Abstract
Since the beginning of the renovation process or “Doi Moi” in 1986, Vietnam’s economy has experienced relatively high economic growth. Besides greater openness in trade and investment, governance reform has been one of the driving forces of the country’s fast and sustainable growth. Fiscal decentralisation has been one of the key reforms that saw central government granting more fiscal autonomy to provincial governments, who now have a greater discretion than before in collecting and distributing resources for developmental purposes in their jurisdictions. Using a newly available provincial panel dataset, this paper examines the effects of fiscal decentralization on economic growth in Vietnam for the period 2004–2010 by applying new proxy measures of fiscal decentralisation as the ratio of different types of revenue over total expenditure of provinces. The results suggest a significant positive effect of fiscal decentralisation on provincial economic growth in Vietnam. The empirical models adopted also address the concerns of endogeneity and unobserved heterogeneity between provinces.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Similar content being viewed by others
Notes
- 1.
Vietnam currently has 63 provinces after Ha Tay province was merged into Hanoi in 2008.
- 2.
Nguyen-Hoang and Schroeder (2010)
References
Bardhan, P. (2002). Decentralization of governance and development. Journal of Economic Perspectives, American Economic Association, 16(4), 185–205.
Davoodi, H., & Zou, H. -F. (1998). Fiscal decentralization and economic growth. Journal of Urban Economics, 43, 244–257.
de Mello, L. R. (2000). Fiscal decentralization and intergovernmental fiscal relations.
Ding, S., & Knight, J. (2009). Can the augmented Solow model explain China’s remarkable economic growth? A cross-country panel data analysis. Journal of Comparative Economics, 37(3), 432–452.
Faguet, J. -P., & Sánchez, F. (2008). Decentralization’s effects on educational outcomes in Bolivia and Colombia. World Development, 36(7), 1294–1316. doi:10.1016/j.worlddev.2007.06.021
Kalirajan, K., & Otsuka, K. (2012). Fiscal decentralization and development outcomes in India. World Development, Elsevier, 40(8), 1511–1521.
Lin, J. Y., & Liu, Z. (2000). Fiscal decentralization and economic growth in China. Economic Development and Cultural Change, 49(1), 1–21.
Martinez-Vazquez, J., & Robert, M. (2003). Fiscal decentralization and economic growth, World Development, 31(9), 1597–1661.
Martinez-Vazquez, J. (2005). Making fiscal decentralization work in Vietnam.
Nguyen, L. P., & Anwar, S. (2011). Fiscal decentralisation and economic growth in Vietnam. Journal of the Asia Pacific Economy, 16(1), 3–14.
Nguyen-Hoang, P., & Schroeder, L. (2010). An analysis of quasi-decentralized budgeting in Vietnam. International Journal of Public Administration, 33, 698–709.
Oates, W. E. (1999). An essay on fiscal federalism. Journal of Economic Literature, 37, 1120–1121.
Tiebout, C. (1956). A pure theory of local expenditures. Journal of Political Economy, 64, 416–424.
Vo, D. H. (2009). Fiscal decentralisation in Vietnam: lessons from selected Asian nations. Journal of the Asia Pacific Economy, 14(4), 399–419.
Wu, A. M., & Wang, W. (2013). Determinants of expenditure decentralization: Evidence from China. World Development, 46, 176–184.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Appendix
Appendix
See Fig. A.1
Rights and permissions
Copyright information
© 2017 Springer Nature Singapore Pte Ltd.
About this chapter
Cite this chapter
Nguyen, T.D. (2017). Fiscal Decentralisation and Economic Growth: Evidence from Vietnam. In: Cooray, N., Abeyratne, S. (eds) Decentralization and Development of Sri Lanka Within a Unitary State. Springer, Singapore. https://doi.org/10.1007/978-981-10-4259-1_13
Download citation
DOI: https://doi.org/10.1007/978-981-10-4259-1_13
Published:
Publisher Name: Springer, Singapore
Print ISBN: 978-981-10-4258-4
Online ISBN: 978-981-10-4259-1
eBook Packages: Economics and FinanceEconomics and Finance (R0)