Fiscal Innovation for Enhancing Local Government Revenues: Lessons from Area-Based Research on Thai Local Administrative Organizations
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Abstract
Although Thai local administrative organizations (LAOs) have continuously been assigned an increasing number of public service responsibilities under the decentralization process, their capacity to generate local revenue remains constrained by legal frameworks, fiscal authority, and central government oversight. This condition has generated an important debate regarding the capacity of local governments to achieve fiscal sustainability on their own. This study aims to examine and synthesize the place-based mechanisms of fiscal innovation that contribute to local revenue development under Thailand’s institutional constraints. It employed a qualitative multiple-case study design combined with Participatory Action Research (PAR) in four local administrative organizations: Don Kaew Subdistrict Administrative Organization, Mueang Phrae Municipality, Krabi Provincial Administrative Organization, and Songkhla Provincial Administrative Organization. Data were collected through documentary analysis, in-depth interviews, focus group discussions, co-design and innovation experimentation workshops with stakeholders, and analysis of service and financial data before and after implementation. The findings reveal that fiscal innovations that can enhance local revenue are not limited to the introduction of new taxes or fees. Rather, they constitute “hybrid fiscal innovation,” which integrates different types of innovations, including revenue, process, and digital, and behavioral and participatory, under the specific conditions of each locality. However, revenue outcomes do not emerge automatically; instead, they depend on legal readiness, organizational capacity, local leadership, collaboration among network partners, and public acceptance. In addition, the development of fiscal innovation continues to face constraints arising from a centralized fiscal structure, regulatory uncertainty, and the challenge of balancing revenue generation with local governments’ public service mission. This article proposes an analytical framework for place-based fiscal innovation to explain how local administrative organizations adapt under institutional constraints. It argues that the success of fiscal innovation does not result from financial instruments alone but from processes of learning, legitimacy-building, and relationship management among local stakeholders. These findings lead to policy recommendations for developing policy sandbox mechanisms and creating an institutional environment conducive to the sustainable development of local fiscal innovation.
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