Public Expenditure Analysis

292 Pages·2005·1.07 MB·English

by  Anwar Shah

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
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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