The Interrelationship between Formal and Informal Decentralization and its Impact on Sub-Central Governance Performance: The Case of Vietnam
Thanh Thuy Vu
Université Paris X Nanterre
University Paris West La Défense
Université Paris 2 Panthéon Assas
January 31, 2012
CESifo Working Paper Series No. 3714
Formal and informal institutions are often viewed as complements or substitutes in empirical and theoretical works. However, no evidence of complementarities or substitutes is found in our empirical analysis of the interrelation between formal and informal decentralization across 64 provinces of Vietnam. This paper finds that the formally decentralized system of public service supply is accommodating the informal one, but informal decentralization in public order provision tends to compete with the existing ineffective formal system. This implies that the central government needs to reorganize the system of decentralizing the provision of public goods/services and public in order to make informal institutions complementary rather than rival or free-riding on formal ones.
Number of Pages in PDF File: 29
Keywords: formal decentralization, informal decentralization, sub-central governance, accommodating, and competing
JEL Classification: D730, H110, H730, H830, K000working papers series
Date posted: February 2, 2012
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