The influence of fiscal transparency on expenditure by regional and provincial governments in Vietnam

The intricate relationship between budget transparency and government expenditure has been confirmed, with a particular focus on how these dynamics are influenced by spatial and temporal factors. This study deals with the spatio-temporal effects of transparent communal budgets on local government spending, specifically across the 63 provinces in Vietnam. By analyzing data over time, the study uncovers critical insights into how the disclosure of budget information influences government spending patterns, both in the short term and the long term. The findings reveal a nuanced relationship, where both the direct and indirect effects of budget transparency on expenditure tend to be negative, suggesting that increased transparency may lead to a reduction in government spending. This trend is observed from both a short-term perspective, where immediate changes in budget disclosure affect spending, and a long-term perspective, where the effects of sustained transparency become more evident. The study highlights significant regional disparities in the impact of budget transparency on government expenditure. It finds that the influence of budget disclosure is less pronounced in northern Vietnam compared to the southern regions. The results advocate for policies that support targeted resource allocation at the provincial or regional levels. Such tailored approaches are essential for achieving more effective and equitable government budget management, ensuring that transparency initiatives are adapted to the specific needs and conditions of different regions within Vietnam. Overall, this research contributes to the broader understanding of how transparency in budgetary processes can influence government spending. By highlighting the spatial and temporal dimensions of this relationship, the study provides valuable insights for policymakers seeking to enhance fiscal accountability and optimize public resource allocation in Vietnam.