Despite the growing body of literature examining the effectiveness of transparency and accountability initiatives, there remains limited substantiation for whether and how open budgeting contributes to reductions in poverty and improvements in the lives of the poor. This paper reviews available evidence and concludes that institutional changes can contribute to higher-level outcomes in certain contexts.
This paper identifies and pieces together evidence demonstrating the development impact of Open Budgeting by conducting a review of the available literature. The paper examines evidence supporting and refuting various small incremental steps in a results chain to establish links between open budgeting and improved human development outcomes and improvements in public services. The review is not exhaustive but is intended to highlight findings for further investigation and discussion.
The second key question explored in the paper is how to identify ‘leading indicators of institutional change impact’. These are concrete observable milestones marking points of progress in open budgeting interventions that eventually contribute to development outcomes for the poor. The paper starts with the overall goal of poverty reduction and unpacks this as improvements for the poor in the delivery of basic public services such as health, water, sanitation, roads and transport.
The paper explores this by considering three key institutional changes and how they affect poverty: fiscal transparency, accountability, and participation. The three are often interrelated and mutually reinforcing. In other words, some argue that transparency is necessary for accountability because without information, citizens could not hold their governments accountable. However, it has also been argued that holding governments accountable is what makes governments comply with transparency, and that participation encourages accountability. Given the complex nature of the relationships between these institutional changes, the paper examines them both as unique concepts and as part of endogenous interactions.
The findings show links between the institutional changes achieved by participatory budget initiatives and improvements in the access of the poor to better quality services. Under certain conditions, open budgeting practices can contribute to development impact. Transparency, particularly as assessed by the Open Budget Index, is a predictor of child and infant health outcomes and access to improved drinking water. Accountability mechanisms have been found to contribute to similar improvements in human development indicators. Participatory budgeting, in terms of the devolution of decision-making authority to local actors, has been associated with improvements in public management and service delivery and has been significantly related to the reduction of extreme poverty.
The findings signalling how institutional changes can contribute to higher-level outcomes in certain contexts highlight the importance of measuring budget transparency, accountability, and participation and tracing their incremental outcomes along a results chain. Documenting these change processes over time would help practitioners to plan for and assess the effectiveness of knowledge initiatives.
