Participatory budgeting and government efficiency: evidence from municipal governments in South Korea
| Author | Sun-Moon Jung |
| DOI | http://doi.org/10.1177/0020852321991208 |
| Published date | 01 December 2022 |
| Date | 01 December 2022 |
| Subject Matter | Articles |
Article
Participatory budgeting
and government
efficiency: evidence from
municipal governments
in South Korea
Sun-Moon Jung
Dongguk University, Republic of Korea
Abstract
The current study evaluates the role of a democratic institution—participatory budget-
ing—in improving government efficiency. Participatory institutions aim to enhance gov-
ernance, information sharing, and the responsiveness of political agents to citizens,
leading to fiscal accountability and efficiency. Drawing from a database of 221 municipal
governments in South Korea around a mandatory participatory budgeting adoption
period, we find that participatory budgeting adoptions are followed by improvement
in multiple dimensions of government efficiency. In particular, municipal governments
experience statistically significant improvements in their fiscal sustainability and admin-
istrative efficiency. In additional analysis, we find that the efficiency improvements are
more pronounced in the presence of strong mayoral leadership. Overall findings sug-
gest that participatory budgeting programs contribute to fiscal health and administrative
efficiency, above and beyond their role in securing fiscal democracy.
Points for practitioners
The current study suggests that participatory budget systems not only contribute to
quality in democracy (as prior studies have found), but also improve fiscal efficiency and
accountability by serving as a bottom-up governance mechanism. We document that
introductions of participatory budgeting programs are followed by statistically signifi-
cant improvements in fiscal sustainability and administrative efficiency. The results also
indicate that the efficiency-improvement effect differs across municipalities, depending
Corresponding author:
International Review of Administrative
Sciences
!The Author(s) 2021
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DOI: 10.1177/0020852321991208
journals.sagepub.com/home/ras
2022, Vol. 88(4) 1105–1123
International
Review of
Administrative
Sciences
Sun-Moon Jung, Dongguk University, Business Administration, Office of L402, Building 4F, 30 Pildong-ro 1 gil,
Jung-gu, Seoul 0 4620, Republic of Korea.
Email: sunmoonjung@dongguk.edu
on their political environments. Overall, this study provides a strong argument for the
participatory budgeting system by empirically supporting its efficiency-improvement
effect.
Keywords
democratic institutions, government efficiency, participatory budgeting, local
governance
Introduction
In recent decades, innovations in local governance have emphasized the role of
grassroots democracy in fiscal decision-making. Participatory budgeting (PB) is a
democratic institution in which citizens have a direct say in the distribution of
public resources (Cabannes, 2004). PB programs address “two distinct but inter-
connected needs” by improving government performance and enhancing the qual-
ity of democracy (Wampler, 2007). By promoting institutional rules that
encourage transparency and constrain lax management, civic engagement in the
fiscal process helps improve administrative performance (Baiocchi and Ganuza,
2014; Wampler, 2007).
Prior studies have focused on the role of PB systems in promoting fiscal democ-
racy (De Renzio and Wehner, 2017). For example, one established area of empir-
ical research links PB systems’ fiscal openness to better resource allocation and
poverty improvement (Boulding and Wampler, 2010; Goldfrank and Schneider,
2006; Gonc¸ alves, 2014; Touchton and Wampler, 2014). Less attention has been
paid to the efficiency-improving effect of fiscal openness. As bottom-up account-
ability mechanisms, PB programs provide local citizens with better access to
financial information and with continuous opportunities to strengthen
community-based monitoring and social coalitions (Gonc¸alves, 2014). Hence, PB
programs are expected to contribute to government efficiency. To this point, how-
ever, we have scant empirical evidence on the efficiency-improvement effect of PB.
The current study aims to fill this void by examining whether the introduction
of PB programs leads to improvements in government efficiency. South Korea
provides ample data related to our research question since all municipalities
were required to adopt PB programs starting in 2011. Using the 221 municipal
governments in Korea during 2010–2014 (N¼1063), we find evidence that sup-
ports an efficiency-improvement effect of PB. After PB adoption, municipal gov-
ernments experience statistically significant improvements in various indicators of
fiscal sustainability and administrative efficiency, including reliance on external
grants, balance of revenues and spending, labor costs, benefits and perks, and
non-program expenses. These findings are robust to controlling for municipal
fixed effects and year fixed effects.
1106 International Review of Administrative Sciences 88(4)
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