To investigate the role of governance and economic growth at the provincial level, this study conducted the Granger causality test for a panel data of 60 provinces in Vietnam from 2006 to 2014 and found that there is an existence of bi-directional causality linkage between provincial competitiveness (hereafter we call “governance”) and economic growth. | VNU Journal of Science: Economics and Business, Vol. 33, No. 2 (2017) 38-48 Causal Linkage among Tax Revenue, Provincial Competitiveness and Economic Growth at the Provincial Level: Evidence from Vietnam Nguyen Phuong Lien* Hoa Sen University, 8 Nguyen Van Trang, Dist. 1, Ho Chi Minh City, Vietnam Received 3 March 2017 Revised 10 June 2017, Accepted 26 June 2017 Abstract: To investigate the role of governance and economic growth at the provincial level, this study conducted the Granger causality test for a panel data of 60 provinces in Vietnam from 2006 to 2014 and found that there is an existence of bi-directional causality linkage between provincial competitiveness (hereafter we call “governance”) and economic growth. Furthermore, running a two-step system generalized method of moments estimation (SGMM), this work shows the general provincial competitiveness index and tax revenue have a significantly positive impact on economic growth at a 1% level in three models. Notably, the effects of components of tax revenue and sub-provincial competitiveness on growth are diverse. In addition, student rate, and poverty rate relate negatively to economic growth. These findings imply that policymakers should focus on the increasing provincial competitiveness index as well as setting up an effective tax collection system for rising growth. Moreover, local governors are better providing variety of career options to reduce both ratios of student and poverty for sustainable developing economies in their areas. Keywords: Governance, tax revenue, provincial competitiveness index, economic growth, Granger causality test, SGMM. 1. Introduction * poverty rate will promote the rising of the economy [2]. Much less attention has been paid to assess the effect of the provincial competitiveness index on growth. Furthermore, in the past two decades, there has been little in the literature to shed light on the capability of provincial governance in an emerging market such as that of .
