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

Hoang-Phuong Nguyen

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Fiscal decentralization; Vietnam; poverty reduction (search for similar items in EconPapers)
JEL-codes: H83 H87 (search for similar items in EconPapers)
Date: 2008-01
New Economics Papers: this item is included in nep-pbe and nep-tra
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Published in Journal of Public and International Affairs 19 (2008): pp. 69-90

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