The city of San Francisco intends to be the first major US city to allow citizens to directly vote on portions of budget via the web (News: San Francisco To Test Online Participatory Budgeting) . Participatory budgeting, however, has long been rooted in Brazil.
Dr. Sónia Gonçalves, from King’s College London, studied the effects of participatory budgeting on municipal expenditures and infant mortality in Brazil. The adoption of participatory budgeting has been a highly popular reform at the municipal level in this country. The perceived success of participatory budgeting in key municipalities like Porto Alegre led to its widespread adoption across Brazilian municipalities and stimulated the development of similar budgeting programs across the developing and also the developed world. However, very little evidence exists of its effects in Brazil, or elsewhere, on local finances and living standards. Despite all the praise and endorsement received from international organizations such as the United Nations and the World Bank, whether participatory budgeting is effective in improving political accountability and government responsiveness is an open question.
UPDATE – Gonçalves study featured by Washington Post – click here!
To fill this important gap in the literature, Dr. Gonçalves has put together a municipality panel data set covering the whole of Brazil for the period 1990 to 2004. Her paper investigates whether the use of participatory budgeting in Brazilian municipalities during 1990–2004 affected the pattern of municipal expenditures and had any impact on living conditions. It shows that municipalities using participatory budgeting favored an allocation of public expenditures that closely matched popular preferences and channeled a larger fraction of their budgets to investments in sanitation and health services. This change is accompanied by a reduction in infant mortality rates. This suggests that promoting a more direct interaction between service users and elected officials in budgetary policy can affect both how local resources are spent and living standard outcomes. The adoption of participatory budgeting at the municipal level is associated with increased expenditure on basic sanitation and health services (such as water and sewage connections, waste removal), an early and urgent demand in the participatory forums. These services take up an increased share of total municipal budgets. Associated with this reallocation of resources at the municipal level the author also observes a significant reduction in the infant mortality rates among municipalities that adopted participatory budgeting.
Participatory budgeting is no magic bullet, though (Boulding & Wampler, 2010). Simple adoption of this model of public budgeting does not translate into automatic welfare improvements. There is substantial evidence in the literature that participatory budgeting needs not only financial resources (to back the investment projects) but also, and crucially, political commitment from the local governments (Avritzer, 2010). However, the results presented in this paper, as an average effect of participatory budgeting, do suggest that this reform appears to have brought government functioning closer to citizens’ preferences and to have resulted in improvements in living standards along at least one key dimension.
Download PDF The Eﬀects of Participatory Budgeting on Municipal Expenditures and Infant Mortality in Brazil, World Development (2013)