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Appreciating how government budgeting systems and policies vary is best understood by comparing and analyzing the political cultural, historic, economic, and institutional contexts in which they are formulated, adopted, and executed. This book argues that even similar-appearing institutions and budgetary procedures may very well differ in practice due to the influence of a government’s political cultural and historical experiences.
The great budgetary transformation of central Eastern Europe and the former Soviet Union demonstrates the critical importance of economic context, political culture, history, and institutions in the recreation of public financial management systems. Since the collapse of the USSR, countries in this region have served as fiscal laboratories that experiment with budgetary reforms. This includes countries like Hungary and Poland that joined the European Union.
This chapter examines budgeting in the United States, its budgetary institutions, culture, and policies, from the founding of the republic in the 1700s through the Trump administration. The US Constitution is the world’s oldest functioning government document, and its budgetary rules reflect the country’s ongoing debate about fiscal federalism, and how the federal goverment should manage its fiscal and macroeconomic policies.
Latin America has stignificantly improved its budgetary effectiveness during the past thirty years, despite a widespread variation in political, demographic, and income levels. Bureaucratic authoritarian regimes have evolved into contribute to public finance stabilization. Significant problems remain in the financing of such basic services as education and health care. Expenditure control weakenesses remain at the managerial and operational levels of government.
Every government engages in budgeting and public financial management to run the affairs of state. Effective budgeting empowers states to prioritize policies, allocate resources, and discipline bureaucracies, and it contributes to efficacious fiscal and macroeconomic policies. Budgeting can be transparent, participatory, and promote democratic decision-making, or it can be opaque, hierarchical, and encourage authoritarian rule. This book compares budgetary systems around the world by examining the economic, political, cultural, and institutional contexts in which they are formulated, adopted, and executed. The second edition has been updated with new data to offer a more expansive set of national case studies, with examples of budgeting in China, India, Indonesia, Iraq, and Nigeria. Chapters also discuss Brexit and the European Union's struggle to require balances budgets during the Euro Debt Crisis. Additionally, the authors provide a deeper analysis of developments in US budgetary policies from the Revolutionary War through the Trump presidency.
Though geographically diverse, China, Indonesia, Nigeria, and Iraq share some interesting commonalities. All have been heavily influenced by external, primarily European, budgetary models and practices. After the 1949 Revolution, China turned to the Soviet Union for five-year planning and budgetary models and guidelines. Iraq, a former British colony also turned to the Soviet Union for guidance during the Cold War, and more recently its budgetary processes have been influenced by the American occupation. Like Iraq, Nigeria was a British colony, and Indonesia a former Dutch colony, and both these countries were influenced by their colonial histories.
The EU member states engage in budgeting through a set of supranational fiscal procedures outlined in EU treaties and supporting legislation. The EU itself is a suprnational government with its own budget and budgetary institutions, procedures, and programs. It enforces these macrobudgetary rules that significantly constrain the policy decisions of the individual member states.
This chapter examines the budgetary behavior of the former countries of the British Empire, now known as Commonwealth countries. Orginally created by the 1931 Statute of Westminister that recast the British Empire as a “Commonwealth of nations,” the modern Commonwealth consists of a fifty-four-country network of disparate people created in 1949. The chapter in particular examines the budgetary practices of the United Kingdom and India.
All governments have budgets. Budgeting is a core state function. Effective budgeting empowers the state to prioritize policies, allocate resources, and discipline the bureaucracy. Proficient budgeting contributes to efficient fiscal and macroeconomic policies. This book offers a comparative framework that identifies eight categores called cultural clusters that help identify the budgetary institutions and policies adopted by different governments.
Public works spending was an integral component of John F. Kennedy’s fiscal policy. Drawing on a wide range of archival evidence from the Kennedy Presidential Library, we show how the administration worked to pass a $2.5 billion infrastructure bill that would give the presidency unilateral authority in determining where and when those funds would be spent. Contrary to recent accounts that emphasize Kennedy’s role in promoting massive tax cuts in 1963–64, the 1962 Public Works Acceleration Act was a key fiscal instrument that Kennedy advocated prior to the administration’s push for tax reform. Moreover, the public works policy was strictly Keynesian—designed as a proactive countercyclical “stabilizer” that would generate budget deficits in order to make up for slack in a recession. Kennedy’s plan faced stiff resistance in Congress and the history of the law offers important lessons for why infrastructure programs are often disregarded as countercyclical instruments.
The Coalition’s invasion and occupation left the Iraqis with new budgetary institutions, the mandate to boost investment spending, an effort to build budgeting capacity, and donor requirements to develop budgetary processes consistent with international best practices. The Coalition Provisional Authority imposed rudimentary budgetary templates in the form of the 2003 and 2004 budgets, followed by a set of CPA-issued orders that defined the budgetary process, empowered the Ministry of Finance, and provided an initial framework for the central government’s fiscal relations with provincial and local governments. The Coalition layered these changes in budgetary rules and organizations on Saddam Hussein’s institutional arrangements, which Saddam, in turn, had layered on British and Ottoman budgetary practices. Then the June 2004 transfer of power raised critical questions about the success of the Coalition’s budgetary state-building efforts in Iraq. Would the Iraqis accept, take ownership, and invest in the CPA’s budgetary institutions, or abandon them? Would these rules and procedures be sustainable and serve the Iraqis in their efforts to make budgetary decisions in politically and economically difficult times? What budgetary decisions would they make? What political and economic obstacles confronted the Iraqis in their efforts to budget effectively? The answers to these questions and the practical successes and long-term sustainability of these freshly imposed institutions would be tested in day-to-day budgeting. This chapter provides a detailed examination of how the Iraqis’ buy-in, ownership, and investment in the budgetary process occurred as they faced harsh fiscal challenges, ongoing security threats, and political instability. In this way, Iraq’s ownership and continued use of these new budgetary rules, procedures, and organizations served as important tests of the Coalition’s capacity to transform Iraqi institutions.