Government Wide Performance Budgeting Economics Essay

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Performance Budget that the Government formulated the first business plan and engineering plans, according to government functions and re-plan the implementation of the policy planning programs, and on the basis of cost-benefit analysis to determine the cost of implementation of the program to a method of preparation of the budget. 90 years since the 20th century, around the world will focus on budget reform can improve the performance of the administrative performance of the budget up. From developed countries to implement the practice of performance budget reform, performance budgeting to improve the efficiency in the use of public funds, improve government performance and achieved significant results.

Performance of the budget through the establishment of political and human environment, improve the effective use of finances. The main purpose of the traditional budget management is to make the budget consistent with the financial management requirements, also known as the compliance budget. The Government only on the use of public resources is not responsible for the use of resources for the results. The traditional method of budget and budget performance differs in that it put some of the basic concept of the market economy into the public administration into. Thus, effectively reducing the cost of public goods had provided by the Government to improve the efficiency of fiscal expenditure. Performance output indicators for the preparation of the budget to the budget based on budget allocations for each spending department costs to specific outputs based on legislative approval of the department's funding allocation within the limits free financial resources. Public bodies should not only their responsible use of public resources, but also the results of use of these resources should take responsibility for departments and units of output is a measure of the effectiveness of the main indicators of budgetary funds, while the control input on the budget has been greatly relaxed, budget departments and units in the use of budgetary funds have a stronger autonomy and flexibility. Performance of departments and units as the budget applied for and obtained a reasonable budget legitimate reason, in the general scarcity of public resources, revenue and expenditure under the reality of the larger conflict can greatly improve the efficiency of the allocation of public resources and improve efficiency in the use of budgetary funds. In this section the empirical evidence on the efficacy of government-wide performance budgeting system is considered under three heading: budgetary allocation, aggregate expenditure, and productive efficiency and program effectiveness.


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Different countries has different budget allocation, some countries may focus on automobile industry while some may focus on others industries. There are several industries on every country, such as automobile, banking and finance, textile, agriculture, telecom, oil and gas, and so on. It is important for the country to focus on their major industry so that they can earn money from it. Therefore, the government of the country must well know how to use the budget wisely, so that they will not query from the people of the country.

However, it is hard to calculate the total cost of expenditure on the industry and hard to make sure the benefit in the future. Thus, the government must have a body to focus on calculate the future benefit of the industry and intelligently allocate the budget to different industry so that the country can earn money in the future and will not waste for the resources. If the government wrongly allocates the budget to the particular industry, it will make the country's resources wasted and other industries may be affected due to lack of budget. Moreover, it will make the country develop slower or have outstanding obligation with other country due to resources wasted.

(i) Factors impacting on the allocative efficacy of performance budgeting

Some country's government is, arguably, the way in which politic influences budgets. In any type of democratic system, of course, budgeting is necessarily and essentially political. Cabinets in parliamentary systems, being composed of politicians worried to keep majority control of the parliament, are obviously greatly influenced by electoral considerations when making public expenditure decisions. Nevertheless, substantial legislative budgetary power tends arguably to place significant budgetary power in the hands of individual legislators who can be particularly liable to the influence of special interest groups. It may become significantly more difficult in such systems, for example, to eliminate or scale back programs which are ineffective or inefficient, but which have significant local interest group support.

In respect to allocation efficiency, performance budgeting reformers have been driven by a belief that expenditure allocation in the public sector tends to be insufficiently responsive to changing social needs and priorities. The perception is that money can keep flowing year after year to ineffective programs because of a lack of accountability for results linked to the budget process. This becomes an obvious problem particularly when government priorities change significantly, or when significant new public policy challenges emerge. Increasing the responsiveness of the budgetary allocation of resources to government priorities has, therefore, been an express objective of some performance budgeting systems.


As usual, different countries have their different own aggregate expenditure objective which it will affect their own country in different ways. The objective of the aggregate expenditure is important to determine the growth and development in a country for a year. The expenditures that spend out by the government are to prepare or ready the facilities to their public.

For example, the strategy of budget in Malaysia during 2002 is to maintain the momentum of economic growth, increase the competitive between private sector, various different sources of plantation and to make sure the allocate of fortunes are more balancing. Therefore, they reduced the individual tax rate, eliminated taxes limit on the bonus given and reduced or eliminated duty import on certain chosen goods that had helped in increasing the utilization and also the aggregate demand.

Whether the increase in expenditures is conducive to economic growth, international academic debate has been a hot topic kitchen. Especially in developing countries, public spending and GDP, an average of 26% / Division in the past 15 years increased by about 8 percentage points. But at the same time, the various levels of economic growth in developing countries and the growth rate is very different. This makes the financial expenditure and economic growth around the relationship between the debates even more intense. One view is that public spending is often low productivity, government spending for the facility and the formation of high taxes and spending and the private sector will cause great negative impact on investment, therefore, must reduce government spending in order to ensure economic growth. Another point of view, public spending growth in the economy play an important role in economic development because it offers a number of public goods with external effects and other public benefits or services to encourage and facilitate private investment. Then we state whether government spending can promote economic growth, expenditure on economic growth will ultimately what impact.


The Government took a number of measures to get better existing procedures and systems, introduced office automation and information technology to reinforce information and service delivery, and superior the ability of area administration. Those measurements are for the purpose to improve the quality of service offered by public sector agencies to clients at the "service" counter. The Government realizes that the values and ethics are critical for the provision of "quality" service so the Government launched a number of programs to instill pleasing values, such as honesty, discipline, integrity, dedication, accountability, trustworthiness and efficiency among the public servants.

(i) Improved productivity and delivery of services

In the early years, the government decides to expand the range of goods and services. The government offer to the people through institution building, resulting in the expansion of the civil service to take on the responsibility for development. The main purpose to expand the goods and services are in order to promote organizational efficiency and effectiveness towards achieving national developmental goals. Thus, it will directly increase the reputation of the government and the popular feelings.

(ii) Office automation and information systems technology

Government to the Internet, enterprises to be effective, agencies and office automation has become an inevitable trend of modern management of enterprises. In the current government agencies and enterprises to vigorously reform the external environment, office automation, government agencies or enterprises to improve the work efficiency of various departments to improve scientific decision-making, accuracy and improve the comprehensive competitiveness of both management and has a very important significance. Build a corporate intranet, office automation, and information for many leading department in charge of the main work

Office automation and computerization of the public sector has been expanding at an increasing rate over the years. The use of equipment for expediting work processes, enhancing the quality of output and the upgrading of the comfort and safety of personnel are actively promoted. Text processing machines, reprographic equipment, communication equipment and audio-visual equipment are examples of the kinds of automation introduced in the public sector to enhance administrative efficiency and effectiveness.

(iii) Measuring efficiency and effectiveness

The Government set up performance measurement at the organizational and individual levels to make sure that the curriculum and activities are implementing efficiently and effectively with set purposes. A manual entitled "Guidelines for establishing performance indicators in government agencies" was issued in 1993. This manual objective is to help agencies in implementing performance measurement. The performance indicators were incorporated into the agency's annual budget estimates, annual reports and other feedback to the Government. With the measurement, how well the organization is doing and what it needs to increase to become effectiveness and efficiency.