Do good governance and public administration improve economic growth and poverty reduction? The case of Vietnam

In this study, we examine how governance and public administration quality can affect per capita income, income inequality, and poverty using provincial-level data in Vietnam. Governance and public administration quality are measured by the Vietnam Governance and Public Administration Performance Index (PAPI) surveys, which collect data on citizens’ experiences with and perception of provincial performance in governance and public. Using province fixed-effect regressions, we find a positive and nonlinear association between governance and public administration and per capita income. Better performance of governance and public administration also appears to improve income distribution and reduces poverty. The association between governance quality and poverty severity is larger than the association between governance quality and poverty headcount. This finding implies that, within a province, better governance and public administration are most beneficial for the poorest of the poor.