Spatiotemporal impact of fiscal decentralization and economic growth: evidence at provincial level in Vietnam

This study examines the spatiotemporal impact of fiscal decentralization on economic growth at the provincial level in Vietnam with data from 2010 to 2018. The results show a complex relationship where the direct, indirect, and total effects of fiscal decentralization on economic growth are positive in the short-term but negative in the long-term. Additionally, this study shows that the North tends to use fiscal decentralization resources for growth purposes more effectively than the South. These results confirm that it is necessary to take into account both similarities and differences in local contexts in estimating the impact of fiscal decentralization. Thereby, our results suggest that fiscal decentralization policy should focus on some key provinces/regions to achieve optimal growth before the diminishing effectiveness increases in the long-term.