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What is in it for the poor? Evidence from fiscal decentralization in Vietnam

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  • Nguyen, Hoang-Phuong

Abstract

Like other developing countries, Vietnam has attempted to push for greater fiscal decentralization in the hope of a more efficient delivery of social services to targeted citizens. The fiscal decentralization initiative is encouraging and merits pursuit, but the present study however, shows that a misstep in the decentralization process can discriminate disproportionately against the poor. Specifically, an increase in the sub-provincial share of the total provincial expenditures is predicted to bring about an appreciable decrease in the lowest-quintile average monthly income. We suggest that the Vietnamese government require provinces to adopt pro-poor allocation norms rather than reclaiming its control over the provincial expenditure assignment. This paper’s empirical findings sound a note of considerable caution that other developing countries should exercise in their fiscal decentralization efforts to avoid creating unintended consequences for the poor.

Suggested Citation

  • Nguyen, Hoang-Phuong, 2008. "What is in it for the poor? Evidence from fiscal decentralization in Vietnam," MPRA Paper 9344, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:9344
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    References listed on IDEAS

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    1. G. Gulsun Arikan, 2004. "Fiscal Decentralization: A Remedy for Corruption?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(2), pages 175-195, March.
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    4. Jorge Martinez-Vazquez, 2005. "Making Fiscal Decentralization Work in Vietnam (2005)," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0513, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    5. Jorge Martinez-Vazquez & James Alm (ed.), 2003. "Public Finance in Developing and Transitional Countries," Books, Edward Elgar Publishing, number 2595.
    6. Jorge Martinez-Vazquez, 2004. "Making Fiscal Decentralization Work in Vietnam," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0404, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    7. Rao, M.,Govinda, 2000. "Fiscal Decentralization in Vietnam: Emerging Issues," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 41(2), pages 163-177, December.
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    More about this item

    Keywords

    Fiscal decentralization; Vietnam; poverty reduction;
    All these keywords.

    JEL classification:

    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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