nationalist period” (Xxxxxxxxxxx, 1993: 134). As expected, the government maintained limits on the extent of particularistic policy. Macroeconomic policy was managed in a relatively predictable manner to achieve broad growth and stability. Size and political clout were prime determinates of BoI promotion but promotional privileges were relatively limited in scope, consist- ing mainly of tax holidays and tariff exemptions on inputs. In a case with stable, mildly particularistic institutions this framework predicts a mix of coordinated and hierarchical economic governance institutions.Electronics Industry

Policy Environment. The With shifting regimes and sudden changes in the rules of the political game, this framework employed in this dissertation suggests that the policy environment under inability of the unified military many veto player governments to over- come problems of collective action and the subsequent regime-uncertainty in this period should be only moderately particularistic. That iscreate a highly particularistic policy environment, it should be evident that those with centralized power limit despite the use of state policies for personal benefit because of external pressures. As indicated in previous chapters, I differentiate between micro and macroeconomic policies. Overall, this period plays out as predicted, with a policy environment that was relatively stable and featured broadly-targeted policies in some areas but was prone to particularism in otherssystemic vulnerabilities. Macroeconomic Policy Macroeconomic policy in this period was uncoordinated and narrowly targeted. The technocrats, who had been insulated by Xxxxx and Xxxxxx were suddenly exposed and expected to meet politically-motivated ends distinct from stable growth. Thai monetary policy became decidedly expansionary under the civilian administration, with politicians directing the BoT to take a more activist role in both stable expanding the money supply. The benefits were targeted toward particular industries and decided by military-approved technocrats that by and large placed economy-wide stability and growth over the interests of any particular firms, families, or cronies. Fiscal and monetary policies were geared towards maintaining a stable exchange rate and avoiding inflation ge- ographic regions (Muscat, 1994). The policy adjustments and fluctuations that occurred over this period were relatively predictable responses to changing external and internal conditions. For example, Finance Minister Xxxxxxx estab- lished a ‘money for transformation’ program that allocated money directly to local government(Anuchitworawong, 2007; Xxxxxx, 1998). Significant banking reforms were enacted in 1979, with the government responded purpose of diluting family ownership and limiting the power and discretion of the key banks (Xxxxx, 1998). Fiscal policy became much less con- servative in this period with money flowing much more freely, with little regard to budgetary and current-account deficits in de- creasing revenues. By the late 1960s with mild demand-restraint measures, relying on substantial foreign reserves as a cushion end of the period significant imbalances developed (Muscat, 1994). Muscatt notes, “Implicit in this combination of balancing trends Trade policy remained dedicated to maximizing state revenues and limitations of policy changes to protecting vulnerability as exogenous and independent. The conclusion considers the cautious and incremental is a very important point easily overlooked: with a sound basic framework in place, incrementalism ensured possibility that the government also avoided major mistakes” (Muscatlevel of vulnerability might impact the number of veto players. powerful firms that had been targeted for promotion under import substitution. Sectoral policy Once the civilian administration had gained control over the policymaking apparatus, 1994: 103)they were expected to deliver policy benefits to those that had elected them. The Sarit dual challenge of reduced US assistance and Xxxxxx regimes were forced a massive spike in oil prices meant that competition to balance between maximizing par- ticularistic benefits and ensuring overall economic stabilitydisburse side-payments was especially fierce. This balancing act was played out in At the relationship between the military leadership and Dr. Pueysame time, the senior technocrat. Xx. Xxxx’x task was size of the coalition made a the creation of a comprehensive system to achieve the policy goals set forth by the military: stability and growth. But the top brass also sought provide public goods to enrich themselves and their political supporters in the military. Xxxxx and Xxxxxx, not being trained in economics, had to rely on conservative technocrats like Dr. Puey to determine how many particularistic policies they could pursue before it endangered overall eco- nomic stability and growth. But because conservative technocrats prefer almost no particularistic policies, the Junta required some way to determine when a recommen- dation made by the technocrat is absolutely critical to overall economic health and when it is simply reflected the technocrat’s conservatism. I argue that Dr. Puey, like his predecessor and his successor, used the threat of resignation to signal that some particularistic policy would place growth and stability at risk. It is important to note that this is not evidence that Dr. Puey had actual veto power. Xxxxx and later Xxxxxx could have had him removed, arrested, or killed without any institutional impediments and little-to-no immediate political cost to themselves. Trade policy was designed to achieve import substitution objectives and maintain government revenues. These goals were also clearly indicated voters all but less consistently followed through on than monetary policy goals. Throughout the Sarit and Thanom governments, tariffs were erected with little economic logic beyond revenue maxi- mization, leading to higher nominal rates of protection on consumer goods than on capital goods and raw materials (Muscat, 1994). Inconsistencies in the application of these policies arose in the issuing of exemptions and rebates through sectoral policy. Economic actors making decisions about the specificity of assets they wished to hold faced a stable, mostly untargeted trade policy environment. Sectoral Policy While sectoral policy was consistent in its overall approach, it was designed to achieve political as well as economic endsimpossible. The upper echelons of the military served as political patrons for wealthy Chinese families. Xxxxxxx notes that the bureaucracy widely regarded as having failed to achieve the ability to “operate efficiently and in the public interest, in areas of economic activity outside of the public utilities and educational and other functions the private sector could not fulfill on result was a large scale“ (1994: 94). Economic actors making decisions about the specificity of assets they wished to hold faced a stable, highly particularistic sectoral policy environment. “Corruption and clientelistic networking remained pervasive [High tariffs combined with case-by-case exemptions favored large, connected firms, across the industrial sector. The BoI continued to provide tax-relief based promotion in the Sarit regime]period of instability. Exporting firms were allowed to offset taxes for inputs by applying for exemption status, getting tax rebates after the fact, or using bank guarantees. . maintaining ties with powerful politicoThe BoT also extended a re-bureaucrats was still highly valued by business people for such links helped overcome bureaucratic inconvenience or delay and delivered certain privileges and even contracts” discounting credit option to promote exports (Laothamatas, 1992: 31see Table 3.2.2). “The [Board return to power of Investment] BOI intentionally backed the military in 1976 reaffirmed to the business community the importance of maintaining close ties to powerful officers. As the military struggled to create an institutional configuration that would, at the same time, allow them to distribute side-payments to an expanded coalitional base and take over a group greater share of larger- scale firms in the promoted industries by regulating either the minimum value of initial investments or minimum production capacity, almost all the owners of existing factories were automatically excluded military budget from the programmes. Those who would possibly have had access to this policy were Americans, the only the merchant class in general and a group of large-scale importers of manufactured goods, because clear signal they had already accumulated some capital and knowledge concerning imported goods, importers also had access to foreign exporters, and hence foreign manu- facturer, through their importing business” (Xxxxxxx, 1989). These large firms were also very well connected to Sarit communicated was uncertainty and the militarycontinued importance of political access. “Sarit. . . held interests Items 1974 1976 1978 1980 1981 EEI Products (Millions of Baht) 11.8 2.7 20.3 290.9 442.7 EEI Rediscount as % of Industrial Products 0.28 0.02 0.13 1.04 1.24 EEI Rediscount as % of all Products 0.15 0.02 0.09 0.63 0.82 Source: BoT and Customs Department (cited in nine companies that obtained promotional benefits from BOI; nine of Sarit’s political associates also received BOI status. One source recorded that in 1969 there were 143 government officials or family members who had seats on (Narongchai, 1982) p.2.19) Table 3.4: BoT Rediscounting Credit for the boards of 347 firms” (Muscat, 1994: 113). Sarit had granted control of sectoral policy to loyal supporters and created a system of uncoordinated and conflicting sectoral policy initiatives. 2 2This balkanized sectoral policy-making apparatus proved an effective way to distribute the spoils of rule and was continued through later periods, changing slightly to meet the needs of new rulers in different situations. The scope of these particularistic sectoral policies was bounded by the hard bud- get constraints imposed by Xxxxx’s technocrats. Thus the military rule period had lower levels of clientelism than in earlier years. “Despite the lack of transparency in sectoral policy and the many incentives for rent-seeking, government-business rela- tions changed in both style and substance after 1960. During this period, clientelism between officials and private firms actually declined. There was increasingly more equality between bureaucratic elites and business, and more formal, policy-based con- sultation than during the nationalist period” (Xxxxxxxxxxx, 1993: 134). As expected, the government maintained limits on the extent of particularistic policy. Macroeconomic policy was managed in a relatively predictable manner to achieve broad growth and stability. Size and political clout were prime determinates of BoI promotion but promotional privileges were relatively limited in scope, consist- ing mainly of tax holidays and tariff exemptions on inputs. In a case with stable, mildly particularistic institutions this framework predicts a mix of coordinated and hierarchical economic governance institutions.Electronics Industry