The impact of land development imbalance on local government budget balance: Evidence from Vietnam’s provinces and cities

Abstract

This study analyzes the trade-off between the national goal of ensuring food security and the need for local governments in Viet Nam to enhance their fiscal autonomy, which is heavily reliant on land-based revenues. Using a panel dataset for all 63 provinces from 2014-2023, the research constructs an index that reflects the disparity between the planned land structure and economic development potential. The analysis results show that a higher degree of this imbalance leads to a decline in local fiscal autonomy. This finding provides concrete quantitative evidence of the negative fiscal impact of land use planning policy: must accept a reduction in their potential revenue. Academically, the research clarifies the link between spatial planning and public finance. Policy-wise, the results provide a basis for reconsidering inter-governmental fiscal mechanisms, aiming to establish appropriate financial support for disadvantaged localities, thereby promoting more balanced and equitable development.