This symposium examines the issues related to budget system reform in developed and developing countries. Based on the experience of recent attempts to reform in transitional countries, the first paper in the symposium outlines a three-pronged strategy for budget system reform. The second paper in the symposium examines the use of budgetary controls and procedures and argues that the trend is for these controls and procedures to become less complex over time. The third paper in the symposium examines the reoccurring problems of reforming the budgetary process in the United States and suggests improvements to the current federal budget process. The last paper in the symposium examines whether forecasts of federal revenues are systematically biased.
Over the past fifty years members of the Organization for Economic Cooperation and Development (OECD) have sought to reform their budget systems. While the budget systems in these countries have slowly evolved over time from a focus on inputs and the control of public resources to a new focus on outputs and the outcomes generated by the production of outputs, a new challenge has emerged over the past decade in the countries of Eastern Europe and the former Soviet Union. The challenge here is how to reform (and in some cases, replace) existing budget systems to shift the focus from inputs and control over expenditures to outcomes and efficiency in the delivery of public services in a relatively short period of time.
The question of how to proceed with reform in the transitional environment has been a significant point of contention in the public finance literature. Much of the work to date has focused on tax reform and less effort has been expended on the topic of budget system reform. This symposium aims to add to the literature by addressing the topic of budget system reform in developed and transitional countries.
The first paper of the symposium is by Jack Diamond and addresses the topic of budget system reform in emerging countries. While traditional budget systems have evolved gradually over time, emerging countries must reform their budgetary institutions rapidly to function in the increasingly competitive global marketplace. He argues that reform must be...