Lien Nguyen Phuong

Main Article Content

Abstract

To investigate the role of governance and economic growth at provincial level, this study conducts 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 (here after I call “governance”) and economic growth. This research evaluates the governance at provincial level by tax revenue and provincial competitiveness index. Running 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 1% in three models. Notably, the effects of components of tax revenue and sub-provincial competitiveness on growth are diverse. Furthermore, student rate, and poverty rate relate negatively to economic growth. These findings imply that, the policy makers should focus on the increasing provincial competitiveness index as well as setting up the effective collection tax system for rising growth. Moreover, the local governors had better providing variety of career options to reduce both ratios of student and poverty for sustainable developing economies in their areas.