The movie’s better.
There are numerous differences between the book and the film, mostly of characters, emphasis and setting. There’s no Vargas in the novel; the book’s main protagonist is a Vargas-like assistant district attorney named Holt, who has a Mexican (albeit thoroughly Americanized) wife. There’s no Sgt. Menzies; the film collapses the characters of McCoy and “Sgt.” Quinlan into the single character of Capt. Quinlan. The unnamed, rather Santa Monica-like Southern California setting of the novel is transmogrified in the film into an über-border town of irresistible sleaziness and decay.
Most important, the book lacks the poetry and atmosphere of Welles’s film, specifically the Mexican-ness, border tensions, and racially-charged edginess which overlay almost every scene. But bottom line: the movie, with its special alchemy by way of Welles’s magic ‘touch’, transforms a conventional crime thriller into a phantasmagorical, and unforgettable, work of art.
Bibl : Frank Brady, Citizen Welles : a Biography of Orson Welles, N. Y., New York, Scribner, 1989, pp. 496-511; Danny Peary, Cult Movies 3, N. Y., Simon & Schuster, 1988, pp. 255-260; “Touch of Evil” : Crossing the Line; “Hallucinations of Miscegenation and Murder: Dancing along the Mestiza/o Borders of Proto-Chicana/o Cinema with Orson Welles's Touch of Evil," in : William Anthony Nericcio, Tex[t]-Mex : Seductive Hallucinations of the "Mexican" in America, Austin, University of Texas Press, 2007, pp. 39-80; Brooke Rollins, “Some Kind of a Man : Orson Welles as Touch of Evil’s Masculine Auteur,” Velvet Light Trap: A Critical Journal of Film & Television, Spring2006, Issue 57, pp. 32-41.
 For more on border noir see: Dominique Brégent-Heald, "Dark Limbo : Film Noir and the North American Borders," Journal of American Culture, v29 n2, pp. 125-138.
 Eric M. Krueger, “Touch of Evil: Style Expressing Content,” Cinema Journal, Vol. 12, No. 1 (Autumn, 1972), p. 57.
 In Quinlan's calculus, American invariably equates to White, as opposed to Mexican, different, or otherwise foreign (i.e. brown-skinned). Thus his nationalistic bias has a pungently racist element to it.
 Sympathetic or not, by the end of the film the character of Quinlan isn’t redeemed in any sense – in fact he has become progressively more vile and ruthless. To be sure, there’s the minor bone tossed his way with Sanchez's confession which confirms his repute as a detective. The really nice twist, however, is that it’s the squeaky clean Vargas who’s ultimately dragged down to Quinlan’s level, literally, as he meanders through the sewer-like, oil-drenched waters trying to collect surreptitiously obtained evidence to, in effect, frame Quinlan.
Despite all the technical razzle-dazzle and convoluted plot, Touch of Evil is at heart a character study, specifically of two characters: the somewhat one-dimensional Vargas and the more complexly textured Quinlan. And if the particular vehicle for the character study is tragedy, then the true tragic figure is not the obvious choice of Quinlan, who has already, self-accommodatingly, sunk to his own moral and ethical heart of darkness, but rather, the by-the-book Vargas, who little by little compromises his professional ethics, eventually employing Quinlan-like methods of aiding justice in pursuit of an ostensible, and probably illusory, greater good.
But, in a classic case of Wellesian one-upmanship, it seems that the wily director may have had the last laugh after all. In particular, by way of the 1998 restoration (which incorporates a goodly amount of Welles’s suggestions in his famous 58-page memo), the artistic vision of Welles the auteur - even from beyond the grave and more than a half century later - has, at least to some extent, prevailed over philistinic studio interference. Thus, the mythology of Welles as misunderstood genius only continues to grow over the years.