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The Disparity of Revenue and Expenditure among Subnational Governments in Vietnam

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  • Duc Hong Vo
  • Thuan Nguyen
  • Dao Thi-Thieu Ha
  • Ngoc Phu Tran

Abstract

Fiscal decentralization has attracted attention from government, academic studies, and international institutions with the aims of enhancing economic growth in recent years. One of the difficult issues is to measure satisfactorily the degree of fiscal decentralization across countries. The fiscal decentralisation index, the first of its kind, was recently developed in 2010. This newly developed index accounts for both fiscal autonomy and fiscal importance of subnational governments. We argue that while Vo’s index is an advance on current practice, it is still not perfect as it assumes there is no dispersion of revenue and expenditure across regions. In response to this weakness, fiscal entropy and fiscal inequality measures are developed using information theory. It is shown how fiscal inequality can be decomposed regionally and hierarchically. These ideas are illustrated with an emerging country data—Vietnam—pertaining to the national, provincial, and local levels of governments.

Suggested Citation

  • Duc Hong Vo & Thuan Nguyen & Dao Thi-Thieu Ha & Ngoc Phu Tran, 2021. "The Disparity of Revenue and Expenditure among Subnational Governments in Vietnam," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(1), pages 163-174, January.
    • Handle: RePEc:mes:emfitr:v:57:y:2021:i:1:p:163-174
    DOI: 10.1080/1540496X.2019.1605896
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    References listed on IDEAS

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    1. Duc Vo, 2009. "Fiscal decentralisation in Vietnam: lessons from selected Asian nations," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 14(4), pages 399-419.
    2. Davoodi, Hamid & Zou, Heng-fu, 1998. "Fiscal Decentralization and Economic Growth: A Cross-Country Study," Journal of Urban Economics, Elsevier, vol. 43(2), pages 244-257, March.
    3. Duc Hong Vo, 2010. "The Economics Of Fiscal Decentralization," Journal of Economic Surveys, Wiley Blackwell, vol. 24(4), pages 657-679, September.
    4. Zhang, Tao & Zou, Heng-fu, 1998. "Fiscal decentralization, public spending, and economic growth in China," Journal of Public Economics, Elsevier, vol. 67(2), pages 221-240, February.
    5. Bird, Richard M. & Smart, Michael, 2002. "Intergovernmental Fiscal Transfers: International Lessons for Developing Countries," World Development, Elsevier, vol. 30(6), pages 899-912, June.
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    Cited by:

    1. Phuong Duy Nguyen & Duc Hong Vo & Chi Minh Ho & Anh The Vo, 2019. "Fiscal Decentralisation and Economic Growth across Provinces: New Evidence from Vietnam Using a Novel Measurement and Approach," JRFM, MDPI, vol. 12(3), pages 1-13, September.

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    More about this item

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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