(CPV) – In sum, 2011 represents a unique landmark in the history of provincial governance. While the time-series data demonstrates clear improvement in the average province over time on important indicators of governance, the 2011 PCI clearly shows that historically well-governed provinces have seen notable declines in the satisfaction of respondents in their overall score, but remain in the top ten.
Other high-ranking provinces from previous years, such as Binh Dinh and Vinh Long experienced dramatic falls. Between 2009 and 2010, Binh Dinh fell from 7 to 20 and in 2011, the slide continued to 38.
Similarly, Vinh Long dropped from an Excellent ranking of 5 in 2009 to 9 in 2010. In 2011, however, its provincial governance was rated by respondents to be 54, only a Mid-High rating. Rapid declines of this nature are highly unusual.
The PCI methodology is severely biased against such rapid movements due to its use of hard data and experiential survey questions that are shown to demonstrate statistically differences between provinces, it generally indicates dramatic and meaningful changes within the governance of particular province.
Usually only a couple of provinces increase or decrease their ranking by more than 20 points, however, this year seven provinces improved their ranking by more than 20 points while eight provinces saw 20 points ranking declines.
Even more striking, there appears to be very little variation among respondents within these high movers, indicating that there has been a general change in perception rather than simply a few firms dramatically changing their views.
What accounts for these dramatic and non-arbitrary changes in ranking between 2010 and 2011? In preparation for this year’s report, PCI research team explored a number of potential explanations. The methodology of the PCI is exactly the same as in the two previous iterations, so it is impossible that small changes in question wording of construction are responsible.
Alternatively, Vietnam has been facing macroeconomic difficulties as far back as 2007, but rankings remained stable over the four subsequent iterations of the PCI.
It is hard to see why they would only influence the rankings in 2011. Moreover, the economic effects have been severe everywhere, so they can not explain the pattern of declines observed in the PCI rankings this year, where the primary declines were experienced in high-performing locations with robust business sectors. It could be that Vietnam’s economic centers were hardest hit by the global economic crises and the struggles of business are reflected in their PCI scores. But there is no correlation at all between declines in PCI rankings and the Business Thermometer.
Finally, there is an argument that IZs provide sanctuary from governance problems elsewhere in the country as IZ management boards and localized regulations shield occupants from arbitrary decisions by other provincial officials.
Some have argued that growth IZs may affect PCI rankings, as localities with a high portion of respondents in these settings may receive a bonus in PCI outcomes. This hypothesis was exploded as well, but we found no evidence that it affected the rankings.
Respondents based in IZs did not differ in their governance assessments from respondents in the same province outside of an IZ.
Furthermore, provinces with large number of IZs were not represented among the biggest improvers. Dong Nai and Hai Duong have far more IZs than Binh Phuoc and Ha Tinh.
A final factor that could be an important change between the 2010 and 2011 survey, however, was the 11th Party Congress leading to widespread changes in leadership throughout the country.
Such events often lead to a great deal of uncertainly and transition to new leaders in some provinces which may have influenced scores.
Jones and Olken (2005), in a highly regarded economic paper, found significant evidence that leadership changes at the national level have a dramatic impact on national economic performance, so the possibility is certainly worth exploring.
Preliminary investigation revealed that the highest shifts in provincial rankings were recorded in places necessary to understand whether firms are responding to the leaders themselves or to the disruptive transition period as the new leaders acclimated into their positions.
Of course, multiple factors influence provincial governance, ranging from historic endowments, to local socio-cultural factors, to central government policies, to international integration.
In highlighting local leadership transition, our global is simply to point to one important contributor to changes between 2010 and 2011. Having a new provincial leader does not necessarily performance. There is considerable variation within the leaders took on their job with ease and have continues their predecessors’ high-quality governance.
Most importantly, pointing to changes in leadership describes only one node on a complex causal chain. Leaders make choices about local initiatives and implementing national policy.
For low-ranking provinces, the road to improvement requires looking beyond leadership transition to the specific policies that were enacted or not enacted that have aggravated the respondents in the 2011 PCI survey.