Main Article Content
To investigate the role of governance and economic growth at the provincial level, this study conducted the Granger causality test for a panel data of 60 provinces in Vietnam from 2006 to 2014 and found that there is an existence of bi-directional causality linkage between provincial competitiveness (hereafter we call “governance”) and economic growth. Furthermore, running a two-step system generalized method of moments estimation (SGMM), this work shows the general provincial competitiveness index and tax revenue have a significantly positive impact on economic growth at a 1% level in three models. Notably, the effects of components of tax revenue and
sub-provincial competitiveness on growth are diverse. In addition, student rate, and poverty rate relate negatively to economic growth. These findings imply that policymakers should focus on the increasing provincial competitiveness index as well as setting up an effective tax collection system for rising growth. Moreover, local governors are better providing variety of career options to reduce both ratios of student and poverty for sustainable developing economies in their areas.
Governance, tax revenue, provincial competitiveness index, economic growth, Granger causality test, SGMM
 Jenkins, R., “Vietnam in the global economy: Trade, employment and poverty”, Journal of International Development, 16 (2004) 1, 13-28. https://doi.org/10.1002/jid.1060.
 Acemoglu, D., & Robinson, J. A., Why nations fail: the origins of power, prosperity, and poverty. Crown Publishing Group, New York: Crown Publishing Group, 2012.
 Amsden, A. H., Asian’s next giant South Korea and late industrialization, Oxford: Oxford University Press, 1989.
 Acemoglu, D., García-Jimeno, C., & Robinson, J., “State Capacity and Economic Development: A Network Approach”, American Economic Review, 105 (2015) 8, 2364-2409. https://doi.org/10.1257/aer.20140044
 Dincecco, M., & Katz, G., “State capacity and long-run performance” (BEHL working paper No. WP2013-01). APSA 2012 Annual Meeting Paper. BEHL, 2012. https://doi.org/10.2139/ssrn.2044578
 Phan, H. V., “Effects of changes in provincial governance on the economic performance of the business sector: An empirical study using Vietnam’ s Provincial Competitiveness Index”, WASEDA Business & Economic Studies 2013 No. 49, Hanoi.
 William, R., “Are big city businesses more profitable than other firms?”, Managerial Finance, 39 (2013) 11, 1100-1119.
 Knutsen, C. H., “Democracy, State Capacity, and Economic Growth”, World Development, 43 (2013), 1-18. https://doi.org/10.1016/j.worlddev.2012.10.014.
 Majid, R. A., Mohamed, N., Haron, R., Omar, N. B., & Jomitin, B., “Misappropriation of Assets in Local Authorities: A Challenge to Good Governance”, Procedia - Social and Behavioral Sciences, 164 (August 2014), 345-350.
 Hakim, T. A., & Bujang, I., “The impact and consequences of tax revenues’ components on economic indicators: Evidence from panel group data”, International Trade from Economic and Policy Perspective 63 (2012), 82-95. https://doi.org/dx.doi.org/10.5772/48415
 Acemoglu, D., “Institutions, factor prices, and taxation: Virtues of strong states?”, American Economic Review, 100 (2010) 2, 115-119. https://doi.org/10.1257/aer.100.2.115.
 Barro, R. J., “Economic growth in a cross section of countries”, Quarterly Journal of Economics, 106 (1991) 2, 407-443. https://doi.org/10.2307/2937943.
 Barro, R., & Sala-i-Martin, X., “Public finance in models of economic growth”, Review of Economic Studies, 59 (1992) 4, 645-661.
 Cooray, A., “Government Expenditure, Governance and Economic Growth”, Comparative Economic Studies, 51 (2009) 3, 401-418. https://doi.org/10.1057/ces.2009.7.
 Helms, J. L., “The effect of state and local taxes on economic development: A meta-analysis”, Review of Economics and Statistics, 67 (1985) 4, 574-582. https://doi.org/10.2307/1060685.
 Alm, J., Jackson, B., & McKee, M., “Institutional uncertainty and taxpayer compliance”, American Economic Review, 82 (1992) 4, 1018-1026. https://doi.org/10.2307/2117358.
 Bird, R. M., & Martinez-Vazquez, J., “Tax effort in developing countries and high income countries: The impact of corruption, voice and accountability”, Economic Analysis and Policy, 38 (2008) 1, 55-71. https://doi.org/10.1016/S0313-5926(08)50006-3.
 Krugman, P. R., Obstfeld, M., & Melitz, M. J., International economics theory & policy, Ninth, Boston: Pearson, 2012. https://doi.org/10987654321.
 Evans, P., Embedded Autonomy State and industrial transformation, Princeton, New Jersey: Princeton University Press, 1995. https://doi.org/10987654321.
 Johnson, C., Miti and the Japanese Miracle The Growth of Industrial Policy, California: Stanford University Press, 1982.
 Granger, C. W. J., “Investigating causal relations by econometric models and cross-spectral methods”, Econometrica, 37 (1969) 3, 424-438.
 Hurlin, C., “Testing Granger Causality in Heterogenous Panel Data Models with Fixed Coefficients”, LEO Documents de Recherche, 10 (January 2004). http://www.univ-orleans.fr/leo
 Yousefi, A., “A Panel Granger causality test of investment in ICT capital and economic growth: Evidence from developed and developing countries”, Economics World, 3 (2015) 5-6, 109-127. https://doi.org/10.17265/2328-7144/2015.0506.001.
 Anh, V. T. T., Thai, L. V., & Thang, V. T., Provincial Extralegal Investment Incentives in the Context of Decentralisation in Viet Nam: Mutually Beneficial or a Race to the Bottom? (UNDP-Vietnam Discussion Papers on Topics Relating to Decentralisation and Economic Performance No. 5088790–1), Forum American Bar Association, Hanoi, 2007.
 Mankiw, N. G., Romer, D., & Weil, D. N., “A contribution to the empirics of economic growth”, Quarterly Journal of Economics, May 1992, 407-437.
 Baltagi, B. H., Econometric analysis of panel data, West Sussex PO19 8SQ, England: JohnWiley & Sons Ltd., 2005.
 Arellano, M., & Bond, S., “Some tests of specification for panel carlo application to data: Evidence and an employment equations”, Review of Economic Studies, 58 (1991) 2, 277-297.
 d’Agostino, G., Dunne, J. P., & Pieroni, L., “Corruption, military spending and growth”, Defence and Peace Economics, 23 (2012) 6, 591-604.
 Sasaki, Y., “Heterogeneity and selection in dynamic panel data”, Journal of Econometrics, 188 (2015), 236-249. https://doi.org/10.1016/j.jeconom.2015.05.002.
 Barro, R. J., “Government spending in a simple model of endogenous growth”, Journal of Political Economy, 98 (1990) 5, S130-S125. https://doi.org/10.1086/261726.
 Acemoglu, D., Johnson, S., Robinson, J. A., “Colonial origins of comparative development: An empirical investigation”, American Economic Review 91 (2001), 1369-1401.
 Windmeijer, F., “A finite sample correction for the variance of linear e cient two-step GMM estimators”, Journal of Econometrics, 126 (2005), 25-51. https://doi.org/10.1016/j.jeconom.2004.02.005.
 Hansen, L. P., “Large sample properties of generalised method of moments estimators”, Econometrica, 50 (1982) 4, 1029-1054. https://doi.org/10.2307/1912775.
 Hsiao, C., Analysis of panel data, Cambridge: Cambridge University Press, 2003.
 Wooldridge, J. M., Econometric analysis of cross section and panel data, London: MIT, 2010. https://doi.org/10.1515/humr.2003.021.
 Dickey, D., A., & Fuller, W., A., “Distribution of the estimators for autoregressive time series with a unit root”, Journal of the American Statistical Association, 74 (1979), 427-431.
 Phillips, P.C.B., P. Perron, “Testing for a unit root in time series regression”, Biometrika 75. (1988), 335-346.
 Spence, M., The next convergence, Washington: Picador, 2011.