Dysfunctional consequences of the Korean performance budgeting system and their policy implications

Shin, Sang Hoon (2013). Dysfunctional consequences of the Korean performance budgeting system and their policy implications. University of Birmingham. Ph.D.

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Abstract

In 2005, the South Korean government implemented a system of performance budgeting: Self-Assessment of Budgetary Programmes (SABP). Most studies on this system have focused on the relationship between SABP results and subsequent budget allocations. These studies are based on the premise that the SABP system itself is operating well, and consequently SABP results are reliable. However, this thesis questions that premise and analyses the process for arriving at SABP results, especially focusing on differences in views on the merit of programmes between the spending ministries and the Ministry of Strategy and Finance (MOSF), which controls SABP. The thesis addresses four key research questions: Which factors affect differences in views in the SABP process? What are the dysfunctional consequences of SABP? What is the impact of these dysfunctional consequences? And, lastly, what feasible policy alternatives can be proposed? The study suggests that there is a tendency to optimism bias by spending ministries in their self-assessment programmes, often leading to a subsequent drastic downward review of such assessments by the MOSF. These results are established by both quantitative and qualitative analysis. This thesis also provides evidence of dysfunctional effects arising from the SABP process, some of which are “unintended” by both spending ministries and the MOSF, while others are “unintended” by the designers of the SABP system but are likely to be “intended” by the spending ministries, as “agents” in the principal-agent relationship. The thesis concludes that both the unintended and intended dysfunctional consequences of SABP are sufficiently important to suggest that the performance budgeting system needs to be carefully re-designed, and proposals are made for feasible refinements to the SABP process.

Type of Work:

Thesis (Doctorates > Ph.D.)

Award Type:

Doctorates > Ph.D.

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