04 Jun 2008  Working Papers

Accountability and Inequality in Single-Party Regimes: A Comparative Analysis of Vietnam and China

Executive Summary — While both China and Vietnam have experienced rapid annual growth over the past two decades, income inequality has risen more rapidly in China than in Vietnam during the same period. Structural and socio-cultural determinants fail to account for these divergent paths, as nearly every variable predicts higher inequality in Vietnam. This paper by Regina Abrami and colleagues focuses on differences in political institutions to explain these divergent paths. In so doing, it contributes to a growing body of literature describing variation in authoritarian regimes, but focuses on variation within one authoritarian regime type. Key concepts include:

  • Compared with China, Vietnam's institutions empower a larger group of insiders and place far more constraints on the party leadership, both through vertical checks and through semi-competitive elections. As a result, Vietnamese economic policies must consider a larger cross section of society.
  • Vietnam spends a far larger portion of its revenue on transfers, and has been able to engender greater equalization among provinces and individuals.
  • It is still too early to tell whether the development paths in China and Vietnam will converge or diverge.
  • Growing income inequality has pressured the Chinese government to shift its focus from promoting all-out economic growth to solving social tensions.

 

Author Abstract

Over the past two decades, no two economies have averaged more rapid economic growth than China and Vietnam. But while China's income inequality has risen rapidly over that same time frame, Vietnam's has only grown moderately. Structural and socio-cultural determinants fail to account for these divergent pathways. Existing political variables are also unhelpful. China and Vietnam are coded in exactly the same way, even in the path-breaking work on authoritarian regimes. In this paper, we take a deeper look at political institutions in the two countries, demonstrating that profound differences between the polities directly impact distributional choices. In particular, we find that Vietnamese elite institutions require construction of broader coalitions of policymakers, place more constraints on executive decision making, and have more competitive selection processes. As a result, there are stronger political motivations for Vietnamese leaders to provide equalizing transfers that limit inequality growth.

Paper Information