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Public Expenditure Analysis PDF

292 Pages·2005·1.07 MB·English
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PUBLIC SECTOR GOVERNANCE AND ACCOUNTABILITY SERIES PUBLIC EXPENDITURE ANALYSIS Edited by ANWAR SHAH PUBLIC EXPENDITURE ANALYSIS Introduction to the Public Sector Governance and Accountability Series Anwar Shah,Series Editor A well-functioning public sector that delivers quality public services consistent with citizen preferences and that fosters private market-led growth while managing fiscal resources pru- dently is considered critical to the World Bank’s mission of poverty alleviation and the achievement ofMillennium Development Goals.This important new series aims to advance those objectives by disseminating conceptual guidance and lessons from practices and by facilitating learning from each others’ experiences on ideas and practices that promote responsive(by matching public services with citizens’preferences),responsible(through effi- ciency and equity in service provision without undue fiscal and social risk),and accountable (to citizens for all actions) public governance in developing countries. This series represents a response to several independent evaluations in recent years that have argued that development practitioners and policy makers dealing with public sector reforms in developing countries and,indeed,anyone with a concern for effective public gov- ernance could benefit from a synthesis ofnewer perspectives on public sector reforms.This series distills current wisdom and presents tools of analysis for improving the efficiency, equity,and efficacy ofthe public sector.Leading public policy experts and practitioners have contributed to the series. The first seven volumes in the series (Fiscal Management,Public Services Delivery,Pub- lic Expenditure Analysis, Tools for Public Sector Evaluations, Macrofederalism and Local Finances,International Practices in Local Governance,and Citizen-Centered Governance) are concerned with public sector accountability for prudent fiscal management;efficiency and equity in public service provision;safeguards for the protection ofthe poor,women,minori- ties,and other disadvantaged groups;ways ofstrengthening institutional arrangements for voice and exit;methods of evaluating public sector programs,fiscal federalism,and local finances;international practices in local governance;and a framework for responsive and accountable governance. Fiscal Management Macrofederalism and Local Finances Edited by Anwar Shah Edited by Anwar Shah International Practices in Local Public Services Delivery Governance Edited by Anwar Shah Edited by Anwar Shah Tools for Public Sector Evaluations Citizen-Centered Governance Edited by Anwar Shah Matthew Andrews and Anwar Shah PUBLIC SECTOR GOVERNANCE AND ACCOUNTABILITY SERIES PUBLIC EXPENDITURE ANALYSIS Edited by ANWAR SHAH THE WORLD BANK Washington,D.C. ©2005 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone:202-473-1000 Internet:www.worldbank.org E-mail:[email protected] All rights reserved 1 2 3 4 08 07 06 05 This volume is a product ofthe staffofthe International Bank for Reconstruction and Development / The World Bank.The findings,interpretations,and conclusions expressed in this paper do not necessarily reflect the views ofthe Executive Directors ofThe World Bank or the governments they represent. The World Bank does not guarantee the accuracy ofthe data included in this work. The boundaries,colors,denominations,and other information shown on any map in this work do not imply any judgement on the part ofThe World Bank concerning the legal status ofany territory or the endorsement or acceptance ofsuch boundaries. Rights and Permissions The material in this publication is copyrighted.Copying and/or transmitting portions or all ofthis work without permission may be a violation ofapplicable law.The Interna- tional Bank for Reconstruction and Development / The World Bank encourages dissem- ination ofits work and will normally grant permission to reproduce portions ofthe work promptly. For permission to photocopy or reprint any part ofthis work,please send a request with complete information to the Copyright Clearance Center Inc.,222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office ofthe Publisher,The World Bank,1818 H Street NW,Washing- ton,DC 20433,USA;fax:202-522-2422;e-mail:[email protected]. ISBN-10:0-8213-6144-9 ISBN-13:978-0-8213-6144-3 eISBN:978-0-8213-6145-0 DOI:1596/978-0-8213-6144-3 Library ofCongress Cataloging-in-Publications Data Public expenditure analysis for citizen-centered governance / edited by Anwar Shah. p.cm.—(Public sector,governance,and accountability series) Includes bibliographical references and index. ISBN 0-8213-6144-9 (pbk.) 1.Local government—Citizen participation.2.Municipal services—Evaluation.3.Local budgets.4.Expenditures,Public. I.Shah,Anwar.II.World Bank.III.Series. JS211.P827 2005 352.4'6214—dc22 2005043248 Contents Other Forthcoming Books of Related Interest ii Foreword xi Preface xiii Acknowledgments xv Contributors xvi Overview xix by Anwar Shah CHAPTER Public Expenditure Incidence Analysis 1 1 by Giuseppe Ruggeri General Issues 2 The Allocation ofPublic Expenditures 15 Distributional Effects 25 Conclusions 29 v vi Contents 2 On Measures of Inequality and Poverty with Welfare Implications 33 by Nanak Kakwani and Hyun Son The Lorenz Curve and Social Welfare 34 Gini Index 36 Calculations ofthe Gini Index 37 Generalized Gini Index 38 Entropy Measures ofInequality 39 Atkinson’s Inequality Measures 40 Measuring Poverty 42 An Illustration Using Lao PDR Data 44 Some Concluding Remarks 47 On Assessing the Equity of Governments’ Fiscal 3 Policies, with Application to the Philippines 49 by Hyun Son Welfare Measures 50 Welfare and Income Components 52 Welfare Reform Index 55 Indirect Taxes and Subsidies 56 An Overview ofthe Philippines’Fiscal System 57 Basis for Measuring Distributional Effects 61 Analysis ofEmpirical Results 62 Some Concluding Remarks 67 4 Evaluating Public Pensions 69 by Robin Boadway and Katherine Cuff The Imperative for Public Pension Reform and Development 69 The Rationale for Government Intervention 72 Transfers to the Elderly 88 Contributory Pension Schemes 99 Encouragement ofVoluntary Provision for Retirement 125 Conclusion:Issues for Evaluation 128 Contents vii 5 Gender in Public Expenditure Reviews 135 by Barbara Bergmann Choice and Range ofTopics 137 Methodology ofAnalysis 139 Provision ofData 141 Remedies and Changes in Policy and Budget 142 Examples ofGender-Sensitive Budgetary Analysis 144 Summary 151 6 Citizen-Centered Governance: A New Approach to Public Sector Reform 153 by Matthew Andrews and Anwar Shah The Public Sector Reform Challenge in Developing Countries 154 Conventional Reform Approaches,the Legacy They Leave,and Their Problems 156 A New Citizen-Centered Framework to Guide Reform 165 Conclusion 175 7 Toward Citizen-Centered Local-Level Budgets in Developing Countries 183 by Matthew Andrews and Anwar Shah Citizens and the Common Approaches to Budgeting in Local Developing Countries 184 Citizens Analyzing Municipal Finances in Developing Countries: A New Approach 190 Conclusion 215 8 Voice Mechanisms and Local Government Fiscal Outcomes: How Do Civic Pressure and Participation Influence Public Accountability? 217 by Matthew Andrews Background 218 The Link between Public Sector Accountability and Civic Voice 219 viii Contents Reforms Focused on Enhancing Voice and Accountability 220 A Research Approach 222 Observations about the Link between Voice,Voice Mechanisms, and Accountability 223 Conclusion 241 BOXES 1.1 Components ofVarious Income Concepts 12 1.2 A Classification ofGovernment Expenditures 18 1.3 Selected Groupings ofGovernment Expenditures 26 FIGURES 2.1 Lorenz Curve 35 6.1 The Process Bias ofCommon Reform Combinations 161 6.2 The Top-Down,Centralizing Nature ofCommon Reform Combinations 164 6.3(a)A Roadmap for Citizen-Centered Governance 169 6.3(b)Citizen-Centered Reform—Formalizing the Results Focus 169 6.4 Citizen-Centered Reform Influences on Governance 170 6.5 Tools for Results-Oriented Management—External Citizen Focus 173 8.1 Voice Mechanisms,Voice Expression,and Accountability 221 8.2 Voice Expression and Accountability Effects ofMechanism Adoption 235 8.3 Voice Mechanisms,Voice Expression,and Accountability (Observed Experience) 242 TABLES 1.1 Global Indexes ofRedistribution Based on Comparisons ofGini Coefficients 29 2.1 Calculation ofthe Gini Index 38 2.2 Inequality in Lao PDR 45 2.3 Poverty Measures: Lao PDR 46 3.1 Fiscal System in the Philippines:1998 58 3.2 Government Expenditures by Functional Classification 60 3.3 Welfare Reform Index for Income Components: Philippines,1998 63 3.4 Welfare Reform Index for Expenditures:Philippines,1998 66

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For various reasons¡Vwhether philosophical, political, humanitarian, or by institutional mandate¡Vpeople are concerned for the well being of the most vulnerable groups in society: women, the poor, and the elderly. Some would even measure the value of a political system by how well it cares for the
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