The impact of corruption on provincial development performance in Vietnam

Crime Law Soc Change (2016) 65:325350

DOI 10.1007/s10611-016-9608-8

Quang Vinh Dang1

Published online: 18 February 2016# Springer Science+Business Media Dordrecht 2016

Abstract Corruption has long been considered a national illness in Vietnam but progress in fighting corruption has been modest. In recent years, the Communist Party of Vietnam and the Government of Vietnam have strengthened their efforts to prevent and fight corruption. Despite strong anti-corruption measures being implemented at the national level, provincial authorities have shied away from tackling corruption. One of the reasons for this could be that it is not clear to provincial authorities if and how corruption is affecting local development economically and socially. This article demonstrates that corruption has a negative impact on private sector investment, employment and per capita income at the provincial level in Vietnam. However, corruption is found to have no significant impact on how income is distributed across provinces. The findings demonstrate that more effective anti-corruption measures are necessary to promote the private sector and improve household income. The study provides provincial leaders with empirical evidence and incentives for fighting corruption.

Introduction

Corruption is generally viewed in the larger academic literature as a hindrance to economic growth and development. Corruption discourages investment by increasing costs and reducing certainty in the business environment. It negatively impacts efficiency by diverting valuable resources from the public coffers into private pockets, and from efficient projects to inefficient ones.

This article is an edited version of a paper by the same title, which was presented at the 2014 Vietnam Economist Annual Meeting (VEAM), Ho Chi Minh City, 2425 June 2014 and the Costs of Corruption in Vietnam Research Symposium, Hanoi, 2526 June 2014.

* Quang Vinh [email protected]; [email protected]

1 Central Institute for Economic Management (CIEM), Ministry of Planning and Investment,

Vitenam, Hanoi, Vietnam

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326 D. Quang Vinh

In Vietnam, as pointed out in the 2012 Governments report to the National Assembly (Nguoi lao dong 2012) corruption has long been named a national problem that threatens the existence of the regime....