The great divergence: Political accountability and extractive capacity in Vietnam and China in the reform era

Abstract

Using a historical institutionalist approach, this paper argues that changes in political accountability in the late 1980s, resulting in a more collective system in Vietnam and a centralised regime in China, led to the divergence of extractive capacity in the two countries. While the former moves towards a tax state model with an increasing dependence on the non-state sector and direct taxation, the latter depends on the state sector and indirect taxation for fiscal revenue. The different characteristics of extraction might pose different risks to the resilience of the two communist regimes.