SEARCH

SEARCH BY CITATION

Abstract

  1. Top of page
  2. Abstract
  3. Framework
  4. Method
  5. Summary
  6. References

What is the impact of performance-based budgeting (PBB) on governmental spending? Do various PBB implementation strategies result in different outcomes? The authors, Jack Yun-jie Lee of National Open University in Taiwan and XiaoHu Wang of the University of Central Florida, gathered data from the United States, Taiwan, and China (Guangdong Province) to explore the possible intermediate- and long-term results of PBB. The data demonstrate how the impacts of PBB vary across countries and regions.

Since the 1980s, performance-based budgeting (PBB) has been adopted by many countries to improve accountability and the effectiveness of public programs. The U.S. Congress passed the Chief Financial Officer Act of 1990 and the Government Performance and Results Act (GPRA) of 1993, which together laid down the legislative foundation for PBB reforms. PBB has also advanced rapidly in other countries in the Organisation for Economic Co-operation and Development (OECD) as a way to make government more competitive and cost-efficient and as a response to cynical taxpayers who demand more accountable government spending. Many have expanded the practice of PBB and introduced new legislation that requires performance measurement and benchmarking (OECD 2002; Willoughby and Melkers 2005). In the countries that have used performance measurement for a number of years, many have also shifted to report outcomes and build a stronger link between performance and budgeting (OECD 2002; Perrin 2003). Following the principle of the GPRA, Taiwan and China (Guangdong Province) also adopted PBB in 2001 and 2003, respectively.

[Performance-based budgeting (PBB)] scrutinizes public program performance and should affect how these programs behave in resource allocation decision making and curbing wasteful spending.

Though studies have been conducted to examine PBB’s immediate impact on management practices and decision making (Jordan and Hackbart 1999; Joyce 1993; Willoughby and Melkers 2005), few researchers have explored how it may affect government spending behaviors. After all, PBB scrutinizes public program performance and should affect how these programs behave in resource allocation decision making and curbing wasteful spending. This is especially critical during periods of rapid growth in debts and deficits as governments struggle to control spending.

Using databases from three countries (regions), this exploratory study attempts to understand how PBB may influence government spending behaviors, with the ultimate purpose of enriching the conversation about how to assess PBB impact. A comparison of multiple countries (regions) may uncover possible variations of PBB momentums and impediments, therefore improving the validity of findings and broadening the conversation. The specific research question of this study is, what is the impact of PBB on spending?

Next is a framework to present the scale of spending growth, PBB practices, and how PBB influences spending, followed by a methodology section and a section to present the key findings. The paper concludes with lessons that will further the conversation of assessing PBB impact.

Framework

  1. Top of page
  2. Abstract
  3. Framework
  4. Method
  5. Summary
  6. References

Spending Growth

By the mid-1980s, the U.S. federal deficit had grown significantly. The total federal budget deficit grew from $2.8 billion in 1970 to $221 billion in 1986 and to $290 billion in 1992. The deficit growth was large enough to require a set of budgetary reforms aimed in part at curbing the growth of the national debt (Carroll 1995; Joyce 1993).

More recently, many Asian countries were also challenged to curb budget deficits and government debts. In Taiwan, for example, the government faced a fiscal crisis in which public debt grew at an accelerated pace. According to a report published by the Council for Economic Planning and Development in 2003, Taiwan led the world in issuing public debt between 2000 and 2002, resulting in 17.9 percent annual growth in the public debt to gross domestic product (GDP) ratio during the three-year period. The long-term deficit of the central government accelerated from NT$2,357.2 billion in 2000 to NT$3,936.7 billion in five years (NT is the Taiwan money unit: New Taiwan Dollar). The total public debt of central and local governments ran up to NT$4.8 trillion in 2006, accounting for 40 percent of GDP.

In China, public spending has been a key tool for the government to sustain economic growth. Public spending relative to GDP in China has also increased quickly since the mid-1990s (OECD 2005a). One study estimates a 7 percent public expenditure growth in GDP between 1994 and 2000 (OECD 2005b). With a significant portion of off-budget spending, the true level of public expenditures should be even higher.

Performance-Based Budgeting Implementation

In the United States, the Government Performance and Results Act became law in 1993, establishing a strategic planning and performance budgeting framework for the federal government. The Bill Clinton administration established the National Performance Review (NPR) Committee the same year to implement management reform with the objective of budget deficit reduction. The White House released a legislative proposal, the Government Reform and Savings Act (HR 3400), to implement the NPR’s cost-cutting recommendations. Section 3C of the Clinton administration’s fiscal year 1995 budget, “Delivering a Government That Works Better and Costs Less,” made clear that this reform was intended to save budget and to cut costs.

The GPRA requires specific objectives, standards, and goals for federal programs, submission and publication of federal agencies’ performance reports, and integration of performance goals for major expenditures into the federal budget. The NPR’s goal is to enhance performance accountability by eliminating wasteful spending and achieving better program results through an extensive performance review.

Executive leadership support plays an important role in PBB implementation. Both the Clinton administration and Congress demonstrated strong support for the GPRA and PBB. The central role of the U.S. Office of Management and Budget in the implementation was ensured in the content of the GPRA. Performance-based budgeting continued in the George W. Bush administration with the implementation of the Program Assessment Rating Tool (PART) to assess federal programs’ purposes, strategic planning, management, and results. PART is believed to have had limited but steady impact on management communication and decision making (Newcomer 2007). Moreover, the message to improve government performance and accountability through PBB has resonated throughout various levels of government in the United States (De Lancer Julnes and Holzer 2001; Melkers and Willoughby 1998).

Taiwan

The cabinet of the executive branch of Taiwan (Republic of China), the Executive Yuan, initiated a national conference on administrative reforms in 2001, launching a series of budgetary reforms intended to transform administrative agencies into result-oriented performers. In the same year, the government issued the Administrative Regulations of Performance Assessment for Agencies (ARPAA) subordinate to the Executive Yuan, outlining a PBB framework for the public sector.

With strong support from the prime minister, the ARPAA requires each agency to submit strategic performance objectives, performance indicators, and performance targets in three key performance areas: services, manpower, and funding. Each agency is required to develop 5–10 strategic performance objectives, as well as performance indicators for each objective that reflect the agency’s specific functions and activities.

All agencies that are subordinate to the Executive Yuan and local governments are required to implement PBB. At the end of each fiscal year, each agency is assessed as to how well its performance compares with the performance objective. PBB-related training courses have been offered at various levels of government, including city and county governments, to improve implementation.

Compared with some other PBB systems in the world, Taiwan’s PBB reform has two distinct aspects. One is strong executive leadership in the Executive Yuan to implement and constantly evaluate the reform. Hundreds of major PBB projects are classified and controlled at the Executive Yuan level. Their annual performance evaluations are submitted to the Research, Development, and Evaluation Commission (RDEC) of the Executive Yuan. The RDEC assembles committees consisting of members from the Council for Economic Planning and Development, National Science Council, Directorate General of Budget Accounting and Statistics, and Central Personnel Administration, as well as experts outside the government, to review and evaluate these projects and their affiliated agencies. The final evaluation results are published on an RDEC Web site for public review and are used in making funding decisions. The RDEC also monitors the progress of each program and verifies such progress with on-site inspections. A monitoring report is published regularly.

The second distinctive feature of Taiwan’s PBB reform is a carefully designed project management process in which each project is subject to intensive administrative scrutiny during planning, implementation, and evaluation (Sung 2008). Figure 1 illustrates this process of preliminary self-evaluation, classification and control, supervision, and performance assessment. Included first in a medium-term plan (four years), various governmental projects are incorporated into an annual plan after a preliminary agency self-evaluation. The projects are then classified and reviewed at the Executive Yuan, ministry, and agency levels, where the performance assessment is conducted. The Department of Regional Affairs of the RDEC reviews local government projects subsidized by the central government. Commissioned by the Executive Yuan, the RDEC is mainly responsible for project management, although the Council for Economic Planning and Development, Public Construction Control, and National Science Council are also involved in the management of projects in their specialties.

image

Figure 1. Performance-Based Budgeting Project Management in Taiwan

Download figure to PowerPoint

Noticeably, the project management process involves a carefully designed assessment phase in which each agency uses performance results achieved in the previous three years to set a performance goal. The performance goal for the next four years is established, often at 10 percent higher than the previous goal. The results of this assessment are taken into consideration in making funding decisions for the budget next year. Moreover, the agency’s performance results are linked with employees’ financial benefits.

China (Guangdong Province)

In 2003, Guangdong Province, China, became the first province in the People’s Republic of China to launch PBB reform. The province, located in southern China, was the first to implement market-oriented reform in the late 1970s, and it is known for its progressive economic and political initiatives. In 2003, Guangdong’s per capita GDP was among the highest in China. In 2003, the Guangdong government’s revenues amounted to roughly 13.4 percent of total provincial government revenues, and its expenditures made up about 9.8 percent, both the largest in China.

The finance department of Guangdong Province initiated and coordinated the PBB initiative. After securing support from key government party officials, members of the local congress, and other interest groups, the department started publishing an annual guidebook of regulations and policies to promote its PBB initiative among department officials. The book also includes expert opinions from the central Ministry of Finance, the local congress, and the Guangdong finance, audit, and supervision departments to demonstrate the broad support behind the reform initiative (CDRF 2006).

Furthermore, the department created a new agency, the Performance Evaluation Division (PED), to compile and analyze financial statistics, and to organize and conduct the performance evaluation of programs. The evaluation consists of an agency self-evaluation as well as a formal assessment. The formal assessment often focuses on several selected programs and is done by public officials from the finance department as well as external experts such as scholars or university professors. An evaluation report is prepared by the Performance Evaluation Division and delivered to agencies and individual officials (Niu, Ho, and Ma 2006).

Despite its admirable goal, the PBB effort in Guangdong was considered experimental. It is an administration-driven effort, and no PBB legislation was passed. The scope of the reform has been limited, too. Only programs in six large agencies were selected. These agencies were selected because they had sufficient resources to implement the initiative and because agency leaders demonstrated support for the reform. The programs selected are in areas of transportation, education, tourism, research, and development. Guangdong is limited by its lack of expertise in performance data analysis and evaluation. The Performance Evaluation Division has not successfully developed skills and capacities needed to extend the PBB to other programs, and the progress in developing expert inventory has remained unsatisfactory.

Despite its goal to link performance with budgetary decision making, Guangdong reformers set a modest objective at the early stage of the reform to enhance understanding of performance evaluation. With no drastic changes in the management system, the focus of PBB was on learning, education, experimentation, and information dissemination to help officials understand the need for PBB. No significant effort was made to link performance to funding decisions. And, no change was made to alter expenditure classifications and accounting codes to reflect the program cost needed for making performance funding decisions.

Table 1 summarizes the key dimensions of PBB in the United States, Taiwan, and China (Guangdong). While the PBB effort in the United States is clearly characterized by legislative pressure for performance accountability in all federal agencies, the intent of the PBB in Taiwan and Guangdong is more of an administrative effort to improve managerial practices and operations. Particularly in the case of Guangdong, no legislation was involved. and the executive leadership support was relatively limited. PBB training has been thorough and intensive in the United States and Taiwan, but not in China, where the PBB effort is designated as experimental, with relatively limited financial support. Moreover, while the government in Taiwan shows an assertive intention to link performance results to funding decisions, the practices in the United States and China suggest a more cautious approach to performance funding.

Table 1.  Performance-Based Budgeting Practices: A Comparison
 United StatesTaiwanGuangDong Province
Design
 Key purposesPerformance accountability, spending controlManagerial efficiency and effectiveness, spending controlManagerial efficiency and effectiveness
Key driving forcesLegislators and some administratorsAdministratorsAdministrators
LegislationYesYesNo
ScopeAll agenciesAll agenciesSelected agencies
Implementation
 Presence of executive leadershipStrongStrongModerate
Education and trainingStrongStrongModerate
Implementation length (since...)199320012003
Evaluation
 Performance results linked to funding decisionsModerately intendedStrongly intendedModerately intended
Performance results linked to improving management and service deliveryStrongly intendedStrongly intendedStrongly intended

Performance-Based Budgeting and Government Spending

How does PBB influence government spending behavior? PBB practitioners have tried to integrate performance information into budgetary decision making (Cope 1995; Grizzle and Pettijohn 2002; Willoughby and Melkers 2000). Program outcomes are used in budget deliberations about funding priorities and levels, helping to allocate resources more effectively in order to meet expectations of the public and elected officials (GAO 2001).

Specifically, PBB can be used as a strategy to change spending behaviors by proposing fewer ineffective programs or by eliminating more ineffective existing programs. In the United States, for example, the GPRA and related legislation were designed to control or eliminate wasteful use and mismanagement of public funds (Breul 2007). In Taiwan, the PBB effort is specifically designed to control governmental spending by using performance management tools when the government is facing a fiscal crisis, manifested in an accelerating government debt level. PBB practice is mainly treated as a spending control tool used to placate citizens and mass media.

It is important to note that budgeting is essentially a political process, and spending decisions represent a compromise between diversified political powers. Performance information, even if used in making spending decisions, is likely adopted to advance the value of a political agenda in the budgeting process (Joyce 1993; Wang 2008). There is some evidence to show the impact of PBB on budgetary decision-making capabilities and behaviors (Jordan and Hackbart 1999; Lee and Burns 2000; Willoughby and Melkers 2000).

Method

  1. Top of page
  2. Abstract
  3. Framework
  4. Method
  5. Summary
  6. References

This study employs the comparative method to systematically assess alternative explanations for PPB practices adopted in different countries (regions), and to examine effects of these practices on spending behaviors. The comparative method specifies the conditions under which one country can learn from another, helping researchers find new policy options in other countries and discover latent policy constraints and opportunities.

The selection of countries (regions) being compared is based on purposive sampling, with the United States as a highly developed country (GDP per capita of $44,197), Taiwan as a newly developed region (GDP per capita of $16,442), and China as the largest developing country (GDP per capita of $3,250).

A time-series design is used to assess the impact of PBB on spending. This design allows intermediate- and long-term assessment, generating observations of multiple years before and after PBB as shown in the following diagram:

… OOOOO P OOOOO …

where O is an observation of spending in a specific year, P represents the implementation of PBB, and the ellipses represent any possible observations of spending. This design allows multiple observations of spending, resulting in a hypothesis that spending variations after PBB indicate the possible impact of PBB. Multiple observations also allow a measurement of possible intermediate- and long-term impacts of PBB. In the assessment, government spending is measured by the spending growth rate and the spending level in relation to government revenues and GDP, defined as follows:

Spending Growth Rate in t (SGRt)= (Total ExpendituretTotal Expendituret–1) / Total Expendituret–1

Deficit or Surplus Level in t (DSLt)= (Total RevenuetTotal Expendituret) / GDPt

PBB practices should help control spending growth, so that a negative relationship between PBB and SGR is expected. DSL is a measure of the spending level in relation to revenues and GDP. A positive relationship between PBB and DSL is expected, indicating that PBB should increase the surplus or reduce the deficit.

In the United States and Guangdong … results do not provide evidence that PBB has a significant impact on the spending growth rate.

This study subscribes to the normative economic theory of supply and demand to develop the empirical model for analysis, and it also adopts the prescriptive public administration theory in public spending (incrementalism) in selecting the control variables. Clearly, government spending is affected by numerous socioeconomic and organizational factors that should be controlled in the model detecting the impact of PBB. These factors can be classified as those that create societal demands for public spending, as well as those on the supply side (the government) that produce the capacities to meet the demand. Thus, spending (S) can be specified as a function of societal demands (D) for public programs and government’s capabilities to meet the demand (C): S = f (D, C)

Identification and inclusion of all of the supply and demand factors in a model is impossible and does not serve the exploratory nature of this study. After all, the main purpose of the analysis is to explore the relationship between PBB and budgetary outcomes by controlling socioeconomic and financial factors in a given political-economic context, rather than to construct a perfect model to explain expenditure levels or budget deficits. With the clarity and parsimoniousness of the model in mind, we use GDP as a proxy for societal demand factors and revenue growth as a proxy for supply factors.

This study also employs the prescriptive public administration theory in public spending, which holds that public expenditure is the result of previous spending behaviors (incrementalism). In considering past spending behaviors, multiple observations in expenditure growth in the past are included in the model. Therefore, a time-series statistical model is constructed for the United States, Taiwan, and Guangdong, respectively, for the period 1980–2006, which covers the time span of PBB, specified as:

SGRt = a + b1GDPt–1 + b2Rt–1 + b3PBB

DSLt = a + b1GDPt–1 + b2Rt–1 + b3Et–1 + b4PBB,

where SGRt and DSLt are measures of spending at time t; GDPt–1 is the growth rate of GDP at time t–1; Rt–1 is the growth rate of revenue at time t–1; Et–1 is the growth rate of expenditure at time t–1; PBB denotes the practice of PBB (1 if PBB was adopted, and 0 if PBB was not adopted in a given fiscal year); t represents the annual data for 1980–2006; and a and b are parameter estimates.

Note that the SGRt model does not include Et–1. This is because SGRt and Et–1 should be highly associated. The SGRt model excludes Et–-1 in order to avoid a severe condition of the model’s endogenesis.

Findings and Discussion

Table 2 shows regression results of the spending growth rate for the three countries (regions) in the analysis. Results using data for different time frames in parameter estimation of the models are similar, suggesting that the models are robust. The F tests of the models indicate that all of the models are statistically significant at the .1 level. Tests show that models do not suffer severe conditions of multicollinearity (all VIFs ≤ 2.195). The Durbin-Watson statistics and related tests indicate that the models may not suffer autocorrelation.

Table 2.  Regression Results for the Spending Growth Rate
 U.S.TaiwanGuangdong
  1. Note: Unstandardized regression coefficients; t-values are in parentheses.

  2. *Significant at the .10 level

  3. **significant at the .05 level;

  4. ***significant at the .01 level, two-tailed test.

  5. R2 = Buse raw-moment R2

  6. D-W = Durban-Watson statistic

  7. VIF = Variance inflation factor

Intercept.006829(0.019)17.291(2.042)4.676(0.788)
GDPt−11.21(2.308)**−0.225(−0.201)0.582(2.259)**
 VIF=2.195VIF=1.456VIF=1.022
Rt−1−0.157(−0.819)−0.189(−1.161)0.172(1.220)
 VIF=1.374VIF=1.570VIF=1.02
PBB−0.192(−0.100)−20.103(−2.783)**−.1903(−0.316)
 VIF=1.719VIF=1.099VIF=1.023
R20.2710.3240.252
F2.845(.060)3.677(.027)2.576(.078)
D-W1.8291.3582.025

All regression coefficients for PBB are negative, showing the expected signs of direction for PBB impact. Also, the results indicate that PBB may have a significant impact on spending growth in Taiwan, where the regression coefficient is statistically significant at the .05 level. A significant relationship between PBB and spending growth in Taiwan suggests that PBB restrains spending growth. In the United States and Guangdong, however, the results do not provide evidence that PBB has a significant impact on the spending growth rate. These results indicate that the PBB impact varies, depending on purposes and implementation strategies. In Taiwan, as discussed earlier, a clear goal of spending control was developed for PBB and the corresponding strategies of spending control were implemented vigorously, while the U.S. adoption of PBB in spending control, though intended, is not fully enacted in practice. PBB in Guangdong was not purposely linked to spending control.

Table 3 shows the results of regression on the deficit or surplus level. The models are robust after repeated tests using data from different time frames to estimate the models’ parameters. The F tests indicate that models for the United States and Taiwan are statistically significant at the .001 level, while the model for Guangdong is statistically significant at .107. Tests show that the models do not suffer severe multicollinearity (all VIFs ≤ 3.004). The Durbin- Watson statistics and related tests indicate that the models may not suffer autocorrelation.

Table 3.  Regression Results for the Deficit or Surplus Level
 U.S.TaiwanGuangdong
  1. Note: Unstandardized regression coefficients; t-values are in parentheses.

  2. *Significant at the .10 level

  3. **significant at the .05 level;

  4. ***significant at the .01 level, two-tailed test.

  5. R2 = Buse raw-moment R2

  6. D-W = Durban-Watson statistic

  7. VIF = Variance inflation factor

Intercept−4.091(−3.278)***−1.964(−2.800)***0.432(0.399)
GDPt−1−0.043(−0.237)0.159(1.727)0.030(0.648)
 VIF=2.256VIF=1.570VIF=1.069
Et−1−0.110(−1.631)−0.074(−3.026)***−0.085(−1.986)*
 VIF=1.421VIF=3.004VIF=1.869
Rt−10.170(2.576)***0.066(3.016)***0.021(0.654)
 VIF=1.225VIF=2.933VIF=1.790
PBB2.736(4.056)***−0.625(−1.030)−2.274(−2.118)**
 VIF=1.733VIF=1.521VIF=1.022
R20.6070.4450.282
F8.478(.000)4.417(.009)2.164(.107)
D-W1.0141.3250.649

Results for the deficit or surplus level are equally diverse as those for the spending growth rate. PBB may reduce the deficit or surplus level in the United States (p < .001), but such impact disappears in Taiwan and Guangdong. Interestingly, the results show a positive relationship between PBB and the deficit or surplus level in Guangdong. This suggests that the implementation of PBB propels, not reduces, the spending level in relation to revenue and GDP, or that PBB reduces the revenues collected in relation to expenditures. Either way, PBB appears to increase the budget deficit in Guangdong.

The findings seem to provide evidence that PBB has gradually become an essential part of administrative practice in the U.S. federal government, indicating that the performance-based reform strategy may affect the deficit level. A recent study shows that a relatively large number of federal managers use performance information in making resource allocation decisions, and they have adopted performance-based practices in management (Newcomer 2007). Although these practices have little impact on curtailing expenditure growth, they may help federal managers make funding decisions more cautiously within revenue constraints.

In Taiwan, the administration’s request for a comprehensive PBB reform has placed a very stringent restriction on expenditure growth, providing incentive for agencies to restrain discretionary spending, which explains the negative relationship between PBB and the expenditure growth rate. However, this finding should be read with caution, because some supplemental and special spending items (e.g., some items for disaster response and national defense) are not included in the expenditure calculation and actual expenditure levels can be higher.

PBB has been in place for a short time in Guangdong, and it has been experimented with in only a few selected agencies, which may explain why it has no impact on expenditure growth. The experimental agencies, often large in size and operation (Niu, Ho, and Ma 2006), may take advantage of PBB to advocate their achievements and to request larger budgets. This may explain why PBB may increase the deficit or reduce the surplus level.

The foregoing findings indicate that the PBB impact varies across countries and regions that have different PBB goals and implementation strategies. Legislative leadership support in form of a formal legislation, as in the United States and Taiwan, appears to be critical in PBB implementation. Passing a law and specifying how agencies should follow it provides public officials with a legal basis and responsibility for implementation. PBB legislation reinforces political urgency and underscores the importance of the reform, and it also provides legitimacy for requests and approvals of financial support for PBB, which is critical in PBB implementation and performance-based funding.

Strong executive leadership is critical to substantiate and sustain PBB impact. Executive leadership in PBB reflects in enforcing the law and carrying out administrative responsibilities in PBB implementation. Top executives, who have strong political connections with legislators and knowledge of management and daily operations, are catalysts in obtaining resource support and acquiring the necessary technical capabilities for PBB (e.g., hiring capable performance analysts and developing a good performance information system).

Strong intent and effort to link performance results with resource allocation decision making, as shown in Taiwan, also appears important for the PBB impact on spending. The literature indicates that performance measurement is widely used in budget preparation and examination, but less so in funding decisions by the legislature for a variety of technical and political reasons, including concerns about the validity of the measurement system and fear that performance funding is a threat to the political power structure. The threat of these obstacles should be recognized and eliminated in order for PBB to influence spending.

Implementation length may also play a role in realizing the PBB impact. As the U.S. and Taiwan experiences show, PBB is an exhaustive assessment process demanding intensified effort in time and paperwork to define performance, develop data collection systems, conduct analysis, and evaluate the results. Accounting and audit systems should provide the information needed for assessment. Also important is the creation of positive incentives to encourage compliance with and support for PBB. Clearly, the development and improvement of these necessary elements in PBB take time, and the maturation of a PBB system may indicate the development of an organizational culture that is more accustomed to performance funding.

Summary

  1. Top of page
  2. Abstract
  3. Framework
  4. Method
  5. Summary
  6. References

This study uses data from three countries (regions) to explore the possible intermediate- and long-term impacts of PBB. It finds that PBB with different purposes and implementation strategies may have different impacts on governmental spending. PBB with a clear intention of expense control and resource allocation may reduce the expenditure growth rate, as in the case of Taiwan, and improve the deficit and surplus level, as in the case of the United States.

From a practical perspective, the results indicate that if PBB is designed to influence spending behaviors, efforts should be made to solicit legislative support; to involve top executives in the entire PBB process of design, implementation, and evaluation; to establish clear funding performance objectives; and to develop a culture of performance improvement.

From a practical perspective, the results indicate that if PBB is designed to influence spending behaviors, efforts should be made to solicit legislative support; to involve top executives in the entire PBB process of design, implementation, and evaluation; to establish clear funding performance objectives; and to develop a culture of performance improvement. Academically, this study develops a model to empirically test the hardly examined intermediate- and long-term impacts of PBB. The model provides a basis to further the academic investigation on the impact of performance management in the public sector.

Importantly, the study enriches the conversation of performance management by introducing the relevant information in a comparative setting. Compared with studies in a sole country or region or studies of cross-sectional databases, the validity of this research is enhanced through cross-examining PBB practices and empirical results from different countries and regions with a longitudinal timeframe of 20 years. Hopefully, this exploratory research will attract more scholarly attention to the comparative study of PBB in further research.

References

  1. Top of page
  2. Abstract
  3. Framework
  4. Method
  5. Summary
  6. References
  • Breul, Jonathan D. 2007. GPPA—A Foundation for Performance Budgeting. Public Performance and Management Review 30(3): 31231.
  • Carroll, James D. 1995. The Rhetoric of Reform and Political Reality in the National Performance Review. Public Administration Review 55(3): 30212.
  • China Development and Research Foundation (CDRF). 2006. Handbook of Public Budgeting [in Chinese]. Beijing: CDRF.
  • Cope, Glen Hahn. 1995. Budgeting for Performance in Local Government. In The Municipal Yearbook 1995, 4252. Washington, DC: International City/County Management Association.
  • De Lancer Julnes, Patria, and Marc Holzer. 2001. Promoting the Utilization of Performance Measures in Public Organizations: An Empirical Study of Factors Affecting Adoption and Implementation. Public Administration Review 61(6): 693708.
  • Grizzle, Gloria A., and Carole D. Pettijohn. 2002. Implementing Performance-Based Program Budgeting: A System-Dynamics Perspective. Public Administration Review 62(1): 5162.
  • Jordan, Meagan M., and Merl M. Hackbart. 1999. Performance Budgeting and Performance Funding in the States: A Status Assessment. Public Budgeting and Finance 19(1): 6888.
    Direct Link:
  • Joyce, Philip G. 1993. The Reiterative Nature of Budget Reform: Is There Anything New in Federal Budgeting? Public Budgeting and Finance 13(3): 3648.
    Direct Link:
  • Lee, Robert D., and Robert C. Burns. 2000. Performance Measurement in State Budgeting: Advancement and Backsliding from 1990 to 1995. Public Budgeting and Finance 20(1): 3854.
    Direct Link:
  • Melkers, Julia, and Katherine Willoughby. 1998. The State of the States: Performance-Based Budgeting Requirements in 47 out of 50. Public Administration Review 58(1): 6673.
  • Newcomer, Kathryn, 2007. How Does Program Performance Assessment Affect Program Management in the Federal Government? Public Performance and Management Review 30(3): 33250.
  • Niu, Meili, Alfred Ho, and Ma Jun. 2006. Performance-Based Budgeting in China: A Case Study of Guangdong. Paper Presented at the Second International Conference on Public Management: 21st Century Opportunities and Challenges, University of Macau, China.
  • Organisation for Economic Co-operation and Development (OECD). 2002. Developing Performance Measures for Public Financial Management. Paris: OECD.
  • Organisation for Economic Co-operation and Development (OECD) 2005a. Challenges for China’s Public Spending: Toward Greater Effectiveness and Equity. Paris: OECD.
  • Organisation for Economic Co-operation and Development (OECD) 2005b. Economic Survey of China 2005. Reforming Public Finances to Better Serve Growth. Paris: OECD. http://www.oecd.org/document/31/0,3343,en_2649_34595_35343711_1_1_1_1,00.html. [accessed August 17, 2009].
  • Perrin, Burt. 2003. Implementing the Vision: Addressing Challenges to Results-Focused Management and Budgeting. Paris: OECD.
  • Sung, Yu-Hsieh. 2008. Economy Experience Sharing—Chinese Taipei. Presentation at the APEC Workshop on Government Performance and Results Management Report.
  • U.S. General Accounting Office (GAO). 2001. Results-Oriented Budget Practices in Federal Agencies. Washington, DC: Government Printing Office. GAO-01-1084SP.
  • Wang, XiaoHu. 2008. Convincing Legislators with Performance Measures. International Journal of Public Administration 31(6): 65467.
  • Willoughby, Katherine G., and Julia E. Melkers. 2000. Implementing PBB: Conflicting Views of Success. Public Budgeting and Finance 20(1): 10520.
    Direct Link:
  • Willoughby, Katherine G., and Julia E. Melkers. 2005. Models of Performance-Measurement Use in Local Governments: Understanding Budgeting, Communication, and Lasting Effects. Public Administration Review 65(2): 18090.