ABSTRACT
State effectiveness, understood as a government’s ability to collect taxes, build roads, and provide access to clean water, education, and healthcare, is closely associated with economic performance in the developing world. Vietnam is an interesting case in that its state has demonstrated considerable capacity in some policy areas but not in others. Vietnam’s long history of hierarchically organized and meritocratic institutions have contributed to its transformation from an impoverished, war-ravaged country into a thriving middle-income economy in less than three decades. However, some characteristics of the reform process have had a negative impact on state effectiveness. In key respects, Vietnam’s transition from central planning to the market occurred mainly within the state, with the implication that the bureaucracy has never been able to act autonomously with respect to commercial elites. A related process is the fragmentation of authority, horizontally across sectors and agencies and vertically between central and provincial government. The result has been a process of state commercialization that has undermined coherence and reduced the state’s capacity to discipline its functionaries and elite factions. Addressing these problems is vitally important, but poses challenges; it will require both a process of recentralization that achieves clearer separation between the regulatory and investment functions of the state and new forms of public participation to create a check on the abuse of power for personal gain.
