Fiscal Decentralization, Fiscal Incentives, and Pro-Poor Outcomes: Evidence from Viet Nam

Publication | July 2009

This paper presents how the Viet Nam government has used fiscal incentives including resources and responsibility as effective management tools to improve the likelihood of achieving pro-poor outcomes.

This paper sttates that the key to achieving pro-poor results under fiscal decentralization is to introduce an appropriate system of fiscal incentives. While central governments may have an explicit poverty reduction strategy, and may generally expect that local governments should have a hand in achieving policy objectives identified in this strategy, the system of fiscal incentives, including resources, responsibility, autonomy, and accountability are what actually guide or motivate local government behavior. This paper documents how fiscal incentives including resources and responsibility have been used as effective management tools by the Government of Viet Nam to improve the likelihood of achieving pro-poor outcomes; however, further gains in this area must also be supported by encouraging fiscal autonomy and fiscal accountability at the local government level.


  • Abstract
  • Introduction
  • Exploring the Theoretical Relationship between Fiscal Decentralization and Poverty Reduction
  • Conceptual Framework
  • Case Study: Poverty Reduction and Public Expenditure in Viet Nam
  • Case Study: Fiscal Decentralization and Pro-Poor Outcomes in Viet Nam
  • Conclusions
  • Appendix: Assignment of Expenditure Responsibilities in Viet Nam
  • References

Additional Details

  • Economics
  • Poverty
  • Viet Nam
  • 1655-5252 (Print)

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