A Review of the Evidence on Open Budgeting

Brand new.

“A Review of the Evidence on Open Budgeting” is a recent report by the World Bank Institute’sCapacity Development and Results team. It explores key questions and existing evidence around the impact of open budgeting. Despite the growing body of literature, there remains limited substantiation for whether and how open budgeting contributes to reductions in poverty and improvements in the lives of the poor. This report pieces together the results chain presenting evidence for and against from the literature. It explores links between open budgeting and indicators of impact such as human development and public service delivery. The findings highlight the importance of measuring budget transparency, accountability, and participation. The findings show that the impact of institutional changes differ under varying conditions in specific contexts. The conclusions of the report point to the need for further investigation into impact and establishing effective measurement practices for monitoring related institutional change under varying conditions and different contexts.”

You can download the report here [PDF].

When Citizen Engagement Saves Lives (and what we can learn from it)

When it comes to the relationship between participatory institutions and development outcomes, participatory budgeting stands out as one of the best examples out there. For instance, in a paper recently published in World Development,  Sonia Gonçalves finds that municipalities that adopted participatory budgeting in Brazil “favoured an allocation of public expenditures that closely matched the popular preferences and channeled a larger fraction of their total budget to key investments in sanitation and health services.”  As a consequence, the author also finds that this change in the allocation of public expenditures “is associated with a pronounced reduction in the infant mortality rates for municipalities which adopted participatory budgeting.”

Evolution of Expenditure Share in Health and Sanitation compared between adopters and non-adopters of PB (Goncalves 2013).

Evolution of  the share of expenditures in health and sanitation compared between adopters and non-adopters of participatory budgeting (Goncalves 2013).

Now, in an excellent new article published in Comparative Political Studies, the authors Michael Touchton and Brian Wampler come up with similar findings (abstract):

We evaluate the role of a new type of democratic institution, participatory budgeting (PB), for improving citizens’ well-being. Participatory institutions are said to enhance governance, citizens’ empowerment, and the quality of democracy, creating a virtuous cycle to improve the poor’s well-being. Drawing from an original database of Brazil’s largest cities over the last 20 years, we assess whether adopting PB programs influences several indicators of well-being inputs, processes, and outcomes. We find PB programs are strongly associated with increases in health care spending, increases in civil society organizations, and decreases in infant mortality rates. This connection strengthens dramatically as PB programs remain in place over longer time frames. Furthermore, PB’s connection to well-being strengthens in the hand of mayors from the nationally powerful, ideologically and electorally motivated Workers’ Party. Our argument directly addresses debates on democracy and well-being and has powerful implications for participation, governance, and economic development.

When put together, these findings provide compelling evidence for those who – often unfamiliar with the literature – question the effectiveness of participatory governance institutions. Surely, more research is needed, and different citizen engagement initiatives (and contexts) may lead to different results.

But these articles also bring another important takeaway for those working with development and public sector reform. And that is the need to consider the fact that participatory institutions (as most institutional reforms) may take time to produce desirable/noticeable effects. As noted by Touchton and Wampler:

 The relationships we describe between PB and health and sanitation spending, PB and CSOs, and PB and health care outcomes in this section are greater in magnitude and stronger in statistical significance for municipalities that have used PB for a longer period of time. Municipalities using PB for less than 4 years do exhibit lower infant mortality rates than municipalities that never adopted PB. However, there is no statistically significant difference in spending on health care and sanitation between municipalities using PB for less than 4 years and municipalities that never adopted the program. This demonstrates the benefits from adopting PB are not related to low-hanging fruit, but built over a great number of years. Our results imply PB is associated with long-term institutional and political change—not just short-term shifts in funding priorities .

If throughout the years participatory budgeting has produced  evidence of its effectiveness on a number of fronts (e.g. pro-poor spending), it is only 25 years after its first implementation in Brazil that we start to see systematic evidence of sound development outcomes such as reduction in infant mortality. In other words, rushing to draw conclusions at early stages of participatory governance interventions may result in misleading assessments. Even worse, it may lead to discontinuing efforts that are yet to bear fruit in the medium and longer terms.

10 Most Read Posts in 2013

Below is a selection of the 10 most read posts at DemocracySpot in 2013. Thanks to all of those who stopped by throughout the year, and happy 2014.

1. Does transparency lead to trust? Some evidence on the subject.

2. The Foundations of Motivation for Citizen Engagement

3. Open Government, Feedback Loops, and Semantic Extravaganza

4. Open Government and Democracy

5. What’s Wrong with e-Petitions and How to Fix them

6. Lawrence Lessig on Sortition and Citizen Participation

7. Unequal Participation: Open Government’s Unresolved Dilemma

8. The Effect of SMS on Participation: Evidence from Uganda

9. The Uncertain Relationship Between Open Data and Accountability

10. Lisbon Revisited: Notes on Participation

Documentary: Participatory Budgeting in Belo Horizonte

Through the Facebook Participatory Budgeting group I came across a documentary about Belo Horizonte’s PB. The documentary, by Joao Ramos de Almeida, provides a unique view of the functioning of one of the oldest PBs in Brazil.

Among other things, the documentary shows how the process leads to a degree of civic empowerment and activism rarely seen in traditional governing models. It is particularly interesting to see how citizens contest, for instance, the cost estimates of public works made by the city administration. The documentary also shows how PB manages to engage citizens in an extremely time consuming process. It is also interesting to see that, while there is some degree of deliberation in the PB process, much of it is also about negotiation between the different communities involved.

Among other things, it shows that Belo Horizonte’s PB is far from perfect, and the suspicion of some degree of co-optation of some PB participants by the administration highlights difficulties that are inherent to many participatory processes. To some, it might come across as a sobering message. Yet, when looking at participatory initiatives, we should not only compare their functioning to an ideal vision of democracy. In this case, we should also compare it to the status quo, that is, how public budgeting takes place in the absence of public participation.

For those interested in citizen engagement this documentary (English subtitles, 55 mins) is worth watching.

***

Also read

Participatory Budgeting and Digital Democracy: the Belo Horizonte Case

The Effects of Participatory Budgeting on Infant Mortality in Brazil

Participatory Budgeting: Seven Defining Characteristics

Participatory Budgeting and Technology: Innovations in Open Government

The Participatory Turn: Participatory Budgeting Comes to America

The Participatory Turn: Participatory Budgeting Comes to America

 

So here it is, finally, the much awaited PhD by Hollie Russon-Gilman (Ash Center – Harvard) on Participatory Budgeting in the United States.

Below is the abstract.

Participatory Budgeting (PB) has expanded to over 1,500 municipalities worldwide since
its inception in Porto Alege, Brazil in 1989 by the leftist Partido dos Trabalhadores
(Workers’ Party). While PB has been adopted throughout the world, it has yet to take
hold in the United States. This dissertation examines the introduction of PB to the United
States with the first project in Chicago in 2009, and proceeds with an in-depth case study
of the largest implementation of PB in the United States: Participatory Budgeting in New
York City. I assess the outputs of PB in the United States including deliberations,
governance, and participation.
I argue that PB produces better outcomes than the status quo budget process in New York
City, while also transforming how those who participate understand themselves as
citizens, constituents, Council members, civil society leaders and community
stakeholders. However, there are serious challenges to participation, including high costs
of engagement, process exhaustion, and perils of scalability. I devise a framework for
assessment called “citizenly politics,” focusing on: 1) designing participation 2)
deliberation 3) participation and 4) potential for institutionalization. I argue that while the
material results PB produces are relatively modest, including more innovative projects,
PB delivers more substantial non-material or existential results. Existential citizenly
rewards include: greater civic knowledge, strengthened relationships with elected
officials, and greater community inclusion. Overall, PB provides a viable and
informative democratic innovation for strengthening civic engagement within the United
States that can be streamlined and adopted to scale.

You can read the full dissertation here [PDF].

Like it?  You might also want to read this about who participates in NYC’s PB and this about the effects of PB on infant mortality in Brazil.

Civil Society and Participation in Brazil: A Literature Review

This literature review is divided into six sections. The first section briefly describes the  theoretical and empirical background of debates about civil society and participation: the democratization process of the 1980s. The second section examines the first and second generation of studies of the best-known participatory mechanism in Brazil – participatory budgeting (PB). Next, this review turns attention toward research on policy councils, which fuelled more theoretical advances than studies of PB. A short section presents the few available studies about participation in the Northeast region of Brazil – a still largely unchartered territory in the literature. The fifth section discusses normative debates about the meaning and purpose of participation. Although the debate is not as contentious as it was in the early-2000s, two distinct views about participation still mark this literature. The last and longest section analyzes studies that treat citizen participation as a constitutive part of the representative system, which can help to improve government accountability and increase the quality of democracy.

Read full paper here [PDF].

Unequal Participation: Open Government’s Unresolved Dilemma

( cross-posted from techPresident)

In my frequent conversations about open government and citizen participation, the subject of elite capture (or “how representative it is”) is almost unavoidable. Some go as far as evaluating participatory initiatives on the grounds of an ideal notion of representativeness: participants should perfectly mirror the socio-demographic traits of the larger population from which they come.

But oddly enough, the same people who raise these concerns about participatory initiatives are much less inclined to apply the same reasoning and standards to traditional politics. In other words, few take the time to consider how representative and inclusive existing electoral democracy actually is. An article by Nicholas Carnes at the New York Times about political representation in the United States puts the issue into perspective:

If millionaires were a political party, that party would make up roughly 3 percent of American families, but it would have a super-majority in the Senate, a majority in the House, a majority on the Supreme Court and a man in the White House. If working-class Americans were a political party, that party would have made up more than half the country since the start of the 20th century. But legislators from that party (those who last worked in blue-collar jobs before entering politics) would never have held more than 2 percent of the seats in Congress.

I’ve yet to see a participatory process that produces similar results. But the limits of representation do not stop there. African Americans and Latinos are still greatly under-represented in US politics. The gender issue is no different: with the House of Representatives only 17 percent women, the Inter Parliamentary Union ranks the US 82nd in female representation in politics, behind countries such as the Arab Emirates, Sudan, Mauritania and Kazakhstan.

Obviously, the US is by no means exceptional in exclusion. Those working in the field of political participation have long been aware of the excluding effect of representative systems. As put by political scientist Arend Lijphart, unequal participation remains as representative democracy’s “unresolved dilemma.” Even more unfortunately, underlines Lijphart, inequalities in representation and influence “are not randomly distributed, but systematically biased in favor of more privileged citizens (…) and against less advantaged citizens”.

And it is from this unresolved dilemma that the raison d’être of participatory innovations stems. But rather than a replacement for representative systems (as misunderstood by some), participatory innovations are complementary mechanisms to enable the participation of individuals who are systematically excluded from traditional politics, ultimately increasing the overall diversity of voices that influence government.

This observation leads to a fundamental issue when assessing citizen participation initiatives: beyond questioning demographic representativeness, one must also consider the extent to which initiatives succeed (or not) in promoting the participation of previously marginalized sectors of society (i.e. inclusiveness).

So how inclusive are these mechanisms?

To continue with the US example, let’s consider one of the most exciting open government events taking place at the local level in the US: the recent adoption of participatory budgeting in NYC. Unlike most overhyped #opengov experiences, a team of researchers carried out an evaluation of the experience looking at, among other things, the extent to which it promoted inclusiveness. Below are some excerpts from the report [PDF]:

  • Twenty percent of PB voters identified themselves as African American; 14 percent as Hispanic or Latino/a; 2 percent as Asian and 2 percent as “Other.”
  • A higher percentage of African Americans participated in neighborhood assemblies (38 percent), compared to the full population in the four districts (31 percent).
  • Twenty-one percent of budget delegates and 19 percent of PB voters were born outside of the United States.
  • Participants that identified themselves as Black/African American were the most likely to volunteer to be budget delegates.
  • Women represented 64 percent of neighborhood assembly participants, 65 percent of budget delegates and 62 percent of voters in the PB process.

But how these numbers compare with participation in traditional politics is probably one of the highlights of the evaluation (emphasis is mine):

One of the most striking findings about who participated in PB [participatory budgeting] is how the data compares to other types of civic engagement, particularly voting patterns in NYC elections. Across the districts, PB engaged communities that have traditionally been uninspired by politics. People of color, low-income people and some immigrant groups turned out at higher rates than in previous elections.

A few numbers worth noting:

Latino/as represented 39 percent of voters in the 2009 City Council elections. However, 50 percent of PB voters identified themselves as Latino/a (District 8 NYC).

Black or African Americans represented 79 percent of voters in 2009 City Council elections. However, 87 percent of the district’s PB voters identified themselves as Black or African American (District 45 NYC).

Twenty-two percent of PB voters had a household income of less than $10,000 compared to 4 percent of the district’s voters in the 2009 City Council election (District 8 NYC).

I have very little doubt, if any, that the contrast would be even starker if we compared the income of those who sit on the City Council and those who participated in the NYC participatory budgeting. In City Councils across the US, less than 10 percent of members come from a blue-collar background. Conversely, the numbers on income of participatory budgeting participants speak for themselves.

As citizen engagement gains traction in the open government agenda, inclusiveness should be one of the top priorities: both from normative and empirical standpoints, more inclusive initiatives are likely to produce better outcomes. The NYC experience provides valuable lessons for donors, policymakers, advocates, and enthusiasts alike. They can find more about it here and here.

13 New Articles on Participatory Budgeting

A band inaugurates a public work selected through participatory budgeting in Brazil (picture by Prefeitura de Olinda on Flickr).

The new issue of the Journal of Public Deliberation (Volume 8, Issue 2 – 2012) presents 13 new articles on participatory budgeting. Edited by Janette Hartz-Karpz (Curtin University) and Brian Wampler (Boise State University) “This special issue of the Journal of Public Deliberation brings together leading scholars expand our conceptual tools to understand why PB programs are being adopted, how governments are adapting the rules and principles to meet different policy and political goals, and the impact of PB on civil society, state reform, and social well-being.”

Below links to the articles:

Transnational Models of Citizen Participation: The Case of Participatory Budgeting
Yves Sintomer, Carsten Herzberg, Anja Röcke, and Giovanni Allegretti

The Benefits of Citizen Engagement: a (Brief) Review of the Evidence

Picture by neotint on flickr.

(I am working on a brief literature review on the benefits of participation, focusing on its different types of impact. Most of it (but not entirely) relates to participatory budgeting. Below are a few of the sections covered and a rough draft. Ideas and suggestions for topic coverage and literature (preferably peer-reviewed) are more than welcome.)

INCREASED TAX REVENUE / REDUCTION OF TAX DELINQUENCY

As shown in a cross-national analysis by Torgler & Schneider (2009), citizens are more willing to pay taxes when they perceive that their preferences are properly taken into account by public institutions. Along these lines, the existing evidence suggests the existence of a causal relationship between citizen participation processes and levels of tax compliance. For instance, studies show that Swiss cantons with higher levels of democratic participation present lower tax evasion rates, even when controlling for other factors. This effect is particularly strong when it comes to direct citizen participation in budgetary decisions, i.e. fiscal referendum (Frey & Feld 2002, Frey et al. 2004, Torgler 2005). In the Latin American context, a number of authors have observed a similar relationship with regard to participatory budgeting processes. In the municipality of Porto Alegre (BR) for instance, Schneider and Baquero (2006) show that the adoption of PB led to a substantive increase in tax revenues. In a similar vein, a comparative study of 25 municipalities in Latin America and Europe finds a significant reduction in levels of tax delinquency after the adoption of PB (Cabannes 2004: 36). In another study Zamboni (2007) compares the performance of similar Brazilian municipalities with and without PB processes: even when controlling for other factors, the study finds a significant relationship between the existence of PB and the reduction of tax evasion.

Some evidence suggests that participation may be even more effective at curbing tax evasion than traditional deterrence measures, such as fines and controls. At odds with conventional economic reasoning, the literature in the field of “tax morale” suggests that citizen participation actually comes across as a better remedy for tax evasion than commonly adopted deterrence policies (e.g. Torgler 2005, Feld & Frey 2007, Feld & Torgler 2007) .

INCREASED EFFICIENCY / BETTER ALLOCATION OF RESOURCES

According to a study by the Institute of Development Studies (IDS) on the PB process in Rio Grande do Sul state, “PB has promoted a redistributive development model while improving budgetary planning and efficiency” (Schneider & Goldfrank 2002, p. iii). From an efficiency point of view, the study observes that the PB process improved governmental capacity to allocate funds across governmental divisions (e.g. secretariats) to enact planned projects. For instance, with the implementation of PB, the rate of completion of budgeted education projects increased from an average of 62.5% to 82.5% (Schneider & Goldfrank 2002) . The implementation of PB also increased the planning capacity of the state, leading to a budget that better forecast the revenue receipts, with the government actually spending amounts systematically closer to the planned expenses (Schneider & Goldfrank 2002).

Another study on the municipality of Porto Alegre shows that prior to the implementation of the PB process, no more than two percent of the municipal budget was dedicated to investment, with most of the budget allocated to personnel expenses. Five years later, the combination of increased tax revenues and efficiency gains – engendered by the PB process – led to a tenfold increase in the percentage of investments (Baiocchi 2003). Finally, as shown by Zamboni’s (2007) quantitative study, even when controlling for other factors, municipalities that adopt PB processes are better managed and present less financial irregularities (e.g. corruption) than those without PB.

The elements highlighted above lead to another question regarding the extent to which citizen engagement leads to more targeted and evidence-based allocation of resources. The literature dealing with citizen participation primarily approaches this issue by considering the extent to which participatory processes lead to an inversion of priorities and to increased social justice. In this respect, the available evidence suggests that participatory budgeting leads to significant shifts in priorities and policies, towards expenditures that directly benefit poor sections of society (Avritzer 1999, Navarro 2001, Blore et al. 2004). In a similar vein, quantitative analysis by Baiocchi et al. (2006) finds that participatory budgeting is strongly associated with a reduction in extreme poverty and increased access to basic services. More recently, a World Bank report demonstrated that participatory budgeting bears a statistically significant impact on a number of social indicators. Amongst others, the authors of the report find that PB is positively and strongly associated with improvements in poverty rates and water services (World Bank 2008).

INCREASED TRUST AND IMPROVED IMPLEMENTATION PROCESSES

The relationship between participatory budgeting and increased trust and legitimacy draws from a well-established body of literature dealing with issues of citizen participation, social capital and trust in government. It is widely known that citizen engagement leads to increased levels of trust in institutions: this holds true even when controlling for other factors (Brehm & Rahn 1997, Keele 2007, Tampubolon 2010) . Indeed, in some cases, one of the strongest effects of participatory processes is precisely that of increased trust in institutions (Altschuller & Corrales 2009).

The understanding that PB reduces implementation hurdles draws both from broader literature dealing with policy implementation and from the specific experience of PB itself. In a more general perspective, the evidence from experimental settings suggests that decisions made democratically lead to better cooperative models, mitigating problems of free-riding and facilitating subsequent policy implementation (Ertan et al. 2009, Dal Bó et al. 2010). Beyond experiments in controlled environments, the case for increased participation in decision-making processes – as a means to reduce implementation drawbacks – has been made in fields as diverse as those of economic reforms (Frieden 1991), agriculture policies (Bardhan 2000) and workplace decisions (Black & Lynch 2001). For PB the evidence is by no means different: as the outcome of an inclusive decision-making process, the implementation of PB decisions has been documented as less subject to elite capture and clientelist exchanges (Wampler 2001). The literature has also demonstrated the substantive popular support enjoyed by public works and services selected through the PB process, with local communities often collaborating with supplementary personnel, financial and material resources in order to increase the resources available for the implementation of PB projects (Cabannes 2004).

REFERENCES:
Altschuller, D., Corrales, J. (2009) “The Spillover Effects of Participation in Development Projects: Evidence from Honduras and Guatemala.” Working paper, CCEUP.

Avritzer, L. (1999) “Public Deliberation at the Local Level: Participatory Budgeting in Brazil.” Paper delivered at the Experiments for Deliberative Democracy Conference, Wisconsin January, 2000

Baiocchi, G. (2003) “Radicals in Power: The Workers Party and Experiments in Urban Democracy in Brazil.” London: Zed.

Baiocchi, G.; Heller, P.; Chaudhuri, S. and Kunrath Silva, M. (2006) “Evaluating Empowerment: Participatory Budgeting in Brazilian Municipalities”, in R. Alsop, M. Frost Bertelsen and J. Holland (eds), Empowerment in Practice: From Analysis to Implementation, Washington: World Bank

Bardhan, P. (2000) “Irrigation and Cooperation: An Empirical Analysis of 48 Irrigation Communities in South India.” Economic Development and Cultural Change, 48(4): 847–65.

Black, S., M. Lynch (2001) “How to Compete: The Impact of Workplace Practices and Information Technology on Productivity.” Review of Economics and Statistics, 83(3): 434–45.

Blore, I., Devas, N. and Staler (2004) “Municipalities and Finance: a sourcebook for Capacity Building.” Earthscan, London.

Brehm J, Rahn W. (1997) “Individual-level evidence for the causes and consequences of social capital.” American Journal of Political Science. Vol.41:999- 1023.

Cabannes, Y (2004) “Participatory budgeting: a significant contribution to participatory democracy”. Environment and Urbanization 16(1): 27-46

Dal Bó, P., A. Foster, and L. Putterman (2010) “Institutions and Behavior: Experimental Evidence on the Effects of Democracy” American Economic Review 100: 2205–2229

Ertan A., Talbot P., and L. Putterman (2009) “Who to Punish? Individual Decisions and Majority Rule in Mitigating the Free Rider Problem.” European Economic Review, 53(5): 495–511.

Feld, L. and Torgler, B. (2007) “Tax Morale After the Reunification of Germany: Results from a Quasi-Natural Experiment.” CESifo Working Paper No. 1921.

Feld, L.P., and B.S. Frey (2007) “Tax Compliance as the Result of a Psychological Tax Contract: The Role of Incentives and Responsive Regulation”, Law and Policy 29: 102–20.

Frieden, Jeffry (1991) “Debt, Development, and Democracy: Modern Political Economy and Latin America, 1965-1985.” Princeton, NJ: Princeton University Press.

Frey, Bruno S., Matthias Benz, and Alois Stutzer (2004) “Introducing Procedural Utility: Not Only What, but Also How Matters.” Journal of Institutional and Theoretical Economics, 160(3): 377–401.

Frey, Bruno S., and Lars P. Feld (2002) “Deterrence and Morale in Taxation: An Empirical Analysis.” CESifo Working Paper no. 760, August 2002.

Gaventa, J. & Barret, G. (2010) “So what difference does it make? Mapping the outcomes of citizen engagement”. IDS Working Paper, 347, 1-74.

Goldfrank, Benjamin (2006) “Lessons from Latin American Experience in Participatory Budgeting.” Paper presented at the Latin American Studies Association Meeting. San Juan, Puerto Rico, March 2006.

Keele,L. (2007) “Social Capital and the Dynamics of Trust in Government”,American Journal of Political Science,Vol.51,No.2:241-257.

Navarro, Z. (2001) “Decentralization, Participation and Social Control of Public Resources: “Participatory Budgeting” In Porto Alegre (Brazil).” Development, 41(3), 68–71

Schneider, A. and B. Goldfrank. (2002) ‘Budgets and ballots in Brazil: participatory budgeting from the city to the state’, IDS Working Paper 149. Brighton: IDS.

Schneider, A. and M. Baquero (2006) “Get What You Want, Give What You Can: Embedded Public Finance in Porto Alegre.” Brighton: Institute of Development Studies.

Tampubolon, G. (2010) “Civic engagement and trust in Britain 2003-2004.” ISC Working Paper 2010-14, Manchester University.

Torgler, B. (2005) “Tax morale and Direct Democracy.” European Journal of Political Economy 21, pp. 525 – 531.

Torgler, B. and F. Schneider (2009) “The impact of tax morale and institutional quality on the shadow economy.” Journal of Economic Psychology, 30(2). pp. 228-245.

Varma, K. N., & Doob, A. N. (1998) “Deterring economic crimes: the case of tax evasion”. Canadian Journal of Criminology, 40, 165–184.

Wampler, B (2004) “Expanding Accountability Through Participatory Institutions: Mayors, Citizens, and Budgeting in Three Brazilian Municipalities,” Latin AmericanPolitics & Society, 46:2.

World Bank Report (2008). “Brazil: toward a more inclusive and effective participatory budget in Porto Alegre.” Report No. 40144-BR.

Zamboni, Yves. 2007. “Participatory Budgeting and Local Governance: An evidence based evaluation of participatory budgeting experiences in Brazil.” Working Paper, Bristol University.

The Effects of Participatory Budgeting on Infant Mortality in Brazil

picture by Blog do Mílton Jung on Flickr

Adding pieces of evidence to the ROI of citizen participation. Highlights are mine:

Participatory budgeting, via which the common citizen is given the ability to interact with the elected politicians in the drafting of the local budget, became a popular political reform in Brazilian municipalities in the 1990s and attracted widespread attention across the world. This paper investigates whether the use of participatory budgeting in Brazilian municipalities in the period 1991-2004 has affected the pattern of municipal expenditures and had any measurable impact on living conditions. I show that the municipalities that made use of this participatory mechanism favoured an allocation of public expenditures that closely matched the ìpopular preferences and channeled a larger fraction of their total budget to key investments in sanitation and health services. I also found that this change in the composition of municipal expenditures is associated with a pronounced reduction in the infant mortality rates for municipalities which adopted participatory budgeting. This suggests that promoting a more direct interaction between service users and elected officials in budgetary design and implementation can affect both how local resources are spent and associated living standard outcomes.

You can read the full paper here [PDF].

Update:  The paper has been published in the World Development Journal. You can read the final version here [PDF].