Does fiscal decentralization reduce energy poverty? Evidence from Vietnam
- Mỹ Huyền Trần
- Oct 3
- 2 min read
This study, conducted by Dr. Nguyen Phuc Canh (HAPRI’s Senior Researcher) together with his colleagues, investigates the relationship between fiscal decentralization and energy poverty in Vietnam, using household- and provincial-level data from 2004 to 2018.
The research applies a wide range of econometric approaches, including OLS, instrumental variables, and system GMM, to examine whether greater fiscal autonomy at the provincial level reduces energy poverty. Energy poverty is measured through multiple indicators, such as affordability, expenditure burden, access to modern appliances, and a multidimensional energy poverty index.
The findings reveal that fiscal decentralization significantly reduces energy poverty. Specifically, a one standard deviation increase in decentralization is associated with a 0.3-1.3 percentage point decrease in the likelihood of energy poverty at the household level and 0.3-1.6 percentage points at the provincial level. The effects are stronger for lower-income households and poorer regions, suggesting that fiscal autonomy enables local governments to better address local energy needs.
Importantly, the results hold under both narrow (retained revenue) and broad (retained plus shared revenue) definitions of fiscal decentralization. However, the narrow measure tends to show stronger impacts, highlighting the importance of direct fiscal control for local governments.
Policy implications emphasize that fiscal decentralization can be an effective tool to alleviate energy poverty, particularly when local governments are empowered to allocate resources efficiently. This suggests that ongoing fiscal reforms in Vietnam should continue to strengthen local fiscal capacity, especially in disadvantaged regions, to ensure more equitable access to modern energy services.
This study contributes new evidence to the literature on fiscal policy and energy poverty in developing countries, underscoring how decentralization can support both social welfare and energy equity.
Keywords:
Fiscal decentralization
Energy poverty
Fiscal revenue
Fiscal expenditure
Developing country
Link:
Citation:
Doan, N., Nguyen, C. P., & Su, T. D. (2025). Does fiscal decentralization reduce energy poverty? Evidence from Vietnam. Energy Policy, 207, 114845, DOI: https://doi.org/10.1016/j.enpol.2025.114845
Phan Thi Kim Ngan
