The impacts of civil society and inequality on the extractive capacity of authoritarian regimes: a conceptual model and
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The impacts of civil society and inequality on the extractive capacity of authoritarian regimes: a conceptual model and the case study of Vietnam Thai Q. Nguyen1 · Giang K. Nguyen2
© Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract This paper analyses the impacts of civil society and inequality on the extractive capacity of authoritarian regimes and undertakes a case study of Vietnam. The paper argues that civic groups tend to reduce the extractive capacity of such states, defined as the sum of taxation and rent extraction. This induces the government to substitute rent-extraction for taxation. This hypothesis is tested using fixed-effects regression techniques with panel data of 63 provinces for 2009–2014. Our estimates imply that increases in non-profit institutions reduce the regime’s extraction in terms of both budget revenue and informal charges paid by registered firms. Other results are also consistent with our conceptual model. Provinces with larger income gaps exhibit lower extraction, proxied by government expenditures. Keywords Extractive capacity · Rent extraction · Leviathan model · Civil society · Inequality · High-performing autocracy · Vietnam JEL Classification C79 · H39 · P45
1 Introduction Defying the neo-liberal final judgment of “the End of History” (Fukuyama 1989), autocratic powers such as China and Vietnam have achieved and surpassed conditions that have long been considered as sufficient for democratization, such as economic * Thai Q. Nguyen [email protected]; [email protected]
Giang K. Nguyen [email protected]; [email protected]
1
Oxfam in Vietnam, 22 Le Dai Hanh, Ha Noi, Vietnam
2
Victoria University of Wellington, R.632, Murphy Building, Kelburn Parade, Wellington 6012, New Zealand
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T. Q. Nguyen, G. K. Nguyen
development (Boix and Stokes 2003) and better education (Fukuyama 2001). However, China and Vietnam have done so without significant political liberalization. Nonetheless, these high-performing autocracies face problems that arise with their economic prosperity, most notably a new, blossoming civil society and widening inequality. There have been two main approaches to this issue. One strand of research, including Acemoglu and Robinson (2000), Ansell and Samuels (2014), Diamond (1994), Giovanni et al. (2015), and Way (2014), believes that those factors will increase the risk of revolution against the regime. The other strand applies a non-revolutionary approach that emphasizes an encompassing interest over the society and long time horizon in which rulers collect taxes and extract rents, while providing public services and social insurance in a manner that maximizes their net revenues (McGuire and Olson 1996; Congleton and Lee 2009). Both approaches have largely concentrated on the determinants of redistribution with little consideration for extraction. Taking a non-revolutionary approach, we aim to fill the gap by examining how inequality and civil society affect taxation on go
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