This article uses Vietnam as a case study to examine the linkage between a rising number of non-profit institutions and the improvement of good governance practice by analysing impacts of
Trang 1Original Article
Does Growth in Non-profit Institutions Improve Government Transparency? A Case Study from Vietnam
Abstract
Non-profit institutions have long been believed
to significantly contribute to good governance
practice, particularly in transitional or
authoritarian countries Nevertheless, there
has been a lack of sufficient empirical evidence
to support that claim This article uses Vietnam
as a case study to examine the linkage between
a rising number of non-profit institutions and
the improvement of good governance practice
by analysing impacts of non-profit institutions’
development on government’s transparency at
the provincial level from 2011 to 2014 To do
so, the article employs pooled ordinary least
squares, fixed effects and random effects
models with different sets of control variables.
On the basis of the quantitative results, we
conclude that the rise of non-profit institutions
does have a positive impact on the quality of
governance in Vietnam, at least in terms of
fostering its transparency.
Key words: Vietnam, non-profit institutions,
good governance, transparency, panel data
1 Background
Civil society is considered as the ‘big idea’ of the twenty-first century (Edwards 2004) and regarded among three main pillars of a society, together with the political and economic societies (Howard 2003) While there has been
no commonly agreed definition of ‘civil society’ and its components (Ehrenberg 1999), non-profit institutions (NPIs), or in other words, civil society organizations (CSOs), have been generally assumed to play
a positive role in pushing for a more democratic and accountable government (Fukuyama 2001) It was due to the perception that ‘civil society’, in the form of NPIs, would accelerate the democratization process in transitional countries that set these institutions
in the spotlight of democracy promotion policy, particularly from the United States, after the end of the Cold War The third sector,
as NPIs are called, is also believed to significantly contribute to the society and economy in general (Salamon 2004)
However, although a great deal of funding has been pouring into promoting ‘civil society’ around the world since 1991, there has not been sufficient quantitative evaluation of the impacts of NPIs on the society One study, conducted by the Johns Hopkins Comparative Non-profit Sector Project (CNP), uses data on
‘non-profit’ or ‘voluntary’ institutions in 41 different countries (Heinrich 2005) In their initial results, the research team estimates that the ‘third sector’ had a revenue of US$4,109 billion in 2012, ranked fifth in the world if it were a national economy, and employed
* Vietnam Institute for Economic and Policy
Research (VEPR), University of Economics and
Business (UEB), Vietnam National University Ha Noi
(VNU); email <nguyen.quangthai@vepr.org.vn>.
Received: 30 November 2016 | Revised: 4 April 2017 | Accepted: 16 April 2017
Asia & the Pacific Policy Studies, vol 4, no 2, pp 286–295
doi: 10.1002/app5.182
© 2017 The Authors Asia and the Pacific Policy Studies
published by John Wiley & Sons Australia, Ltd and Crawford School of Public Policy at The Australian National University This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License,
Trang 25.5 per cent of the total work force of surveyed
countries (Salamon 2016) Nevertheless,
despite its rich data, the project simply
provides general statistics from NPIs around
the world while spending little to dig in to their
impacts on significant variables such as social
development, democratization and good
governance Other civil society research
studies, such as those from the World
Governance Assessment, the Civicus Civil
Society Index (CSI) and the United States
Agency for International Development, on
non-governmental sector in post-communist
societies, mostly concentrate on defining and
measuring civil society rather than its impacts
(Heinrich 2005) The CSI is another laborious
effort to combine data on civil society
organizations from 44 countries to analyse
their strengths and impacts on the society
Although this project has garnered gigantic
first-hand data on civil society in a wide range
of countries, it faces a fundamental issue in
assessment methodology because its scores
largely depend on benchmarks, criteria and
perceptions of different local markers (Biekart
2008)
In addition, these aforementioned research
projects are sometimes at odds with one
another on what actually constitutes ‘civil
society’ The CNP and United States Agency
for International Development take an
institutional approach, which considers
NPIs/NGOs as a main component of civil
society, while CSI and World Governance
Assessment call for a more comprehensive
approach that includes other factors such as
culture and environment
This article does not attempt to take part in
the debate around the definition of civil
society Rather, it seeks to examine possible
correlation between growth in NPIs’ number
and good governance, at least in the aspect of
governance transparency The choice of NPIs
as the main independent variable for the article
is due to its quantifiability, but does not
necessarily represent our own perception of
civil society
We also aim to zoom in a more specific case
to add to the enormous knowledge in the CNP
survey that has been conducting for over
20 years The lack of specific case studies is obvious limitation of cross-sectional studies, which have been carried out across a wide range of nations with very different characteristics and circumstances Using the institutional approach to identify NPIs in Vietnam, we examine the link between the number of non-profit organizations and good governance practice, especially transparency
at provincial level from 2011 to 2014 The estimation methodology involves pooled ordinary least squares (OLS), fixed effects and random effects models with different sets
of control variables Thus, we hope to contribute to the empirical literature on the impact of civil societies
The case of Vietnam is of academic significance for two reasons First, Vietnam is
a transitional country (some would say a democratizing country) that has experienced tremendous market-oriented changes over the last 30 years It will be more statistically feasible to evaluate the impacts of NPIs in a transitional country than a more established one In 41 countries in the CNP project, there are no authoritarian regimes included Second, despite being dubbed as an authoritarian regime (The Economist Intelligence Unit 2016), Vietnam produces acceptable statistical sources that can be extracted to collect, examine and compare data for Vietnamese NPIs The rest of the article is organized as follows Section 2 discusses the concepts of NPIs and governance transparency After that, Section 3 describes our data and empirical strategy, while Section 4 provides regression results Finally, we will discuss the findings
as well as their implications in Section 5
2 The Concepts of Non-profit Institutions and Governance Transparency
2.1 Non-profit Institutions
While the definition of ‘civil society’ is controversial, scholars are more consensual
on the concept of ‘non-profit institutions’, which can be used interchangeably with volun-tary associations, charities, non-government organization or third-sector organizations
Trang 3(Anheier 2005) Anheier argues that this term
is ‘primarily economic in nature’ and refers to
their revenue behaviour that does not allow
them to redistribute financial gains for the units
that establish, control or finance them,
according to the System of National Accounts.
In this article, we will use the definition by
Anheier and CNP, which states that an NPI
must be
• organized, that is, institutionalized to some
extent;
• private, that is, institutionally separate from
government;
• non-profit distributing, that is, not returning
profits generated to their owners or directors;
• self-governing, that is, equipped to control
their own activities; and
• voluntary, that is, involving some
meaningful degree of voluntary participation
(Salamon & Anheier 1999, p 3–4)
This definition of CNP is appropriate for our
study, because our main goal is to empirically
examine the linkage between NPIs and
gover-nance transparency that requires the definition
to be as concise and quantifiable as possible
2.2 Good Governance and NPIs
Since the third wave of Democratization in the
late 1980s, NPIs are considered as significant
catalysts of civil society thanks to their
participatory and democratic approach
(Bratton 1989) It is believed that it could both
be a safeguard against excessive use of state
power (Diamond 1994) and strengthen the
state’s capacity for good governance by
‘ensuring its legitimacy, accountability and
transparency’ (Mercer 2002, p 6)
It is widely accepted that transparency is the
key to better governance (Hood & Heald
2006), because greater transparency will help
build a corruption-free environment and
institutions with clear and accessible rules
(Saladin 1999)
Therefore, one of the main goals of civil
society, particularly NPIs, is to make the state
as transparent as possible because they
function as representatives of social
organizations outside the state (Edwards &
Foley 2001) Salamon (1997) thus considers NPIs as value guardians for the society The development of NPIs, as a result, will promote government transparency
Furthermore, transparency can help push for better governance by improving accountability, which is also popularly regarded as a pillar for good governance (Doornbos 2006)
As Fukuyama (2011) points out, the state efficiently works only when it can produce an accountability mechanism that requires the state to restrict its own power That includes internal accountability among state branches
of power and external accountability that requires them to be held accountable before the society that they serve While internal accountability is the responsibility of state builders to build a system that holds the separation of power, external accountability requires the active participation of the public
To do this, the government needs a high level
of transparency to be easily checked among themselves and the public
In this article, we examine the Vietnamese Government’s transparency by evaluating its transparency at the provincial level from 2011
to 2014
2.3 Non-profit Institutions Development in Vietnam
Vietnam has remained a one-party state since its independence in 1945; thus, it has imposed tight control on civil society Especially after the collapse of the Eastern Bloc at the end of the 1980s and early 1990s, the Vietnamese Communist Party has tightened their grip over the society, in the fear of a ‘peaceful evolution
to overthrow the people’s state’ (di n bi n hoà bình nh m l t đ chính quy n nhân dân) Despite this, NPIs in Vietnam have grown significantly after the country diverted its development path from a centrally planned to
a more market-oriented approach after the Vietnamese Communist Party National Congress in 1986 In addition, thanks to the country’s recent deeper integration into liberal order, such as normalizing relations with the United States, obtaining membership in various international organizations such as the
Trang 4Association of Southeast Asian Nations, the
World Trade Organization and Asia-Pacific
Economic Cooperation, the regime’s attitude
towards civil society has been considerably
softened
That, together with the rising economic
prosperity in the country, has given rise to a
budding civil society in Vietnam for the last
decade Only in the 3-year period from 2011
to 2014, the number of NPIs nearly doubled
from 3,370 institutions to 6,048 (Figure 1)
The calculation on NPIs’ numbers will be
clarified in Section 3
Admittedly, NPIs are only one among
many factors that constitute the Vietnamese
civil society sphere, including both
non-governmental and government-owned
institutions However, it would not be
overstated to say that independent NPIs are
playing increasingly important roles in the
society One area, that the authors want to
examine more closely in this article, is their
impacts on the government’s transparency
3 Empirical Model and Data
We conduct our empirical analysis using a
panel of all 63 provinces in Vietnam during
the 2011–2014 period
Based on the hypothesis that NPIs’
involvement enhances government’s
transparency, the main dependent variable in the empirical model is the transparency index
(TR), calculated in the Vietnam Provincial
Governance and Public Administration Performance Index.1This index includes three sub-dimensions on provincial transparency: (i) poverty lists; (ii) communal budgets; and (iii) land-use plan or pricing
The NPIs’ number per 100,000 people in each province proxies for the NPIs’ involvement Given the definition of NPI by Salamon and Anheier (1999), our main task is
to specify types of NPIs covered by it On the
Handbook on Non-Profit Institutions in the
Nations (2003) introduces two bases for NPIs’ classification: (i) economic activity and (ii) organizations’ function, in which the former
is more widely used To clarify the first basis, the United Nations suggests using suitable economy activity sectors listed in the International Standard Industrial Classification
of All Economic Activities Revision 3, which
is a classification in terms of production statistics Organizations in the suggested sectors
1 Conducted annually by the Centre for Community Support Development Studies, Centre for Research and Training of the Viet Nam Fatherland Front and United Nations Development Programme in Viet Nam Available
at <http://papi.org.vn/eng/index>.
Figure 1 Numbers of NPIs in Different Areas of Activities in Vietnam, 2011–2014.
Trang 5are considered to be fit for the NPI definition.
The United Nations also recommends a special
classification, the International Classification
of Non-Profit Organizations, to record NPIs
In 2008, the United Nations revised the
ISIC Rev.3 with more careful consideration
of sectors in which NPI can be included
Accordingly, NPIs are concentrated in service
activities such as education, social work and
human health; in principle, however, NPIs can
be found anywhere in the ISIC classification
Practically, because of the difference in
economic characteristics, countries select
different sectors covering NPIs Several
developed countries, while examining NPIs
such as Canada and Italy, have implemented
their own programs and used the International
Classification of Non-Profit Organizations
(United Nations 2008) Meanwhile, in
Thailand’s case, the Office of the National
Economic and Social Development Board
(NESDB) in cooperation with The Johns
Hopkins University Centre for Civil Society
Studies (JHU/CCSS) have studied the
country’s NPIs Satellite Account using
ISIC (NESDB & JHU/CCSS 2011)
Under the instruction of JHU/CCSS and
recommendations of the United Nations
(2008), the research classified non-profit
organizations in four sectors: education,
human health activities, social work activities
without accommodation and activities of
membership organizations, equivalent to the
divisions of 85, 86, 88 and 94 in ISIC This is
considered as an effort to match NPIs with
divisions in ISIC in developing countries, so
that comparative studies on NPIs in both
developing and developed countries are
possible Besides, this method is more suitable
to access and collect significant data in
developing countries that have much less
comprehensive data on NPIs
To figure out the number of NPIs in Vietnam,
we employ the methodology for NPIs’
calculation in the aforementioned study
(NESDB and JHU/CCSS 2011) Thanks to the
compatibility between ISIC and the Vietnam
Standard Industrial Classification 2007, the
system of economic activity classification used
in Vietnam, NPIs in this article are categorized
in the divisions of 85, 86, 88 and 94 in the Vietnam Standard Industrial Classification
2007 NPIs’ numbers are extracted from Enterprise Census, conducted by Vietnamese General Statistics Office (GSO) from 2011 to
2014, in which all of Vietnamese registered firms and economic institutions are surveyed
In that sense, Vietnamese institutions such as
‘t ch c chính tr - xã h i’ (social–political mass organizations) and ‘h i đ c thù’ (specialized organizations), which are under the control of the Vietnamese Communist Party, are not considered as economic activity based and thus are not surveyed Similar to the NESDB and JHU/CCSS study (2011), Vietnamese firms in selected economic activity divisions are assumed to operate for non-profit purpose, so they are considered as NPIs
In an authoritarian country like Vietnam, there are many government-controlled NPIs Therefore, in order to filter private NPIs, organizations that are state owned by nature are excluded.2NPIs are counted according to the province where they register their headquarters Cross-provincial NPIs’ numbers are calculated accordingly
The effect of NPIs’ involvement on the transparency is investigated through a transparency determinants model that includes NPIs’ involvement as an explanatory variable Our main specification is
T R it¼ β0þ β1LNPI itþ δXitþ u it
where
1 i and t are province and time indicators,
respectively
2 ð Þ TR2 it is the transparency index of
province i at time t.
3 LNPI itis the natural logarithm of the NPIs’
number per 100,000 people in province i at time t.
4 ð Þ X4 it is a set of controls including: male
ratio (MR it ), urban population ratio (UR it),
square of urban population ratio ( UR2
it), population growth rate (PGR it),
in-2 Excluded types of firms are state-owned enterprise, provincial government-owned enterprise and state-controlled joint stock company.
Trang 6migration rate (IMR it) and labour force
participation rate (LFR it ) in province i at
time t.
Because of the limitation of short time
dimension in the panel data, the model is
established without lagged terms Data on male
ratio, urban population ratio, population
growth rate, in-migration rate and labour force
participation rate in 63 Vietnamese provinces
are collected from the Statistical Yearbook of
Vietnam 2014, a publication of Vietnam’s
General Statistic Office on Vietnamese basic
socio-economic data Table 1 shows the
descriptive statistics of the data
To make sure that there are no spurious
correlations, we conduct the Choi’s unit root
test to assess the time series property of
variables (Choi 2001) It should be noted that
if the null hypothesis is rejected in unit root test
for panel data, at least one series in the panel is
stationary P, Z, L*, Pm test results reject the
null hypothesis for all variables with the
exception of Z test for UR However, based
on P, L*, Pm tests, the null hypothesis of unit
root for UR is rejected, which means that UR
variable can be considered to be stationary
(Table 2)
For the OLS method, we conduct a robustness check by using different sets of control variables We also employ the fixed effects estimator and the generalized least square random effects estimator to estimate the transparency model By calculating changes in groups, both the fixed effects and random effects methods are used to remove time-invariant unobserved heterogeneity in the panel data (Wooldridge 2002) We employ the specification test of Hausman (1978) to determine the difference between fixed effects and random effects methods and investigate the suitable estimator for this model
4 Empirical Results and Findings
In baseline estimates, NPIs’ involvement is found to have significantly positive impacts
on the provincial transparency The
coefficients of LNPI in these regressions range
from 0.209 to 0.261 (Table 3)
The fixed effects regression estimators are generally not significant However, the Hausman test suggests that the random effects method is the preferred model We continue
to employ robust random effects estimate to test the hypothesis Findings show that random effects estimates in (7) and (8) also illustrate positive impacts of NPIs’ involvement on provincial transparency in Vietnam However,
the magnitude of the coefficient of LNPI in
the random effects method is lower than the pooled OLS Generally speaking, a twofold increase in the number of NPIs per 100,000 people causes the provincial transparency index to rise by roughly 0.2 points according
to the (8) regression
Table 1 Descriptive Statistics of Input Data
Table 2 Panel Data Unit Root Test
Variable Inverse chi-squared,P Inverse normal,Z Inverse logit t, L* Modified inv chi-squared,Pm
Note: *, ** and *** show significance at 10%, 5%, and 1%, respectively.
Trang 7Table 3 Vietnamese Provincial Transparency and Non-profit Institutions’ Involvement
Independent
variables
Pooled OLS with robustness
F-statistic or Wald
chi-square
F(3, 240) = 12.22
Prob > F = 0.000
F(4, 239) = 11.77
Prob > F = 0.0000
F(5, 238) = 9.47
Prob > F = 0.0000
F(6, 237) = 8.19
Prob > F = 0.0000
F(7, 236) = 9.18
Prob > F = 0.0000
F(7,62) = 1.55
Prob > F = 0.1662
Wald chi-square (7) = 32.48 Prob > χ2= 0.000
Wald chi-square (7) = 32.48 Prob > χ2= 0.0000
Prob > χ2= 0.5437
Note: Dependent variable is the provincial transparency index (TR it); values of standard error are in brackets; *, ** and *** show significance at 10%, 5%, and 1%, respectively.
Trang 8Findings from control variables are also of
academic significance While we do not find
evidence on effects of demographic variables
like male ratio, population growth and
in-immigration rate on government transparency,
labour force participation rate consistently
influences the transparency index in each
province It can be said that a rise of labour
force in Vietnam enhances the governance
transparency
It is noteworthy that urban population
ratio (UR) has a negative impact on the
transparency, but square of UR, UR2, has a
positive effect on this index This means that
the relationship between the two variables
follows a U-shape Initially, the urban growth
obstructs transparency in Vietnam However,
when the UR comes to a threshold ratio, an
increase in urban population rate promotes
the Vietnamese provincial government’s
transparency This threshold ratio in Vietnam
is roughly equal to 2.004/(2 * 1.960) = 0.511
according to the (8) regression
5 Discussion and Conclusions
This article is an attempt to examine the effects
of NPIs’ involvement on provincial
transparency in Vietnam The pooled OLS,
fixed effects and random effects methods with
the Hausman test for model specification are
employed to run the transparency determinants
model This study takes into account the
stationary properties of variables to avoid
spurious correlations in panel data regressions
The empirical analysis confirms a positive
impact of a rise in NPIs’ involvement
in Vietnam on provincial authorities’
transparency as predicted in the theoretical
framework The random effects estimator is
the preferred model, in comparison with the
fixed effects estimator according to the
Hausman test The effect of NPIs’ involvement
on the provincial transparency is relatively
substantial A twofold increase in the number
of NPIs per 100,000 people causes the
provincial transparency index to rise by
roughly 0.2 points
This article contributes to the current
literature in two ways First, empirical findings
in this article confirm the correlation between growth in NPIs and good governance, in particular governance transparency, by using the small and homogenous sample of all Vietnamese provinces that share the same political system Second, this study makes use of different estimation strategies in a transparency determinants model to deliver robust findings
From this article, it is evident that Vietnam needs more suitable policies to create incentives for NPIs’ development in order to enhance good governance, in particular transparency
Currently, the Vietnamese one-party regime’s attitude towards civil society in general and NPIs in particular remains vague Newly elected leadership in the Vietnamese Communist Party holds a conservative stance
on civil society, labelling it as one of 27
‘dangerous tendencies’ that party members and the society should avoid (Vietnamese Communist Party 2016) However, while warning against the danger of ‘civil society’, the regime has increasingly given NPIs more space to participate in the country’s socio-political life for the last 30 years The Vietnamese Government emphasizes the role
of NPIs, social organizations as they are called,
in promoting economic development, erasing poverty and supervising the state’s activities
in various official documents and leaders’ speeches It seems that the regime is ambiguous on how to treat NPIs: on one hand,
it wants to keep NPIs under strict control in fear of subversive activities planned by foreign agents; on the other hand, it also wants NPIs to help solve increasing social issues that the country is facing with after embracing the market economy approach
That explains why the Vietnamese Government does not have a comprehensive policy on NPIs After the Executive Order No 102/SL-L004 by the National Assembly in
1957 on Associations, Vietnam has not had a specific law to govern activities of NPIs The government has consistently used decrees and ministry’s directives to control the activities
of NPIs, which makes the legal environment for NPIs extremely unstable The Vietnamese
Trang 9National Assembly has reviewed 13 draft
laws on associations since the late 1990s to
2016, but all were rejected The most recent
draft law was delayed in 21 November
2016 Different from developed countries,
particularly ones surveyed in the CNP project
conducted by John Hopkins University in
which the government support accounts for
around a third of its source of funding
(Salamon et al 2012), the Vietnamese
Government gives almost no economic
resources to independent NPIs, in favour of
state-sponsored mass organizations (Thành
et al 2015)
We believe that the conservative approach
from the regime might result from a lack of
meaningful evidence on its roles in the
economy and society Thus, this article aims
to set the initial background for more
evidence-based policy discussions on impacts
of NPIs on the Vietnamese society, in doing
so helping push further the debates on their role
for better governance
Obviously, as the research only focuses on
the correlation between NPIs’ development
and transparency, it will have serious setbacks
on fully evaluating actual impacts of NPIs on
good governance, which combines many
factors other than transparency In addition,
even the notion of ‘good governance’ itself is
not universally accepted and might never be
(Doornbos 2006) Therefore, the authors
consider this article as the very first step in
analysing the roles of NPIs in fostering
better governance, particularly in transitional
countries In order to gain more empirical
knowledge on this issue, there is a need for
more concrete theoretical background as well
as empirical evidence
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