Fiscal decentralisation and economic growth in Vietnam

By making use of a recently released panel dataset that covers 61 provinces of Vietnam, this paper examines the link between fiscal decentralisation and economic growth. Significant fiscal decentralisation has taken place in Vietnam from the mid-1990s. This paper explicitly considers the effect of fiscal decentralisation on economic growth (1) under the 1996 State Budget Law, which covered the period 1996 to 2001, and (2) under the 2002 State Budget Law, which covered the period 2002 to 2007. Our empirical analysis reveals that economic growth in Vietnam is positively associated with revenue decentralisation but negatively associated with expenditure decentralisation.