2.3. The Relationship Between Government Spending and Poverty Alleviation in Emerging Markets Empirical Evidence From Vietnam

Asian Affairs: An American Review
ISSN: (Print) (Online) Journal homepage: https://www.tandfonline.com/loi/vasa20
The relationship between government spending

and poverty alleviation in emerging markets:
empirical evidence from Vietnam
Vu Xuan Dung & Duong Thuy Le
To cite this article: Vu Xuan Dung & Duong Thuy Le (2023) The relationship between
government spending and poverty alleviation in emerging markets: empirical
evidence from Vietnam, Asian Affairs: An American Review, 50:4, 276-303, DOI:
10.1080/00927678.2023.2262355
To link to this article: https://doi.org/10.1080/00927678.2023.2262355
Published online: 26 Oct 2023.
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2023, VOL. 50, NO. 4, 276–303
https://doi.org/10.1080/00927678.2023.2262355
The relationship between government spending

and poverty alleviation in emerging markets:
empirical evidence from Vietnam
Vu Xuan Dung and Duong Thuy Le
Faculty of Finance and Banking, Thuongmai University, Hanoi, Vietnam
ABSTRACT ARTICLE HISTORY

This paper uses a fixed effects model and a fixed Received 3 January 2023
effects quantile regression to explore the relationship Accepted 31 August 2023
between government spending and poverty reduc- KEYWORDS
tion in the 63 provinces of Vietnam from 2010 to Government spending;
2020. Our study argues and finds that government poverty reduction;
spending plays a significant role in reducing the pov- income per capita
erty rate in Vietnam. Furthermore, the paper shows
that income per capita is a good proxy for the pov-
erty rate. Given the influential role of government
spending in reducing impoverishment, the study also
finds that income inequality is a challenge to the
Vietnamese government. It contributes to the litera-
ture on public finance in Vietnam and emerging mar-
kets. Additionally, it has policy implications for
policymakers in these economies regarding address-
ing poverty alleviation and income inequality.
Introduction
As is the case in many emerging markets, the main priority of Vietnam’s
spending strategy in recent years has been to lift people out of poverty.1
Nevertheless, poverty remains one of the most challenging issues for such
countries.2 There are two main reasons why the relationship between gov-
ernment spending and poverty eradication in emerging economies is
complex3 and generates varied effects.4 First, in developing nations, not all
of the transfers and subsidies financed by governments reach the required
CONTACT Vu Xuan Dung vuxuandung@tmu.edu.vn Thuongmai University, Hanoi, Vietnam;

Duong Thuy Le duonglt@tmu.edu.vn Thuongmai University, Hanoi, Vietnam
© 2023 Taylor & Francis Group, LLC
Asian Affairs: An American Review 277
level;5 moreover, government spending decisions are difficult to deliver

due to rampant corruption and selfish officials.6 Second, government
spending is believed to directly and indirectly influence poverty.7 Regarding
the direct impact, governmental spending, such as government transfers,
immediately affects people experiencing poverty because it raises their
real disposable income. At the same time, public investments in agricul-
tural growth or infrastructure can increase employment, which in turn
raises income in rural regions. Regarding the indirect influence, several
studies such as Weilin, Jingdong, and Rong8 as well as Easterly and
Fischer9 employ a simultaneous equation model to show that government
spending relieves the poor through a so-called linkage effect. This effect
arises in the form of benefits to the poor when governments spend their
state budgets on rural infrastructure (including roads and electricity),
agricultural research, health, and the education of people living in rural
areas to stimulate the development of both agricultural and nonagricul-
tural sectors, all of which help to increase jobs and income-earning
opportunities for the poor.10 In this way, agricultural productivity is
enhanced, reducing rural poverty. However, it is notable that the popula-
tion structure in Vietnamese regions has rapidly changed over the past
few decades, with the urbanization rate increasing from 14.7% in 1960 to
37.3% in 2020 (Vietnamese General Statistics Office). Meanwhile, regard-
ing the Vietnamese economic sectoral structure, the proportion of the
agricultural sector in the gross domestic product sharply declined from
46.3% in 1988 to 12.36% in 2021 (Vietnamese General Statistics Office).
Moreover, the Vietnamese rural economy has witnessed increasing diver-
sification into the nonfarm sector.11 Therefore, the simultaneous set of
equations focusing on agricultural productivity somewhat unfits the cur-
rent advanced stage of Vietnamese economic development.
Given the complex relationship between government spending and
poverty eradication and the change in economic structure in emerging
markets, more research should be conducted to explore this relationship.
Hence, this paper uses Vietnam as a representative case study for emerg-
ing markets in order to investigate whether public spending exerts crucial
effects on poverty alleviation and how these effects vary across quantiles.
This study argues that public expenditure can be a positive factor in hin-
dering impoverishment in the economies of emerging countries, such as
Vietnam.
Vietnam is chosen as a setting because government policies primarily
drive its fight against poverty. These policies can be summarized in three
ways. First, based on the Millennium Development Goals (MDGs) devised
by the United Nations (UN) and tailored to the Vietnamese context,
Vietnam has established its own 12 development goals (referred to as
278 V. X. DUNG AND D. T. LE
Vietnam’s Development Goals), among which poverty reduction has been

identified as the top priority by the Comprehensive Poverty Reduction
and Growth Strategy and National Targeted Programs. These goals were
integrated into its socio-economic development strategies and programs,
five-year plans, and annual plans. Second, Vietnam adapted its budget
management to fit its specific national conditions to connect poverty
reduction targets with broader socio-economic development programs to
stimulate sustainable development and poverty reduction. More specifi-
cally, Vietnam decentralized its state budget by dividing it into two levels:
central and local budgets. This decentralization process has two primary
advantages. On the one hand, it enables the central budget to still play
an essential part in collecting primary sources from taxes and covering
significant expenditures in the country. On the other hand, it grants
greater autonomy to local provinces to determine allowance payments for
the poor. It supports a higher level of essential service delivery following
specific characteristics of the local regions. Third, the Vietnamese govern-
ment heavily invested in programs concentrated on building basic infra-
structure (electricity, rural roads, schools, health facilities, small-scale
irrigation projects, and marketplaces) in poor areas. With a clear goal of
"leaving no one behind”, despite a humble state budget, Vietnam doubled
its investment in poverty reduction, with up to 21% of its state budget
being dedicated to social welfare, the highest amount among ASEAN
countries.12 These achievements amounted to significant progress in pov-
erty reduction in the country. Indeed, Vietnam is among the best-per-
forming countries concerning reducing poverty, as further indicated by
the fact that it met the MDG target on poverty alleviation ten years
ahead of the deadline set by the UN. Moreover, according to the IMF’s
assessment, despite starting as one of the poorest nations in the mid-
1980s, Vietnam became a lower-to-middle-income country in 2010.
Vietnamese people’s monthly income per capita has increased significantly
from approximately 21 U.S. dollars in 1999 to approximately 75 U.S. dol-
lars in 2010 and nearly 185 U.S. dollars in 2020 (Vietnamese General
Statistics Office). With rising income per capita, Vietnam’s poverty rate
decreased dramatically from above 70% at the end of the 1980s to 14.2%
in 2010 and 4.8% in 2020 (Vietnamese General Statistics Office). Although
the efforts of the Vietnamese government and its success in reducing
poverty are apparent, whether Vietnam’s success in reducing poverty has
resulted from its decisive national budget management still needs to be
questioned. This research uses data to reveal the genuine relationship
between government spending and poverty reduction, which could apply
to other nations in fighting against poverty.
Over the last decade, the Vietnamese government has spent much of
its budget on sectors that significantly impact poverty reduction. These
sectors include investment and development (capital construction invest-
ment and providing public goods and services); education and training;
medicine and healthcare; science and technology; and social guarantee.
Employing Vietnamese provincial data from 2010 to 2020, this study
argues that the negative relationship between these government expendi-
ture and poverty reduction. Three points should be noted in our research
results. First, we find that government spending plays a significant role in
alleviating poverty in Vietnam, particularly expenditure on development
and investment, education and training, medical and population, and
social security. Nevertheless, the effectiveness of government spending in
reducing poverty rates differs from quantiles. Second, by regressing
income per capita as an alternative to the poverty rate, we have evidence
that Vietnamese public expenditure raises citizens’ income per capita.
Third, our research reveals the critical finding that while government
spending helps to lift people out of impoverishment, it also enlarges the
income gap in Vietnam.
The study at hand goes beyond previous research in several ways.
First, it employs a fixed effects model and a fixed effects quantile regres-
sion to explore the association between government spending and poverty
reduction. It thus contributes to the public finance literature that has eval-
uated the impact of public expenditure on reducing poverty in emerging
markets. The results of extant literature examining this relationship using
aggregate government spending show the impact of overall government
spending on poverty reduction. Nevertheless, government spending
includes various items, which may affect poverty decline differently. For
instance, in Vietnam, government spending consists of different public
expenditures, such as government spending on education, economic
development, and technology, not all of which have the same impact on
poverty alleviation. As a result, disaggregating government spending,
which is a detailed item of government spending, needs to be researched
to identify the specific items of government spending that play a role in
relieving poverty and supporting policymakers in appropriately allocating
the state budget to the economy. Hence, this paper bridges the gap in two
ways. In terms of a data sample, the research either disaggregates public
spending data, updates, and increases the observations number of the
government spending and poverty rate in Vietnam. In terms of research
methods, the paper employs a fixed effects model and a fixed effects
quantile regression to identify the association between government spend-
ing and impoverishment reduction and the effect changes based on dif-
ferent quantiles. Moreover, our study may serve as a reference point for
policymakers in emerging nations to form policies that place a greater

weight on the specific types of government spending that promote pov-
erty alleviation and public financial reallocations to reduce the income gap.
The remainder of this paper is organized as follows. The next section
reviews the extant literature. “Vietnamese background” section reports the
Vietnamese background on government spending and poverty reduction.
“Methodology” section introduces our model and data. “Results and dis-
cussion” section presents and discusses the empirical results. “Does the
effect of government spending on poverty reduction change with quan-
tiles?” section identifies the relationship under study by employing quan-
tile regression. “Does government spending increase income per capita?”
section provides a robustness check with income per capita. “Additional
analysis: government spending and income gap” section reflects on the
relationship between government spending and the income gap. The final
section concludes.
Literature review
Researchers have dedicated significant attention to the factors that pro-
mote poverty reduction,13 including population growth,14 terms of trade,15
agricultural productivity,16 inflation,17 employment guarantee schemes,18
educational attainment,19 ethnicity,20 political institutions,21 foreign aid,22
structural public balance adjustment,23 and social security expenditure.24
The research community has also widely investigated the nexus between
government spending and poverty alleviation. Some papers use govern-
ment spending as an independent variable. For instance, in the context of
developed economies, Rosaria and Giorgio25 study the impact of structural
public balance adjustment on impoverishment in seven Eurozone nations
and find that it positively correlates with the proportion of citizens in pov-
erty, including monetary poverty, material deprivation, and low work
intensity. Other researchers have focused on developing countries, mainly
China and India. More specifically, Shenggen, Peter, and Sukhadeo26
demonstrate that public investments in education, rural roads, and agricul-
tural research effectively reduce poverty in India. Westmore27 reveals that
the poverty rate of households across several Chinese provinces could be
reduced thanks to Chinese government transfers. Weilin, Jingdong, and
Rong;28 Yu and Li,29 who also use China as a research subject, find evi-
dence that rural public expenditure on education, health care, social secu-
rity, and infrastructure positively lift people out of poverty. Other
researchers employ government spending as a control variable. For exam-
ple, Ming-Chang30 considers both the economic and non-economic factors
of poverty in developing economies, proving that government expenditures
such as military and social expenditures yield little effect on poverty alle-
viation. Going even further, Wagle’s study31 of global poverty finds that
government spending does not impact poverty reduction.
Despite the wealth of studies investigating the association between gov-
ernment spending and poverty reduction, whether government spending
reduces poverty in emerging countries is still inconclusively answered.32
For instance, Easterly and Fischer33 find that government spending to
promote agricultural growth can aid in reducing poverty in India by rais-
ing mean income or improving income distribution. The same results and
research method were applied to Vietnam by Weilin, Jindong, and Rong.34
For a specific catalog of government spending, Anderson, Orey, Maran,
and Lucio35 indicate that public spending on social security has a positive
effect on poverty alleviation in China. In their research into 27 provinces
in China, Van de Walle36 also shows that public expenditure, including
expenditure on education, healthcare, social security, and infrastructure,
facilitates poverty reduction. However, some studies have found the rela-
tionship between government spending and poverty reduction ambiguous.
For instance, Mohsen;37 Yanyan, Christopher, Trinh, and William38 argue
that government spending is limited in decreasing poverty in developing
countries. In contrast, public expenditure, such as government transfer39
and government social spending,40 has a mild effect in lifting the poor
out of impoverishment. Some studies even suggest that government
spending, such as military spending, leads to higher poverty rates in
growing economies.41
Meanwhile, this relationship is still underexplored in the Vietnamese
context. Shenggen, Huong, and Long42 attempted to investigate this nexus
by applying a simultaneous equation model with the agricultural produc-
tion function. Their results suggest that government spending on agricul-
tural research, roads, education, and irrigation positively impacts poverty
reduction in Vietnam through the leverage of its agricultural growth.
Despite not explicitly about government spending, another article on pov-
erty reduction in Vietnam shows that government policies lend support
to the poor by improving their education and surrounding infrastructure.
The little attention to this subject in Vietnam may be due to the available
data regarding government spending. Indeed, it was not until 2010 that
Vietnam made it mandatory that each province has recorded its local
budget to a consistent standard. Before that, data on public expenditure
were only publicized for the whole country, which may have led to insuf-
ficient sample size for researchers.
Vietnamese background
Government spending
Vietnamese government spending accounted for a quarter of its gross
domestic product (GDP) from 2010 to 2020 (Vietnamese General Statistics
Office). Government spending is categorized into various items based on
the different purposes of the government, including government spending
on education, medicine, science and technology, administration, environ-
mental protection, and investment and development. The spending is
mostly allocated to investment and development (gsdev), education and
training (gsedu), medicine and healthcare (gsmed), science and technol-
ogy (gstech), and social guarantee (gssoc). The proportions of this spend-
ing in Vietnam’s total public expenditure in 2010 and 2020 are reported
in the pie charts below (Figure 1):
Public expenditure on investment and development activities consti-
tutes the most significant proportion, with an average of 28.7% from 2010
to 2020, while expenditure on science and technology accounts for the
most modest proportion of overall spending. However, the Vietnamese
government budget has shifted its attention to areas that have long-term
effects on poverty reduction, such as education, healthcare, and social
development. For each sector, the government has deployed specialized
programs focusing on decreasing poverty incidence, including the National
Program for Hunger Eradication and Poverty Reduction and the Program
for Especially Disadvantaged Communes in Mountainous and Remote
areas. To ensure that the programs target those in need, the government
Figure 1. Top Vietnamese government expenditures in 2010 and 2020. Source.

Author. Note. gsdev, gsedu, gsmed, gstech, and gssoc are, respectively, development
and investment expenditure; education and training expenditure; science and tech-
nology expenditure; medical and population expenditure; and social security
expenditure.
has decentralized its state budget, which allocates national expenditure to

local provinces. This enables the local budget authorities to correctly and
promptly determine who is in real need.
Poverty reduction
Vietnam has witnessed a considerable decline in its poverty rate in recent
decades, falling from 37.4% in 1998 to 4.8% in 2020.43 The poverty inci-
dence in Vietnam is reported in the following line graph (Figure 2):
To slow down the poverty rate, the Vietnamese government has
endeavored to effectively deploy poverty reduction programs and policies,
such as the national target program on sustainable poverty reduction for
the periods 2011–2015 and 2016–2020, credit preferential policies, and
programs and policies to support the poor’s education, healthcare, hous-
ing, farming lands, and clean water. Despite these efforts, there remain
several challenges that the Vietnamese government faces in reaching its
poverty reduction targets.44 First, as can be seen from the graph, despite
the sharp decrease in the poverty rate, there is also a significant differ-
ence in the poverty incidence between urban and rural areas. Second,
poverty alleviation achievements vary by region, with high poverty inci-
dence still occurs in underprivileged regions such as highland and moun-
tainous areas. These geographical differences have widened the Vietnamese
income gap, reflected by a relatively dangerous Gini index of 0.4 from
2010 to 2020.45 Moreover, Vietnam has struggled to sustain its poverty
reduction, with as many as 4.09% of its population falling back into pov-
erty between 2016 and 2019, especially in impoverished regions such as
high mountains and among ethnic minorities. Consequently, the role of
Vietnamese public expenditure in eliminating poverty is still questionable
and worthy of research.
Figure 2. The poverty incidence in Vietnam from 1998 to 2020. Source. Author.
Methodology
Research model
Our primary goal in this study is to determine whether expenditures
financed mainly by the Vietnamese government significantly affect poverty
reduction. As such, we borrow a simple research model from the literature
and add disaggregated government spending as an independent variable. It
is clear that the state budget consists of multiple different categories and
that not all of them play a role in lifting the poor out of impoverishment.
Hence, we select the five items that received the most investment from the
Vietnamese government from 2010 to 2020. These are public expenditures
on development investment, education and training, science and technol-
ogy, medical and population, and social security. Poverty reduction might
be affected by other elements in addition to government spending. For
instance, several scholars such as Shenggen, Huong, and Long;46 Weilin,
Jingdong, and Rong47 test the effect of urbanization on impoverishment
alleviation but find that it plays no significant role. We revisit this relation-
ship by adding the urbanization rate as a control variable in our model.
Previous literature has found that population growth48 and inflation hinder
poverty eradication;49 thus, this paper further investigates this correlation in
order to provide better suggestions for government policies. To this end,
our research model is given by Equation (1):
α i + β1 government spending it − k + β2 urbanit + β 3 popgrowit + β 4inflait + ε it

POVit =
(1)
POVit measures poverty in province i at time t, and αi is the individual
province-specific effect. Government spending includes disaggregating
spending. gsdev, gsedu, gstech, gsmed, and gssoc are development and
investment expenditure, education and training expenditure, science and
technology expenditure, medical and population expenditure, and social
security expenditure, respectively. urban is the urbanization rate in prov-
ince i at time t, which is measured by the percentage of the city popula-
tion living in urban areas. popgrow is the population growth rate in
province i at time t. infla is the inflation rate of province i at time t. k
is the length of lag (k ranges from 0 to 3 for relevant types of govern-
ment spending variables). β1 is the coefficient of the expenditure variables
and is expected to be negative, while the others are predicted to bring
positive signs.
To accurately capture the real impact of government spending on pov-
erty reduction, model (1) considers time lag. The literature suggests sev-
eral ways to determine the appropriate length of lag, such as adjusted R2
and Akaike’s Information Criteria (AIC), with the latter being primarily
used by economists.50 Therefore, this paper also employs the AIC to
choose suitable lag lengths for government spending variables by regress-
ing each government spending equation (five equations for five categories
of government spending). The AIC results lead to two years for develop-
ment and investment expenditure (gsdev), one year for education and
training expenditure (gsedu), and no lag for the other government spend-
ing variables.
Data
The poverty rate in Vietnam is estimated by the ratio of the number of
people or households whose income (or expenditure) per capita falls
below the poverty line among the total surveyed population and house-
holds (Vietnamese General Statistics Office). These data are extracted
from The Vietnam Household Living Standard Survey, which is carried
out by the Vietnamese General Statistics Office every two years. The data
on urbanization rate and population growth are obtained from the General
Statistics Office. The data on disaggregated government expenditure and
inflation are retrieved from the provincial Statistical Yearbook of Vietnam.
The former is expressed in natural logarithms to avoid a nonstationary
problem. The data on poverty are available earlier; however, the data
regarding government spending for each province in Vietnam is not suf-
ficient until 2010 due to the late unified data standard for the local
national budget. As a result, the panel data set covers 63 Vietnamese
provinces between 2010 and 2020 with a two-year gap.
The descriptive statistics for the research variables are reported in
Table 1.
Results and discussion

To avoid the heterogeneous problem, this paper includes a province-spe-
cific factor. It employs random effect and fixed-effect models to test
whether these public expenditures contribute to poverty reduction in
Vietnam. After that, the Hausman specification test is performed to
choose between the fixed effect and random effect tests. Its result indi-
cates that the former is superior to the latter.
Table 2 presents the estimation results for the nexus between govern-
ment spending and poverty reduction in 63 Vietnamese provinces from
2010 to 2020.
The results of the independent variables, including education training
and medical-population expenditures, are high in statistical significance
Table 1. Descriptive Statistics.

Variables Obs Mean Std. dev. Min Max
pov 378 12.416 10.73 0.0 53.9
gsdev 376 7.869 0.881 5.614 10.615
gsedu 377 7.660 0.583 5.498 9.602
gstech 378 3.111 0.768 1.224 6.69
gsmed 378 6.357 0.616 4.616 8.253
gssoc 378 5.821 0.892 3.196 8.214
urban 378 0.276 0.169 0.095 0.872
popgrow 378 0.963 0.869 −1.22 5.3
infla 378 0.052 0.035 −0.02 0.187
Notes. pov is the measure of poverty. The variables gsdev, gsedu, gstech, gsmed, and gssoc are
development and investment expenditure, education and training expenditure, science and technol-
ogy expenditure, medical and population expenditure, and social security expenditure, respectively.
urban is the urbanization rate. popgrow is the population growth rate. infla is the inflation rate.
Table 2. Estimation Results of Equation (1).

Indep. vars. Fixed effects Random effects
gsdev −1.104*** (0.240) −1.164*** (0.253)
gsedu −3.200*** (1.020) −1.926* (1.023)
gsmed −3.082*** (0.698) −2.676*** (0.739)
gssoc −1.281*** (0. 466) −1.842*** (0.489)
gstech −0.916* (0. 514) −1.458*** (0.528)
urban −5.564 (5.405) −3.472 (4.025)
popgrow 0 .180 (0. 535) 0.408 (0.514)
infla −7.919 (6.770) 7.337 (4.907)
cons 59.964*** (5.166) 50.487*** (4.873)
R2 – within 0.6594 0.6567
R2 – between 0.0426 0.0982
R2 – overall 0.1278 0.1838
No. obs. 376 376
Notes. Standard errors are in parentheses; *** and * indicate statistical significance at the level of
p<.01 and p<.1, respectively.
and magnitude. Specifically, if other factors are held constant, a 1%

increase in both expenditures contributes to a 3.2% and 3.08% reduction
in the poverty rate in Vietnam, respectively. Other types of public expen-
diture also cast considerable light on the fight against impoverishment:
expenditures on development and investment and social security. At the
same time, those on science and technology are statistically insignificant.
Overall, the fixed effect model’s results indicate that government spending
plays a vital role in poverty alleviation in Vietnam, which is consistent
with our expectations and with the findings of several previous studies,
such as Shenggen, Huong, and Long;51 Shenggen, Peter, and Sukhadeo;52
Weilin, Jingdong, and Rong;53 Yu and Li.54
Government spending on education training has accounted for nearly
14% of Vietnam’s annual public expenditure since 2010 (GSO). The grad-
ual increase in this expenditure over the past few years illustrates the
Vietnamese policy target of reducing poverty through education and
training channels. It has shown the effectiveness by the fact that the
proportion of the population obtaining a high school diploma rose dra-

matically from 89.84% in 2001 to 97.94% in 2017, while the equivalent
for vocational education witnessed a rise of 21% in the period 2016–2020
as compared to the period 2011–2015. Furthermore, research by Sanjukta
and Todd;55 Ming-Chang;56 Katsushi, Raghav, and Woojin57 indicate that
the attainment of a higher education level is closely associated with pov-
erty alleviation; therefore, an investment in education by governments will
benefit the poor in emerging markets. In addition, the Vietnamese gov-
ernment is aware that education, especially vocational education, leverages
labor productivity, which increases employee income and secures their
usual living standard, eventually helping to eradicate sustainable impover-
ishment (The Office of the National Assembly, session XIV).
Public expenditure on medical and population also significantly
impacts poverty reduction in Vietnam. This type of government finance
helps people access essential medical and healthcare products and ser-
vices, thus enhancing their quality of health. Data on health quality in
Vietnam show that this type of government spending contributes to a
reduction in the under-five mortality rate from 45.3 deaths per 1000 live
births in 2001 to 22.3 in 2020 while also increasing the average life span
from 72.2 years in 2005 to 73.7 years in 2020 (GSO). Good health
strengthens labor productivity and reduces individual medical spend-
ing,58 facilitating poverty decline in developing nations such as Vietnam.
Meanwhile, development and investment expenditures by the
Vietnamese government mainly consist of expenditures on infrastructure,
transportation systems, electricity systems, irrigation systems, and invest-
ment in economic organization and activities. Thanks to massive invest-
ment by the government from 2010 to 2020, rural areas have gained more
than 206,000 kilometers of both new and upgraded roads, 31,000 new
schools, and nearly 73,000 cultural and sports houses, while 288,000 hect-
ares of land have been used for modern and saving irrigation systems,
99.1% of households have been equipped with electricity, and 100% of
villages have had medical stations built for them.59 These remarkable
developments benefit the poor in many different ways. For instance, roads
are now constructed or upgraded with tarmac or cement for cars to the
center, and 70% of villages have solid roads for cars.60 Good roads encour-
age greater accessibility to marketplaces and better connections among
villages, which satisfies the local people’s primary demand for transporta-
tion. They also promote product distribution among local regions and
large cities and villages. Moreover, thousands of newly built schools create
many more opportunities for the poor to attend classes, reducing illiter-
acy or raising enrollment rates at all schooling levels in rural areas.
Meanwhile, cultural and sports houses enhance the poor’s spiritual and
recreational life. Communal houses also preserve traditional values and

are designed to promote the cultural identity of villages, which helps
develop tourism in local regions. The modern irrigation system improves
the agricultural sector by increasing the number of crops produced yearly,
generating more agricultural income for the poor. Household electrifica-
tion ensures a stable source of electricity in every community, meeting
the rising power demand of agriculture and industries. The protection,
care, and promotion of people’s health are also prioritized by the appear-
ance of commune health stations in every village. Consequently, expendi-
tures on development and investment have played an essential part in
improving manufacturing conditions, promoting jobs, expanding tourism
opportunities, encouraging trade among regions, and boosting the income
of the poor.
Government expenditure on social security, to some extent, directly
affects poverty alleviation because spending, such as government transfers
to the disabled and extremely poor, immediately increases the disposable
income of such groups. Vietnamese policymakers also emphasize social
security measures to ensure that the underprivileged somehow and equally
meet the basic needs of their daily lives. In Vietnam, the poor have been
listed as social protection beneficiaries who receive government transfers
every month to partly offset their daily expenses, which is legalized by
Vietnamese laws and regulations. The most up-to-date legal document is
Decree no. 20/2021/ND-CP, dated March 15, 2021, on social support pol-
icies for social protection beneficiaries, states that the poor must be
offered direct monthly transfers of 360,000 dong, which immediately
increases their disposable income. This spending is an effective tool to
alleviate the poverty rate in Vietnam.
Science and technology expenditure, although it represents only around
0.78% of annual total public expenditure, supports the poor in several
ways. First, this spending provides the technology necessary to create
agricultural products of sufficiently high quality that they can compete in
both the domestic and international markets.61 S, public expenditure on
science and technology boosts technology transfer among sectors and
regions, thus increasing labor quality and job creation.62
The coefficients of the control variables, including urbanization rate,
population growth rate, and inflation, are statistically insignificant.
Vietnam’s annual urban population growth is either low, at only around
3.07%, or gradually decreasing from 3.18% in 2010 to 2.83% in 2020.63
Additionally, the urban population of Vietnam is at its densest in the
country’s largest cities, which accounts for approximately 80% of the total
population. This could explain why this control variable is insignificant in
our research model. Regarding population variables, the Vietnamese
population growth rate is low because this rate was only approximately
0.02% annually between 2010 and 2020.64 As a result, this factor may
have no significant impact on poverty—a finding consistent with Misra
and Peter’s work.65 Regarding the inflation rate, the Vietnamese govern-
ment sets a reasonable inflation rate periodically and implements specific
monetary policies to keep it under control. For instance, if inflation
occurs, the government can lend its citizens support through favorable
loans or by stabilizing its inflated products. Additionally, the government
has gradually established a routine whereby it raises basic salaries to keep
up with inflation. For instance, between 2010 and 2020, the basic salary
rose twice from 730,000 dongs to 1.6 million dongs. Given this successful
governance, inflation cannot increase the poverty rate, as shown by
Raghav and Katsushi.66
Does the effect of government spending on poverty reduction

change with quantiles?
Decomposing government expenditure helps researchers understand its
benefits in reducing poverty in Vietnam, as evidenced in “Vietnamese
background” section; nevertheless, this role may vary across quantiles,
which can mislead policymakers when they make their state budget allo-
cation decisions. Thus, a fixed effects quantile regression is applied in this
section to estimate government spending on poverty eradication across
different quantiles, thus providing public finance policymakers with more
robust results to work.
Koenker and Bassett introduced the notion of quantile regression.67 Its
promising robustness properties facilitate investigations into the relation-
ship between variables whose effects might change with the level of out-
come.68 The relationship between regressors and the outcome applied
conditional quantile function is as follows:
y | X (θ , X ) X β (θ )
−1
=
Qθ ( y | X ) Φ= (2)
where Qθ ( y | X )- the θ th quantile of a variable y conditional on covariates

X ,θ ∈ (0,1); Φ y|X- the joint distribution function for the variable y. Different
parameters β (θ ) are estimated for different quantile θ s, and it is under-
stood that at the given quantiles of the distribution of y, the parameters
β (θ ) are the returns of different features X.
This research employs the poverty quintile for the quantile regression for
three main reasons. First, the result of the Vietnam Household Living
Standards Survey (VHLSS) conducted by the Vietnamese General Statistics
Table 3. Estimation Results of Quantile Regression

Indep. vars OLS Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5
gsdev −0.811 −1.250*** −1.188*** −1.109*** −1.017*** −0.959**
(0.594) (0.379) (0.275) (0.206) (0.281) (0.379)
gsedu −8.008*** −2.217 −2.634* −3.169*** −3.781*** −4.172**
(1.871) (1.894) (1.375) (1.030) (1.404) (1.896)
gsmed −2.222 −3.232** −3.168*** −3.087**** −2.994*** −2.935**
(1.519) (1.247) (0.904) (0.676) (0.924) (1.248)
gssoc −7.147*** −1.342 −1.316** −1.283*** −1.245** −1.221*
(0.823) (0.823) (0.597) (0.446) (0.610) (0.824)
gstech −6.605*** −1.257* −1.112* −0.927** −0.714 −0.579
(0.869) (0.835) (0.605) (0.453) (0.618) (0.835)
urban 0.919 −7.508 −6.684 −5.625 −4.415 −3.641
(2.525) (6.941) (5.035) (3.768) (5.143) (6.947)
popgrow 0.980* 0.231 0.209 0.181 0.149 0.128
(0.508) (0.831) (0.602) (0.450) (0.615) (0.831)
infla 34.79* −9.189 −8.651 −7.959 −7.169 −6.664
(15.63) (11.94) (8.660) (6.478) (8.847) (11.95)
No. obs. 376 376 376 376 376 376
Notes. Standard errors are in parentheses; *** and * indicate statistical significance at the level of
p<.01 and p<.1, respectively.
Office (GSO) is based on income quintiles, including quintile 1 to quintile

5, which denote the lowest-income to the highest-income groups of the
population. Second, international reports conducted by the World Bank69
and United Nations Development Programme70 also mention the poverty
quintile for poverty assessment in Vietnam. Third, the poverty quintile is
consistent with the literature stream regarding poverty using quantile regres-
sion, such as Robert, Ann, and Justine;71 Hensley, Heaton, and Kahn.72
Accordingly, the poverty quintile in this paper is defined as follows:
Quintile 1: Lowest poverty

Quintile 2: Low-medium poverty
Quintile 3: Medium poverty
Quintile 4: Medium-high poverty
Quintile 5: Highest poverty
Table 3 shows the fixed effects quantile regression results of the

explained variable: the poverty rate.
The first column of Table 3 documents the OLS regression results,
while the other columns show the regression results for the 25%, 50%,
75%, and 90% quantiles obtained using the bootstrap method with 100
replications. Time lags of government spending variables in the quantile
regression are also considered as in the fixed effects model. Figure 3 dis-
plays the quantile regression results graphically.
In line with the fixed effect model, the results show that government
spending helps eradicate Vietnam’s poverty. However, when applying the
Figure 3. The estimates across quantiles.

291
quantile regression, it is notable that the coefficients of each independent

variable vary for different quantiles.
Specifically, public expenditure on development and investment helps
to reduce poverty rates at all poverty levels with high statistical signifi-
cance. The quantile regression result indicates that a 1% increase in this
expenditure is associated with a decrease of 1.25% in the poverty rate in
provinces with the lowest poverty (quintile 1) and 0.96% in those with
the highest poverty (quintile 5).
Government spending on education and training also has an essential
impact on poverty reduction. Although the quantile estimated coefficients
in the lowest poverty group are statistically nonsignificant, they have high
statistical significance and undergo gradual increases in poorer provinces.
Explicitly, for the low-medium poor group (quintile 2), a 1% increase in
government spending on education and training helps to reduce the pov-
erty rate by 2.63%. However, this figure changes to 4.17% for the extremely
poor group (quintile 5).
The poor also benefit from government expenditure on medical and
population services, as the quantile estimated coefficients are negative and
statistically significant regardless of poverty levels. They are more promi-
nent in provinces with lower poverty levels (quintiles 1 and 2) and smaller
in those with the highest poverty levels (quintile 5). Specifically, when the
government invests 1% in medical and population activities, the poverty
rate decreases by 3.2% for the lowest poor, and this amount is 2.93% for
the highest poor.
Regarding public expenditure on social security, the quantile regression
results reveal a negative relationship between expenditure and the poverty
rate in all quintiles. However, the estimated coefficient is not statistically
significant at quintile 1. The results indicate that a 1% increase in gov-
ernment spending on social security is associated with a decrease of
1.34% in the poverty rate at quintile one and 1.22% at quintile 5.
Next, the quantile regression indicates a negative nexus between gov-
ernment spending on technology and science and poverty reduction
regardless of poverty level; however, the estimated coefficients are only
statistically significant at lower poverty levels (quintiles 1, 2, and 3). This
may be because the poorest people need help to take advantage of updated
technology and science by finding a job or earning an improved income.
Overall, two main conclusions should be drawn from the quantile
regression results. First, among the categories of expenditure invested in
by the Vietnamese government, those of education and training, as well
as medical and population, have the most considerable impacts on pov-
erty reduction. Thus, more attention should be paid to leveraging the role
of other government expenditures in poverty reduction in order to fight
Figure 4. Monthly income per capita in Vietnam from 2002 to 2020. Unit: thousands
of dongs. Source. The General Statistics Office of Vietnam.
poverty from as many different angles as possible. Second, people experi-

encing lower levels of poverty (quintiles 1 and 2) benefit more from gov-
ernment investment, especially from development, medical, social security,
and technology and science expenditure. This may stem from various
factors, such as differences in ethnicity and topography, which affect their
ability to access and use these investments. In light of this, policymakers
should target extremely poor groups so that they can access government
resources and utilize them efficiently to reduce poverty.
Regarding control variables, except for the population growth rate, urban-
ization, and inflation show a decreasing trend along the distribution, which
means that higher rates of these factors induce a lower rate of poverty; how-
ever, they are all nonsignificant as the results of the fixed effect model.
Does government spending increase income per capita?

The literature mainly employs poverty incidence to measure poverty. This
incidence reflects the rate of those whose income per capita is below the
specified threshold; therefore, income per capita may be used as a poverty
classification proxy. In fact, in Vietnam, the poverty rate and income per
capita operate in the opposite direction, meaning that a person with a
high income may have a low probability of being among the poor.
Figure 4 depicts the gradual rise in the monthly income per capita of
Vietnamese people from 2002 to 2020, although the trend appears to have
flattened in recent years. Again, there is a difference in income per capita
between urban and rural areas, with citizens located in urban areas earn-
ing far more than those living in rural areas.
The data on income per capita reveal a high correlation with the poverty
rate. Therefore, this research uses it as a regressor to check whether it can
be an alternative to the poverty rate in the research model. Hoi and Hoi73
also apply data on income per capita to measure Vietnamese household
Table 4. Estimation Results of Equation (3)

gsdev 0.092*** (−0.021) 0.116*** (−0.023)
gsedu 0.431*** (−0.05) 0.301*** (−0.055)
gsmed 0.131*** (−0.034) 0.073* (−0.038)
gssoc 0.049** (−0.022) 0.081*** (−0.024)
gstech 0.053** (−0.023) 0.049** (−0.025)
urban 0.075 (−0.253) 0.071 (−4.101)
popgrow −0.03 (−0.024) −0.018 (−0.023)
infla −1.566*** (−0.293) −2.489*** (−0.325)
cons 1.986*** (−0.231) 2.969*** (−0.25)
R2 –within 0.9113 0.9057
R2 – between 0.1398 0.1972
R2 – overall 0.4689 0.5292
No. Obs. 378 378
Notes. Standard errors are in parentheses, ***, **, and * indicating statistical significance at p<.01,
p<.05, and p<.1, respectively.
poverty. With this in mind, we use this alternative as a robustness check to

test whether Vietnamese government spending yields any effects in raising
its household income, which helps to reduce its impoverishment.
The equation to investigate this association is as follows:
α i + β1 government spending it + β 2 urbanit

incpercait =
+ β 3 popgrowit + β 4inflait + ε it (3)
Where incpercait is the income per capita in province i at time t, these

data are retrieved from the GSO and cover the period from 2010 to 2020
with a two-year gap. It is also expressed as a natural logarithm to avoid
nonstationary issues.
The same research method is employed in this section. The estimation
results are reported in Table 4.
As shown in Table 4, the regression results support our prediction that
government spending increases households’ income per capita, which in
turn helps to lift people out of poverty. Thus, this research adds to the
literature on poverty reduction by demonstrating that income per capita
can be employed as a proxy for poverty incidence in regressions.
Additional analysis: government spending and income gap

The extant literature on the nexus between government spending and the
income gap yields mixed results. For instance, some scholars, including
Brady;74 Imai, Gaiha, and Kang;75 Gertler, Martinez, and Rubio-Codina76
provide evidence that government expenditure in fiscal transfer payments
helps reduce poverty and the income gap. Yang, Zhong, and Yang;77
Jianjun, Jiaowei, and Wanglin;78 Yang, Zhen, Heng, and Guoqiang79 also
Figure 5. GINI index of Vietnam from 2002 to 2020. Source. The General Statistics
Office of Vietnam.
find that public budget expenditure promotes income sources for the
poor and reduces the urban–rural income gap. By contrast, other research-
ers find that government spending does little alleviate poverty and income
gaps. Specifically, Hwang80 show that fiscal transfer payments have a
crowding effect that widens the income gap, while studies conducted by
Guo, Ning, and Qu;81 Li and Li82 show that public poverty alleviation
funds have a negligible effect on narrowing the income gap and reducing
the poverty rate.
Given these mixed findings on the impact of government spending on
income inequality and that most of these papers are based in the Chinese
context, this section aims to identify this nexus in the Vietnamese context.
The first thing to note about the Vietnamese context is that the data
suggest that there has been a significant income gap among the Vietnamese
people. Indeed, the Vietnamese GINI index is in a relatively high position
despite seeing a decline in recent years.
Figure 5 reports a higher Gini index for urban areas in the past, but
this trend has changed in recent years, with rural regions now reflect a
more unequal income distribution. The less equal income distribution
in rural areas may result from two main factors. First, the poorest
households in mountainous and remote areas are mainly ethnic minori-
ties. Due to their unfavorable natural conditions and cultural character-
istics, they have limited access to and receive few benefits from state
employment programs, market access, essential services, and infrastruc-
ture.83 These elements hinder productive agriculture and commercial
and industrial development there; as a result, their communities appear
to be self-sufficient. Their income is highly unstable and dependent on
government subsidiaries; therefore, they struggle to meet their funda-
mental needs, let alone build up sufficient savings to reinvest in their
future in the way the wealthiest can. Second, in inland deltas and coastal
areas, the poorest are primarily engaged in agriculture, while the richest
can expand their income sources through family businesses. The heavy
dependence on weather conditions and exporters of the agricultural sec-
tor poses significant challenges for farmers. Furthermore, in Vietnam,
the land is state-owned and the government has seized considerable
hectares of land for industrial and residential uses. Consequently, the
poorest farmers have volatile sources of income, which widens income
disparities in rural regions. The results of the previous sections continue
to show evidence that government spending benefits the poor regardless
of whether different research methods and explained variables are
applied. Given the crucial role of public expenditure in poverty eradica-
tion, these results and the data’s true story raise another question: Does
it play a part in reducing income inequality in Vietnam? In this section,
this relationship is investigated. The topic of income inequality has
already been thoroughly researched by scholars, with the extant litera-
ture considering the nexus between government spending and income
inequality. Several papers investigate this relationship in emerging mar-
kets, such as Anderson, d’Orey, Maren, and Lucio,84 who research this
association in low- and middle-income countries, and Yu and Li,85 who
test the impact of social security expenditure on income inequality in
China. Little attention, though, has been paid to the Vietnamese con-
text, although some articles have shed some light on general inequality
in the country, including the work of Van and Gunewardena;86 Anderson,
d’Orey, Maren, and Lucio;87 Nguyen an Van;88 Benjamin, Brandt, and
McCaig;89 Nguyen, Doan, and Tran;90 Phuc.91 Furthermore, despite the
reports by the Vietnamese authorities that a large portion of the national
budget is being spent on alleviating poverty, the declining poverty inci-
dence is not consistent among regions or income groups, and the Gini
index continues to be at a dangerous level. Moreover, the Vietnamese
transition to a full-marketed economy may have boosted its overall eco-
nomic growth but has raised income disparities.92 Hence, this research
explores whether public expenditure is explicitly associated with
Vietnam’s income inequality. Existing research typically uses the Gini
index or data from the World Income Inequality Database as a proxy
for income inequality; however, in Vietnam, these data are available for
the entire economy rather than local provinces. As such, income inequal-
ity in this study is measured by the income gap, which is the difference
between the two income quintiles: quintile 5 is the highest income per
capita group (richest), and quintile 1 is the lowest income per capita
group (poorest). Data on the income gap are extracted from Vietnamese
General Statistics Office and then presented in a natural logarithm to
address the nonstationary problem. To this end, the research equation
to investigate this relationship is as follows:
Table 5. Estimation Results of Equation (4).

Gsdev 0.060** (0.025) 0.104*** (0.027)
Gsedu 0.440*** (0.060) 0.265*** (0.063)
Gsmed 0.175*** (0.043) 0.084* (0.047)
Gssoc 0.072** (0.028) 0.102*** (0.030)
Gstech 0.052* (0.030) 0.052* (0.030)
Urban −0.197 (0.319) −0.067 (0.158)
Popgrow −0.053* (0.031) −0.011 (0.025)
Infla −2.045*** (0.369) −3.467*** (0.394)
Cons 3.017*** (0.289) 4.412*** (0.292)
R2 –within 0.8579 0.8447
R2 – between 0.1127 0.1963
R2 – overall 0.4424 0.5307
No. obs. 378 378
Notes. Standard errors are in parentheses, ***, **, and * indicating statistical significance at p<.01,
p<.05, and p<.1, respectively.
α i + β1 government spending it + β2 urbanit + β 3 popgrowit + β 4inflait + ε it

incgapit =
(4)
The estimated results of Equation (4) are reported in Table 5.

The results in Table 5 demonstrate that higher government spending
widens the income gap in Vietnam, which implies a more unequal income
distribution in Vietnamese provinces. These results are also consistent
with those of Yu and Li,93 who show that higher government expenditure
increases income inequality. High-income inequality is a widespread phe-
nomenon in low- and middle-income countries,94 which is also the case
even for developed countries in the OECD group.95 Although the govern-
ment spends a significant amount to reduce the gap, this is ineffective
because increasing government expenditure may not produce any benefits
for low-income groups.96
In Vietnam, the wider income gap among income groups can be
explained by four factors. First, although the incomes of all groups have
been raised, the poorest is always lower than that of the richest. According
to the Vietnamese Ministry of Planning and Investment, on average, the
income of quintile 1 increased by 9.7%, while that of quintile 5 increased
by 10.7% between 2010 and 2020, leading to income disparities regardless
of the government’s efforts to reduce poverty. Second, the poorest house-
holds face chronic poverty because of their distance to economic centers,
unfavorable topography, or limited access to usable land. In Vietnam,
most of the poor live in remote and mountainous areas home to high
concentrations of ethnic minorities and where agriculture (in a low-
growth period) is the primary source of their incomes. Given their dis-
advantages in natural conditions, these people are also limited in
educational attainment, adaptability skills, and production level; therefore,

they are less competitive with laborers of quintile 5, especially in the con-
text of globalization and integration and in nonagricultural sectors that
yield higher incomes. As a result, the income gap between these income
groups is getting bigger. Third, regarding demography, the Vietnamese
General Statistics Office’s data reveals that the household size of the poor-
est is approximately 1.2 times higher than that of the richest. At the same
time, the former’s proportion of the working-age population (from 15 to
59 years old) is nearly 15% lower than that of the latter from 2010 to
2020. This demographic factor also contributes to widening the income
gap, although income has increased among quintiles. Last, despite consid-
erable government spending on improving the lives of the poor, only a
tiny share of this investment goes to their essential social services, with
the funds instead being spent primarily on socio-economic infrastructure,
which may produce long-term results in reducing the income gap.97
Conclusion
Poverty reduction and income inequality are still problematic issues that
governments need to address, especially in emerging markets. Although
many researchers investigate this nexus, the conclusions are mixed among
countries and research methods.
Using the Vietnamese context to research the role of government
spending in poverty alleviation, we find, as our study has argued, that
public expenditure has been a positive factor in hindering impoverish-
ment in emerging countries. Spending allocations such as government
expenditure on investment and development, education and training,
medical and population, and social security are essential to lift people
out of poverty. Applying a fixed effect quantile regression model, this
study shows that this pattern varies across quantiles, in which the effects
of public expenditures on education training and medical care increase
with quantiles. In contrast, those of government spending on social
security, science-technology, and development investment demonstrate
downward trends in the upper-most quantiles. Our results also find that
income per capita is a good regressor in the research model in addition
to the poverty rate. Notably, in the case of employing income per capita
data as an alternative to the poverty rate, the results show that
government expenditure plays a valuable role in raising peoples’ income
per capita. Nevertheless, although public expenditure has achieved
remarkable goals in alleviating poverty, it has increased the income gap
in Vietnam.
This study has produced three research contributions. First, it has use-
fully utilized literature on public finance in emerging nations and the
world in general. The reason for that contribution is that it is the first
paper to examine the nexus between government spending and poverty
reduction in Vietnam, which employs quantile regression to deal with the
most updated research data for the country’s 63 provinces. It is also novel
because it is a pioneer study about public expenditure and income
inequality in Vietnam. Furthermore, its results translate into real implica-
tions for Vietnamese policymakers in particular and emerging markets
and authorities in general in allocating their national budget to alleviate
their countries’ poverty. Indeed, in these policymakers’ ambition to reduce
poverty and develop Vietnam’s macro-economy, income inequality may
challenge them, and they should thus balance state funding distribution
to harmonize both the sustainable development goals (SDGs) of poverty
and income inequality reduction.
ORCID
Duong Thuy Le http://orcid.org/0000-0001-9077-6547
Notes
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51. Ibid.
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Asian Affairs: An American Review

ISSN: (Print) (Online) Journal homepage: https://www.tandfonline.com/loi/vasa20

The relationship between government spending

Vu Xuan Dung & Duong Thuy Le

To link to this article: https://doi.org/10.1080/00927678.2023.2262355

Published online: 26 Oct 2023.

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The relationship between government spending

ABSTRACT ARTICLE HISTORY

CONTACT Vu Xuan Dung vuxuandung@tmu.edu.vn Thuongmai University, Hanoi, Vietnam;

level;5 moreover, government spending decisions are difficult to deliver

Vietnam’s Development Goals), among which poverty reduction has been

policymakers in emerging nations to form policies that place a greater

Figure 1. Top Vietnamese government expenditures in 2010 and 2020. Source.

has decentralized its state budget, which allocates national expenditure to

α i + β1 government spending it − k + β2 urbanit + β 3 popgrowit + β 4inflait + ε it

Results and discussion

Table 1. Descriptive Statistics.

Table 2. Estimation Results of Equation (1).

and magnitude. Specifically, if other factors are held constant, a 1%

proportion of the population obtaining a high school diploma rose dra-

recreational life. Communal houses also preserve traditional values and

Does the effect of government spending on poverty reduction

where Qθ ( y | X )- the θ th quantile of a variable y conditional on covariates

Table 3. Estimation Results of Quantile Regression

Office (GSO) is based on income quintiles, including quintile 1 to quintile

Quintile 1: Lowest poverty

Table 3 shows the fixed effects quantile regression results of the

Figure 3. The estimates across quantiles.

quantile regression, it is notable that the coefficients of each independent

poverty from as many different angles as possible. Second, people experi-

Does government spending increase income per capita?

Table 4. Estimation Results of Equation (3)

poverty. With this in mind, we use this alternative as a robustness check to

α i + β1 government spending it + β 2 urbanit

Where incpercait is the income per capita in province i at time t, these

Additional analysis: government spending and income gap

Table 5. Estimation Results of Equation (4).

α i + β1 government spending it + β2 urbanit + β 3 popgrowit + β 4inflait + ε it

The estimated results of Equation (4) are reported in Table 5.

educational attainment, adaptability skills, and production level; therefore,

81. J. P. Guo, A. Z. Ning, and S. Qu, “Is the Comprehensive Development of

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