Abstract
Public budget is the engine that drives any economy; thus, budget transparency contributes to shaping the political process and government performance. The current study examines the relationship between budget transparency (measured by Open Budget Index (OBI)) and governance quality (measured by Worldwide Governance Indicators (WGI)). The study covers four years – 2006, 2008, 2010, and 2012 where OBI data are available. Furthermore, the role of the human development level of nations in shaping this relationship is tested. While the result of the analysis shows a significant relationship between budget transparency and governance quality, which is inconsistent with the literature, the findings indicate minimal influence of the human development level of nations on this relationship. This result confirms the influence of budget transparency in the adoption of good governance practices by governments and increased quality of governance. Future research can examine the relationship between human development and quality of governance in the process of understanding factors that contribute in enhancing the governing process.
Highlights
Aaron Wildavsky [1], in his masterpiece Political Implications of Budgetary Reform, stated “The budget is the life-blood of the government, the financial reflection of what the government does or intends to do” (p. 184)
It is based on data collected through surveys sent to institutions and civil society organizations – which raises some concerns regarding the accuracy of the results, since most of the data collection is based on the subjectivity of the participants rather than fact-based analysis [9] the open budget index (OBI) is considered by many scientists and organizations to be the most reliable and credible tool available for measuring the application of budget transparency by governments [55]
Public budget is the engine that drives any economy; budget transparency has an influence in shaping the political process and government performance
Summary
Aaron Wildavsky [1], in his masterpiece Political Implications of Budgetary Reform, stated “The budget is the life-blood of the government, the financial reflection of what the government does or intends to do” (p. 184). The current study will explore the influence of human development in shaping the relationship between good governance and budget transparency. While the result of the analysis shows a significant relationship between budget transparency and quality of governance, the analysis concludes that the human development level of nations has a minimal influence in shaping the relationship. This result confirms the influence of budget transparency on governments’ adoption of good governance practices and increasing quality of governance. Human development significantly moderates the relationship between budget transparency and regulatory quality and between budget transparency and government effectiveness, it did not moderate any other relationships
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