Good Government Means Different Things in

Different Countries
gove_1465

7..36

MATT ANDREWS*
Work on good governance implies a one-best-way model of effective government. This has isomorphic inuences on development, whereby governments are inuenced to adopt a one-size-ts-all approach to get things done.
This article challenges whether such an approach exists, proposing that
models actually do not hold even for the so-called effective governments.
Governments look different, even if they are similarly called models of good
government. This proposition is examined through a study of public
nancial management practices in a set of Organisation for Economic
Co-operation and Development (OECD) and non-OECD countries. The
study shows that effective governments are not more likely to exhibit better
practice characteristics implied in one-best-way models. Good public nancial management means different things in different countries. The article
concludes by suggesting that good governance models give way to menus
and the development community invest more time in examining why different countries select different menu items.
Introduction
Variation is one of the worlds core characteristics, manifest in our abilities
to categorize things on the basis of uncountable variables and in the many
manifestations of global inequality. The international need for social and
economic development is also a broadly felt twenty-rst-century issue. In
pursuit of this second issue, however, many observers have forgotten
the rst, applying routine development solutions to different countries,
regardless of variation. The good governance movement is an example. It
manifests in inuential indicators composed of multiple dimensions that
seemingly constitute a one-best-way model of good or effective government around which all countries should convergeespecially those
needing to develop. Political and administrative reforms in many countries are directly shaped by good governance indicator scores and their
underlying best practice dimensions, with countries apparently buying
into the implied story that this is what good government looks like.
I challenge such a story in this article, arguing that the good governance
version of good or effective government is a hollow one imposing a false
*Harvard University
Governance: An International Journal of Policy, Administration, and Institutions, Vol. 23, No. 1,
January 2010 (pp. 735).
2010 Wiley Periodicals, Inc., 350 Main St., Malden, MA 02148, USA, and 9600 Garsington
Road, Oxford, OX4 2DQ, UK. ISSN 0952-1895

MATT ANDREWS

one-best-way model on developing countries. I argue that countries

reecting good government according to prominent good governance
indicators actually look very different, varying on the very dimensions that
indicators imply are central to good government. These governments
provide rsthand evidence that good government means different things
in different countries.
Following an opening section that presents this proposition in a general
sense, the articles main contribution takes the form of an analysis of
public nancial management (PFM) structures in a selection of 38 national
governments. PFM structures are central to most government arrangements, and good governance work identies good government PFM characteristics. The analysis of data from a recent Organisation for Economic
Co-operation and Development (OECD) survey of budget practices and
procedures shows, however, that governments we would comfortably call
good or effective (1) are not more likely to exhibit these characteristics
than other governments and (2) have highly varying characteristics. I
suggest these ndings as preliminary evidence in favor of the research
proposition and call for more work to better understand why good governments look different, apparently choosing structural items from a
menu instead of treating them as part of a wholesale model. I argue that
answers to this question would be more valuable for governments aspiring to improve effectiveness than the models of governance currently in
vogue.

Observations and Propositions about Good Government

The good governance community has grown in the past decade, producing many indicators and commentaries (Arndt and Oman 2006; Boivard
and Lfer 2003; Grindle 2004; Hood, Dixon, and Beeston 2008; Knack,
Kugler, and Manning 2003; Kurtz and Schrank 2007; La Porta et al. 1999;
Rotberg and Gisselquist 2008; Rothstein and Teorell 2008). Most indicator
sets spotlight structural characteristics of governments and associated
outcomes considered important for development: The World Governance
Indicators (WGI) name a measure government effectiveness, for
example (Kaufmann, Kraay, and Mastruzzi 2007; Kaufmann, Kraay, and
Zoido-Lobaton 1999). The indicators (WGI and others) arguably underlie
strong isomorphic inuences on thinking about what effective government is (for discussion, see Arndt and Oman and Goldsmith 2007). Academic work, lending engagements, and reform proposals gain legitimacy
by identifying with the myth that formal structures reected in the
indicators provide a rational means to attain desirable endsin this case,
development itself (Meyer and Rowan 1991, 46). The following description captures the contents of such myth (Andrews 2008a, 382):
An effective government is small and limited in its engagement, formalized in
mission and process and drawing limited revenues primarily from domestic

GOOD GOVERNMENT MEANS DIFFERENT THINGS

sources. High-quality personnel devise and implement needed programs and

deliver efcient and effective services via participatory processes and through
formalized, disciplined, efcient and targeted nancial management. Responsiveness to the citizenrys changing needs is high, effected through transparent,
decentralized and politically neutral structures; consistently, even during political instability, without impeding (indeed supporting) the private sector.

Many might nd this word picture appealingthe kind of government

we would all imagine is good. The message implied in these indicators
is that these are the common characteristics of a good government that
developing country governments should attempt to reproduce. But the
picture mixes policy choices, outcomes, and institutional characteristics
together, and when one breaks these up it, appears that more effective
governments are similar in terms of general developmental outcomes
only, not institutional characteristics central to governance.
Figure 1 shows the 2006 WGI government effectiveness scores for 81
countries. The more effective governments (scoring above zero on the
WGI government effectiveness indicator) tend to be in more developed
parts of the world (the OECD, European Union members of Eastern
Europe, the Middle East, and certain parts of East Asia). Most governments in developing and transitional regions, the Former Soviet Union,
Sub-Saharan Africa, South Asia, and Latin America score in the ineffective
space below zero.
Many would agree that the countries scoring highest on this indicator
are models of some sortDenmark, Singapore, Canada, Sweden, Australia, the Netherlands,1 United Kingdom, Hong Kong, United States,
Belgium, and Germany.2 They are characteristically developed and tend
to have better outcomes, from more sustained growth rates to stronger

FIGURE 1
Government Effectiveness Score, 2006 (-2.5 to +2.5)
2.5
2
1.5
1
0.5
0
-0.5
-1
-1.5
-2
FSU SSA

SA

LA

EA

MENA EaU

OECD

FSU, Former Soviet Union; SSA, Sub-Saharan Africa; SA, South Asia; LA,
Latin America; EA, East Asia; MENA, Middle East; EaU, Eastern Europe;
OECD, Organisation for Economic Co-operation and Development.

10

MATT ANDREWS

business environments and better social indicators. But institutional

characteristicsthe core of governance structuresseem to vary a great
deal.
While one may argue that all of the governments exhibit formal bureaucratic systems with disciplined budgetary processes, for example, and are
commonly focused on introducing new public management mechanisms,
differences in the details of how these systems work are quite signicant
(Curristine 2005; Hallerberg, Strauch, and von Hagen 2007; Joumard et al.
2004). The degree of political inuence on appointments, promotions, and
performance assessments, for instance, varies signicantly across the governments, as do basic civil service structures (see OECD 1999 for a dated
comment, and for more recent discussion, Choi and Whitford 2008 and
Matheson et al. 2007). The use of arms-length agencies also varies, as does
the degree to which these agencies are subject to formal rules governing
the rest of government (Matheson et al. 2007).
There are even more prominent differences when one considers the
limits and size of government and the degree to which it is engaged in the
economy (Handler et al. 2005; OECD 1999). The good governance picture
suggests the importance of limited government, which it measures in
terms of legal checks (rule of law) as well as institutionalized constraints
on government scope and scal size.3 While rule of law is central to all of
the good governments, it is much more limiting in some than others. A
recent OECD survey of budgeting practices found, for example, that the
United States legislates processes in all 11 areas queried, but the United
Kingdom only legislates 4 of the 11, implying different levels of discretion
in the latter.4 Further, government revenue and spending as a percentage
of gross domestic product (GDP) ranged in these governments from about
35% to about 55% in 2004 (Hauptmeier, Heiperz, and Schuknecht 2007,
268).5 A government like Sweden uses this money to fund extensive
engagements across the economy and plays a dominant role in nancing
and providing social services (also providing bakeries, gyms and garden
centers; Henrekson 2005). The U.S. government is more restrained in its
social activities, and the private sector actually plays a bigger role in
nancing and providing key services like health care. Comparing the two
reveals that the governments actually differ a lot, at least in size and
scopetwo variables that organizational theorists nd that foster all sorts
of other structural variations.
The literature shows that the model governments differ in other areas
as well. The governments exhibit different levels and types of
decentralizationpolitically, administratively, and scally (Mosca 2007;
Stegarescu 2004). Also, while economic and administrative regulatory
burdens tend to be lower than in other countries (except for Belgium,
which has higher levels), they are still highly variable across the sample
(Malyshev 2006; OECD 2005). Different regulatory mechanisms underpin
different relational structures between government and the private sector,
an important aspect of governance.

GOOD GOVERNMENT MEANS DIFFERENT THINGS

11

Governance indicators thus identify governments that look commonly

good in terms of the outcomes they produce but seem to vary in regard to
other institutional characteristics. Perhaps we should not be surprised at
this, given that the indicators generally reect perceptions of governance
and not measures of actual institutional characteristics. The bottom line,
however, is that the good governance picture presented in these indicators seems quite limited: Good governments can look very different.

Do Good Governments Really Look the Same?

Analyzing PFM Systems
Critics might claim that the differences I mention are random or that good
governments probably vary less on core best practice characteristics
than other countries. They might argue that relative convergence around
good governance criteria is higher in good governments than in less good
governments and that my observations fall far short in providing rigorous
evidence otherwise.
Preempting such challenges, this section analyzes key characteristics of
PFM systems in good governments, testing the implicit good governance idea that good governments look the same. PFM characteristics
constitute only one corner of the good governance universe. I believe that
analysis of this kind must necessarily be focused on narrow areas like this,
however, especially if one is to achieve the clarity and rigor about administrative situations and concepts that Herbert Simon (1947) presented
as necessary to transform administrative proverbs into administrative
theory. This kind of focus is also sanctioned by institutional theory, which
emphasizes that research in organizational elds is dened as the set of
organizations that, in aggregate, constitute a recognized area in institutional life (DiMaggio and Powell 1983, 148).
I focus on the specic PFM eld because this stands at the heart of
resource management in all governments and has broad inuence on the
ability of governments to provide services, manage transparently, and
ensure stability (key points of focus in the development domain and the
broad good governance dialogue). Kettl underscores the centrality of PFM
in the context of American government, describing it as the place where
everything of importance comes together, because nearly everything
we want government to do requires money (Kettl 1992, 1). This area is
also characterized by fairly consistent thinking about what good or effective practice looks like. Many of my non-PFM colleagues assume a onebest-way model (Surely there is only one way to do accounts?) and
would be happy with comments by people like David Shand (n.d.) (then
of the World Bank), who noted in an undated report for the Japanese
government, There is now a general consensus among donors and
partner countries on what constitutes good PFM. The OECD documents
(Blndal 2003), the multidonor Public Expenditure and Financial Account-

12

MATT ANDREWS

ability work (PEFA 2006), and other authoritative materials emphasize

common PFM goals and characteristics.6
The increasingly used PEFA instrument allows developing country
governments to compare their system quality with good practice in
regard to 31 elements, implying both the applicability of a standard model
to all countries and the existence of good practice (ostensibly in the
worlds good governments). Blndal (2003, 3) identies seven institutional
features of strong PFM systems, which the OECD believe[s] play a key
role in order to effectively control public expenditures (and which,
Blndal argues, were directly related to the strength of PFM systems in the
OECD). These key institutional characteristics are reected both directly
and indirectly in the PEFA measures. I sum them into four areas of good
PFM characteristics:
1. Top-down, structured budgeting techniques (including scal rules,
medium-term frameworks, and prudent economic assumptions),7
2. Relaxed input controls with ex post performance measures,
3. The use of modern nancial management practices (including accruals, capital charges, internal audit, and carryovers), and
4. Strong budget transparency and accountability arrangements
(including active legislative engagement).

Research Approach
With these apparent characteristics of good PFM identied, I adopt a
research approach to test the proposition implicit in the governance indicators that good government means the same thing in different countries.
I ask primarily if data show that governments considered good or more
effective have higher or lower convergence around these characteristics
than others and then examine differences in structure among governments considered more effective (the nine identied as scoring the
highest points in the WGI government effectiveness sample referenced
in Figure 1Denmark, Canada, Sweden, Australia, the Netherlands,
United Kingdom, United States, Belgium, and Germany).
I look at four specic areas related to the above list: scal rules, lump
sum appropriations and performance management, internal audit, and
legislative authority. I use data from the 2007 OECD Budget Practices and
Procedures Database, which provides quantitative data with regard to 89
detailed questions about PFM systems in 38 countries (OECD 2007a).8 The
data were collected through the OECDs Senior Budget Ofcers network
and represent the answers of these ofcers. It is the broadest one-stop
information source in the world currently and is referenced fairly widely
(e.g., see Curristine 2007; Lienert 2005). There are, however, some concerns about data quality, particularly related to the lack of stringent quality

GOOD GOVERNMENT MEANS DIFFERENT THINGS

13

control by the OECD. This necessitates careful quality control when using
the data, which I conducted (where possible) through triangulation of the
OECD data with other primary or secondary sourcesincluding government reports and legislation, and academic articles. Even with such
quality control, it is possible that the information may yield debate, partly
because some of the answers are subjective or require respondents to have
information they may not be privy to. While noted, I do not believe this
should undermine the value of my analysis. Ultimately, data on how things
are done in any administrative process are often open to subjectivity and
debate.
PFM in Good Governments: Commonly Good Outcomes but
Different Structures
What I nd in the study largely conrms the earlier discussion and provides interesting information from which to start inductively building a
framework that explains why good governments actually look different in
different countries.
I begin by looking at the degree to which good governments have
similar outcomes (something I argued above in saying that these governments are similarly successful). Decits are the only PFM outcome
measure commonly available across countries, but thankfully, these are
also a vital PFM outcome measure given current struggles with economic
downturns and scal management.9 Figure 2 shows average decits across
a section of countries for 19902006. Governments considered more effective on the WGI are at the right with decit averages below 2.5% on GDP
over this period, compared with higher averages in many of the other
governments. The gure thus suggests a convergence around lower
average decits in the more effective governments.
FIGURE 2
Average Decits for 19902006
2

Deficit as % GDP

0
-2

-1.5

-1

-0.5

-2

0.5

1.5

2.5

-4
-6
-8
-10
-12
Government effectiveness score

Sources: World Development Indicators (accessed December 2007); OECD

(2007b).

14

MATT ANDREWS

FIGURE 3
Decit Records for the Nine Good Governments, 19872006
0.2
0.1
USA

Deficit/surplus

20
05

20
03

20
01

19
99

19
97

19
95

19
93

19
91

-0.1

19
89

19
87

United Kingdom
Sweden
The Netherlands

-0.2

Germany
Denmark

-0.3

Canada
Belgium

-0.4

Australia

-0.5
-0.6
Year

Sources: World Development Indicators (accessed December 2007); OECD

(2007b).
All of the good governments were responding to higher, problematic
decits in the 1970s and 1980s (and in most cases, still in the rst few years
of the 1990s, shown in Figure 3). Economic and political pressure to
control these decits is credited as the dominant inuence in favor of
recent more disciplined nancial management (Blndal 2003). Most of the
nine governments actually recorded material decreases in expenditure in
the mid to late 1990s as a result of such pressures (shown in Figure 4).
The pressure was not just for control and lower spending, however, but
also for lower and better spending. Various authors suggest a high level of
consistency in the way the more effective governments dealt with this
pressure (e.g., see Blndal 2003; Joumard et al. 2004), arguing that they all
introduced the kinds of PFM processes listed earlier as better practices.
Recent information from an OECD budgeting survey tells a different
story, however, of highly varied experience.10
The Story with Fiscal Rules. Anyone reading work on scal rules in New
Zealand and Europe in the mid-1990s would have believed that all leading
governments had similar top-down mechanisms and that these rules
offered a one-best-way solution to scal problems. The scal rule concept
was quickly picked up in Latin America and other regions as a best practice
mechanism to facilitate expenditure control and management. It is now part
of the dialogue in reform throughout the world, manifest in terms like
decit rule, expenditure rule, and even in the more operational
budget limit. Figure 5 shows data from the OECD database illustrating

GOOD GOVERNMENT MEANS DIFFERENT THINGS

15

FIGURE 4
Public Expenditure Patterns for the Nine Good Governments,
19872006
0.8
0.7
Australia

Spending as % of GDP

0.6

Belgium
Canada

0.5

Denmark
0.4

Germany
The Netherlands

0.3

Sweden
United Kingdom

0.2

USA

0.1

05
20

03
20

01
20

99
19

97

95

19

19

19

93

91
19

19

19
87

89

Year

GDP, gross domestic product.

FIGURE 5
Fiscal Rules and Government Effectiveness Scores
Fiscal rules index (out of 4)

0
-1.5

-1

-0.5

0.5

1.5

2.5

Government effectiveness score

Source: 2007 OECD Budget Practices and Procedures Database.

how extensive global scal rule adoption is. Scores range from 0 to 4,
indicating the number of different rule types a country has in place (including budget balance, debt, expenditure, and revenue rules). The scores are
correlated with different WGI effectiveness scores (as in Figure 1).
The gure shows that higher scal rule adoption is not reserved for the
more effective good government models to the right. Indeed, three out of
the four governments in the sample scoring below 0 on the WGI government effectiveness indicator (Venezuela, Peru, and Argentina) have scores

16

MATT ANDREWS

of 3 on the scal rule adoption measure. Only one of the ve governments

scoring above 2 on the WGI has a scal rule adoption measure of 3 (the
other four scoring below this level). The 10 countries scoring lowest on the
government effectiveness indicator (all below 0.5) have the highest scal
rule adoption measure average (of 2.2) as compared with the 10 countries
scoring between 0.5 and 1.5 (averaging 1.9) and the 17 countries scoring
between 1.5 and 2.5 on the WGI (with an average of 1.47). The t-tests
indicate that none of these differences are signicant, however, showing
that good governments are not more likely to exhibit this good government characteristic than others.
Table 1 details the variation in scal rule adoption in the nine so-called
good governments identied for deeper analysis, showing that these governments do indeed look very different. The rst column in Table 1 shows
that two of the nine governments (Australia and United States) do not
actually have scal rules.11 The other seven have different types and combinations of rules.
The second column shows that the mix of expenditure rules looks quite
different in the four countries that have such. In some cases, the rule
targets expenditure levels, while in others, it targets growth rates, covering central government only in some cases and the entire government
sector in others, and relying on political commitment for inuence in some
cases, agreement between ruling parties in others, and legislation in one
country. The third column features information about whether governments provide limits for budgeting entities prior to these entities submitting spending requests (often called ceilings). These are not macro-scal
rules but certainly are budget rules and contribute to the top-down formal
budget structure. Again, there is a range of experience, from no limits at all
to indicative limits only, to limits on some kinds of expenditure, to limits
for all expenditure types.
I believe that this range of experience creates problems for advocates
of a one-best-way model of PFM. Some may disagree and argue that the
general experience is to have rules. However, the institutional literature
so readily referenced in good governance work emphasizes the importance of institutional detail, making even differences in the mix or
specics of rules very important. These differences lead to different inuences on behavior. Consider, for example, the different ways offside rules
impact behavior across sporting codes like soccer, eld hockey, and
rugby. In some instances, these rules prohibit an attacking player from
exceeding the last line of defense, but in others, they prohibit passing a
certain point in the eld, while in others, they constrain players to points
behind the physical presence of the opposition. The different implications of such different rules on budgeting behavior would be amusing to
consider!
Different scal rule inuence is in evidence across the governments. A
country like Sweden has found the rules (based in legislation) quite inuential and is one of the governments actually maintaining scal discipline

No rules
Budget balance rule

Expenditure, budget balance,

debt rules

Expenditure, revenue, budget

balance rules

Debt rule
Expenditure, revenue, budget
balance rules

Expenditure, budget balance

rules

Budget balance, debt rule

No rules

Australia
Belgium

Canada

Denmark

Germany
The Netherlands

Sweden

United Kingdom
United States

Source: 2007 OECD Budget Practices and Procedures Database.

Fiscal Rule

Country

TABLE 1
Fiscal Rules in the More Effective Governments

Targets real expenditure ceiling,

dependent on formal agreement of
parties in government
Targets nominal expenditure ceiling,
covering central government only,
based in legislation

Targets nominal growth rate, covering

central government only, dependent
on political commitment of
government
Targets real growth rate, covering
entire government sector,
dependent on political commitment
of government

Expenditure Rule

No, but indicative limits

No, but indicative limits

Other

For all expenditure at line item level

For all expenditure at chapter level

For some types of expenditure at a

chapter level

No
For some types of expenditure at a
chapter level
For all expenditure at chapter level

Limits for Spending Requests

GOOD GOVERNMENT MEANS DIFFERENT THINGS

17

18

MATT ANDREWS

in recent years (at least at the national level and when looking at expenditures in a strict sense).12 Germany, in contrast, found rigid rules in the
European Stability and Growth Pact impossible to enforce because of
economic challenges associated in part with unication and also with
recession.13 The United States actually had scal rules from the late 1980s
and formally still has some on the books, but these are not reected in the
OECD database partly because of their perceived lack of presence and
inuence.14 In both the United States and Germany, social and economic
challenges (the Iraq war, unication, and economic pressures) were partly
to blame for undermining the inuence of rules. Other governments in the
effective government sample are also experiencing pressure in this regard
as they face the challenges of other special costs associated with aging
populations and, more recently, the 2008 global economic downturn.15
These costs contribute uncertainty to the PFM agenda and make rigid
rules less appropriate devices for scal management. One could also argue
that they redene the role of scal decit measures as PFM outcome
indicators; in the face of spending challenges or economic downturns,
some governments might nd it less appropriate to control decits rigidly
in some years, rather allowing some slack to accommodate new policies or
demands.16
Identifying how uncertainty inuences the appropriateness of scal
rules assists one in understanding why different governments have different PFM processes in place. Hallerberg et al. underscore the importance
of this kind of understanding in their direct reference to unanswered
questions about adopting scal rules themselves: While rules seem
attractive and straightforward to contain the spending and borrowing bias
of proigate governments, it is by no means clear what institutional design
they need and how they should be embedded into the government budgeting process to be effective (Hallerberg et al. 2007, 335). They suggest
other political process inuences on scal rule adoption, identifying two
institutional approaches in countries attempting to enhance top-down
budgetary inuencedelegation and contracts (Hallerberg et al. 2007).
Delegation involves a minister of nance using rules to enforce his/her
inuence, and contracts involve actual contractual agreements about scal
behavior within the executive and between the executive and legislature.
The authors argue that delegation is appropriate for single-party governments where ideological distance and political competition is small in the
party, while contracts are appropriate for coalition governments and for
single-party governments where ruling party ideological distance and
political competition is signicant. The authors emphasize the materiality
of these differences: The European framework [of rigid rules] may be less
effective in countries whose budget process is shaped by the delegation
approach . . . [and] . . . the two are not easily interchangeable for a given
country (Hallerberg et al. 2007, 339). The story of PFM systems, related to
scal rules, thus emphasizes context and the need to embrace contextual
variation.

GOOD GOVERNMENT MEANS DIFFERENT THINGS

19

Extent of relaxation in input controls

(1-4)

FIGURE 6
Input Control Relaxation and Government Effectiveness Scores
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
-1.5

-1

-0.5

0.5

1.5

2.5

Government effectiveness score

Source: 2007 OECD Budget Practices and Procedures Database.

The Story with Relaxed Input Controls and Performance Management.
Figure 6 shows how the 38 governments perform in terms of the second
PFM area I examinedrelaxation of input controls. The OECD data asked
about the degree of control relaxation, with lowest scores going to countries with rigid ex ante controls, where: Each agency/executive organisation receives an appropriation that species expenditures below the
agency level (OECD 2007a). The countries score higher when recipients
have more discretion in spending against their appropriation. A country
scores 4 if it can be characterized as: Yes, each agency/executive organisation receives a lump sum appropriation covering both operating and
capital expenditures, with a sub-limit on wages (OECD).
The gure shows that most governments have moved, in some degree,
toward relaxing input controls, which is also the case with performance
budgeting in principle: All 38 countries indicate having some form of
nonnancial performance orientation in the budgeting and reporting
process. The gure does suggest that more effective governments at the
right are more likely to have more discretionary appropriations approaches than less effective governments at the left. The average score for
countries scoring above 1.5 on the WGI is indeed marginally higher than
that for countries scoring below 1.5 (2.11 compared with 2). The t-tests
indicate that this difference of means is not signicant, however. Similarly,
even though the 10 most effective governments have an average of half a
point higher than the 10 least effective governments (2.2 vs. 1.7), the
difference in means is only signicant at the 10% levelhardly conclusive
evidence that good governments are more likely to be characterized by
this practice than others.
So, there is no signicant evidence that good governments are more
likely to adopt these mechanisms than less good governments. But is there
evidence of variation within good governments themselves? Certainly, as
reected in Table 2, which provides information on the way the nine more

Yes, for operating

expenditures

No, expenditure
specied below
agency level

Yes, for operating

expenditures, but a
sublimit on wages

Yes, for operating

expenditures, but a
sublimit on wages

No, expenditure
specied below
agency level

Australia

Belgium

Canada

Denmark

Germany

Country

Lump Sum
Appropriations?

B. More intense monitoring?

C. Budget size reduced?
D. Pay and career opportunities
of head ofcial affected?

B. Often
C. Sometimes
D. Almost never

A. Rarely

A. Almost never
B. Often
C. Rarely
D. Almost always or often

A. Almost never
B. Rarely
C. Almost never
D. Almost never

A. Rarely
B. Rarely
C. Almost never
D. Rarely or almost never

A. Sometimes
B. Almost always
C. Sometimes
D. Almost never

Response to Poor Performance

A. Programs eliminated?
B. More intense monitoring?
C. Budget size reduced?
D. Pay and career opportunities
of head ofcial affected?
A. Programs eliminated?
B. More intense monitoring?
C. Budget size reduced?
D. Pay and career opportunities
of head ofcial affected?
A. Programs eliminated?
B. More intense monitoring?
C. Budget size reduced?
D. Pay and career opportunities
of head ofcial affected?
A. Programs eliminated?
B. More intense monitoring?
C. Budget size reduced?
D. Pay and career opportunities
of head ofcial affected?
A. Programs eliminated?

TABLE 2
Relaxed Input Controls and Performance Measures

Continued

No, only on ad hoc basis

No, only on ad hoc basis

Other

No

Yes, each ministry prepares

performance reports
accompanying the budget

Performance against
Objectives Routinely
Presented to Legislature

20
MATT ANDREWS

Yes, for operating

expenditures

Yes, for operating

expenditures, but a
sublimit on wages

No, for cabinet and

major agencies; yes
for some small
agencies

Sweden

United Kingdom

United States

A. Almost never
B. Almost always
C. Almost never
D. Almost never

A. Almost never
B. Often
C. Almost never
D. Almost never

A. Rarely
B. Sometimes
C. Rarely
D. Almost never

A. Almost never
B. Rarely
C. Rarely
D. Almost never

Response to Poor Performance

A. Programs eliminated?
B. More intense monitoring?
C. Budget size reduced?
D. Pay and career opportunities
of head ofcial affected?
A. Programs eliminated?
B. More intense monitoring?
C. Budget size reduced?
D. Pay and career opportunities
of head ofcial affected?
A. Programs eliminated?
B. More intense monitoring?
C. Budget size reduced?
D. Pay and career opportunities
of head ofcial affected?
A. Programs eliminated?
B. More intense monitoring?
C. Budget size reduced?
D. Pay and career opportunities
of head ofcial affected?

Source: 2007 OECD Budget Practices and Procedures Database.

Some agencies, for

operating
expenditure

Lump Sum
Appropriations?

The Netherlands

Country

TABLE 2
Continued

Yes

Yes, each ministry prepares

performance reports
accompanying the budget

Yes, each ministry prepares

performance reports
accompanying the budget

Yes, integrated into main

budget documents

Performance against
Objectives Routinely
Presented to Legislature

GOOD GOVERNMENT MEANS DIFFERENT THINGS

21

22

MATT ANDREWS

effective governments have acted to reduce input controls and introduce a

performance orientation. The three items cited are part of a much larger set
on this topic in the OECD database, summarized in recent work (OECD
2007a). This work shows that most governments in the OECD have introduced performance measures and use these in some respect (as I allude to
above). However, the work also shows signicant variation in what performance management systems look like across the OECD. The information provided shows some of this variation, in terms of the degree to which
governments have relaxed ex ante controls on budget allocations (by
providing lump sum appropriations), tie appropriations to performance
objectives, and reference nonnancial performance in reports to the
legislature.
The nine governments vary in all three areas. This kind of variation is
again important and interesting, especially when considered in tandem
with recent work explaining why governments adopt such measures. The
OECDs summary of the survey (OECD 2007a, 12) addresses this issue,
commenting, There is no one model of performance budgeting; countries
need to adapt their approach to the relevant political and institutional
context. The report details inuences on performance budgeting structures in a subsection titled Context is important (OECD 2007a, 74):
Institutional and political factors help to explain the different country
approaches, but also inuence the ability of these reforms to achieve their
objectives. These factors include: the nature of the political system, especially the
respective roles of the legislature and the executive in the budget process; the
state structure, federalist or unitary; the degree of centralisation of the public
administration system; and the relative power of the MOF in the wider institutional structure.

The report also advises that adopting performance-oriented systems is

difcult and should be located in a learning process, suggesting that the
type and effectiveness of such a system is also contingent on the time since
initial implementation and the degree to which the governing environment allows learning over time (instead of once-off, win-or-lose reform
attempts). Andrews (2004) similarly emphasizes space for reform as
crucial to performance-based interventions in U.S. states, arising in some
environments and not in others. Environmental inuences like these
emerge from various factors, such as those mentioned in the OECD report.
Pollitt (2006) identies others more specically, nding through case
study research that: (1) task types inuence whether performance management is embraced and effective; (2) majoritarian, single-party governments institute performance-based changes more readily than others; and
(3) more individualistic and risk-accepting cultures best accommodate the
use of devices like performance-related pay and transparent public reporting of targets and achievements. Consensualist countries are likely to
accept performance measurement as a legitimate modern technique but
use performance information in a less direct, more negotiative manner,
which leads Pollitt (38) to comment:

GOOD GOVERNMENT MEANS DIFFERENT THINGS

23

In such circumstances [more consensualist situations] hard-edged performance

steering may threaten important relationships and interestsnot least those of
the powerful public service unions or political parties that are allied to them or
to certain agency missions.

These observations once again suggest that there are appropriate reasons
for variation in intergovernment and intragovernment structures related to
tasks being undertaken, politics, and culture. The lack of performancebased contracts or pay may not denote ineffective government, just different government context. Context matters, as Curristine notes in discussing
performance budgeting information derived from the 2003 OECD Budget
Survey: These reforms have been introduced into an existing institutional
context and budget process (Curristine 2005, 124). She notes, In most
cases, they have not completely transformed or shifted systems away from
inputs, suggesting that, in the short run at least, the new processes actually
run in parallel to the old.17 Brinkerhoff and Goldsmith (2005, 199200) call
this institutional dualism, which further complicates the nature of
systems in countries observed: Because there are different combinations of
new and old systems likely in all domains, it is very difcult to understand
the true institutional qualities in place.18 Curristine (140) recognizes this
important issue by stating, Reformers do not begin with a blank sheet;
performance indicators and targets are introduced into existing and established systems of accountability and control, which have both informal and
formal components. Again referring to the 2003 OECD survey, she notes
further that the question reformers and observers of government effectiveness should concern themselves with centers on establishing the appropriate mix of systems for specic countries:
Traditional accountability mechanisms designed around input controls have not
been extensively relaxed in some countries. Accountability for performance will
co-exist alongside traditional mechanisms. The issue is not about completely
replacing input controls with outputs/outcomes, it is more a question of how to
nd the desired mix of mechanisms within the [individual country] system
(Curristine 2005, 140, italics added).

Emphasizing the importance of nding a desired mix within a specic

country once again explicitly refutes any one-best-way model of government effectiveness. It also yields the few studies aimed at identifying what
the systems should t around vitally important.
The Story with Modern Financial Management PracticesInternal Audit.
Figure 7 illustrates arguably higher levels of overall convergence on a
better practice characteristic than either Figure 5 or 6. The gure reects
the percentage of line ministries that have internal audit units in each of
the 38 governments. The data have not been quality checked, given very
limited access to information on this issue, and one should be concerned
about this because of the many different interpretations of internal audit
around the world.19 However, taking it at face value, one must rst be

24

MATT ANDREWS

FIGURE 7
Internal Audit in Line Ministries and Government Effectiveness
Scores
% Budgetary entities with internal
audit

100
90
80
70
60
50
40
30
20
10
0
-1.5

-1

-0.5

0.5

1.5

2.5

Government effectiveness score

Source: 2007 OECD Budget Practices and Procedures Database.

impressed by the number of countries apparently covering their ministries
with what is a fairly modern nancial management practice. Twenty-seven
out of 38 countries noted coverage between 80% and 100% (which I show
as 90% in the gure). Only six identied not having internal audit units in
line ministries or having units covering less than 20% of these ministries.
For the sakes of this article, the more interesting observation is the fact
that low internal audit adopters are in the more effective governments. The
average coverage for governments scoring below 1.5 on the WGI government effectiveness indicator is 75%, compared with 59% for governments
above 1.5. The difference is actually most glaring for the bottom 10 WGI
scorers (which score below 0.5 on the government effectiveness measure
but have an average internal audit coverage of 83.3%) and the top 10 WGI
scorers (all scoring above 1.8 on government effectiveness but with less
than 60% internal audit coverage in line ministries). The t-tests show that
the differences in means are all signicant at the 1% level. This suggests for
the rst time that good governments may be different from less good
governments. But note the direction of the difference: Good governments
are less likely to adopt the better practice internal audit characteristic than
others!
The OECD data do not allow deeper analysis of differences in adoption
among the good governments themselves, but the range in ministry coverage across the nine governments is from 10% (Belgium) to 90%. One
recent study is tremendously useful in understanding differences at a
deeper level, speaking to the variation in choice of design. Sterck and
Bouckaert (2006) study internal audit entities in six OECD governments
and purport to nd similarities in legal requirements, organizational
structure, and future challenges. Consider, however, the differences they
actually relate in this six-country sample (which includes Australia,
Canada, the Netherlands, Sweden, the United Kingdom, and the United

GOOD GOVERNMENT MEANS DIFFERENT THINGS

25

States): Some governments legislate the need for internal audit, while
others do not; while most governments have internal audit directly in
budgetary entities, there are important exceptions that provide internal
audit through central entities; some governments have central standardsetting entities for internal audit, while others do not; internal audit entities in all governments produce similar reports (reviews of internal control
systems, nancial audits, legislative compliance audits, and performance
audits), but the time spent on the various types is very different (as is time
spent on assurance and consulting activities); and the ratio of civil servants
to internal auditor varies signicantly, from 247 in the United States to 752
in the Netherlands and 979 in Canada.
Instead of emphasizing the supposed similarities, the article could have
examined reasons for what are really notable differences, some of which it
even alludes to. Consider, for example, the differences in institutionalization of the internal audit profession (in the formation of professional
institutes in the United States in the 1940s20 vs. in many European countries like the Netherlands and Belgium in the 1970s21). This explanation is
reected partially in the articles observation that human resource organizations in governments must be able to attract and retain talent but speaks
to a larger social and cultural context in which such talent is produced.
And consider the fact that internal audit was legally recognized and
mandated as a public sector function at very different times in the
governments1978 in the United States and 2001 in the Netherlands. The
article emphasizes the importance of establishing a legal mechanism but
does not discuss how time since passing legislation might affect internal
audit coverage, activity, and inuence. The article also mentions the
importance of managerial acceptance of internal auditing as a function
(especially the modern version) but does not allude to what this acceptance hinges oncultural awareness (and the professionalization issue
already referenced), social and economic pressures to manage risks, risk,
and uncertainty avoidance, perhaps?
The Story with Accountability StructuresLegislative Authority. The
budgetary authority of the legislature is also an issue raised in recent good
governance work, especially pertaining to PFM. The PEFA instrument
used to assess the performance of PFM systems in developing countries
devotes 2 of 28 indicators to this issue, noting that government accountability is undermined where the legislature does not effectively exercise its
power. PEFA notes that the legislature should have authority over budget
review, in-year adjustments to the budget, and review of nancial reports
and audits. The OECD database asks whether legislatures do indeed have
such authority in these areas, as well as whether they have staffs to assist
and whether the time allowed for review is sufcient for the exercise of
authority.22 Figure 8 shows a legislative authority index calculated on
the basis of answers to these questions in the 2007 survey. Scores on the
exact same index are provided for 2002 in Lienert (2005).

26

MATT ANDREWS

Legislative budgetary authority

index (out of 11)

FIGURE 8
Legislative Budgetary Authority and Government Effectiveness
Scores
12

0
-1.5

-1

-0.5

0.5

1.5

2.5

Government effectiveness score

Source: 2007 OECD Budget Practices and Procedures Database.

One should immediately observe that some governments score
extremely poorly on this index0 or 1 out of 11! One should also note that
the lower scores are at the high end of the government effectiveness
scores. Five of the countries scoring the 11 highest scores on the government effectiveness indicator scored 0 or 1 on the legislative authority
index. In contrast, only one of the weakest 11 governments (scoring the
lowest WGI scores) recorded 0 or 1 on the legislative authority index.
The average scores for governments scoring above and below 0.5 on the
WGI effectiveness indicator are close, at 4 and 4.1, and a t-test shows that
the two means are not signicantly different. A paired t-test also shows
that the difference in means of the top and bottom 10 countries is also not
signicant, although the mean of the weaker group exceeds that of the top
(4 in the bottom 10 and 3.9 in the top 10).
Once again, good governments are not found to be more likely to
adopt a better practice PFM characteristic than other governments. But
once again, we ask: Is there more evidence that the good governments
actually differ among each other? And again, the answer is yes. Legislative
authority varies quite signicantly across the effective government group,
as shown in the scores in Table 3 (the same as those shown in Figure 7).
With a potential score of 11, one sees variation in the nine more effective
governments, with Australia, Canada, and the United Kingdom at 1 and
the United States at 10. The different contexts yield different power
struggles, demand for different kinds of budget information, andin the
words that title a prominent article on this topicshape policy and
budgets differently.23
It is important to note that the variation in Table 3 has implications for
the broader budget dialog and process in place in the nine governments.
Highly engaged legislatures can be a signicant brake on executive
budgetary freedom, having a domino effect on other processes in place. A
counterargument suggests that stronger legislatures can foster a pro-

GOOD GOVERNMENT MEANS DIFFERENT THINGS

27

TABLE 3
Different Kinds of Legislative Budgetary Authority
Country
Australia
Belgium
Canada
Denmark
Germany
The Netherlands
Sweden
United kingdom
United States

Type of Government

Legislatures
Budgetary Authority

Westminster
Parliamentary monarchy
Westminster
Parliamentary monarchy
Parliamentary republic
Parliamentary monarchy
Parliamentary monarchy
Westminster
Presidential

1
4
1
5
4
6
9
1
10

Sources: 2007 OECD Budget Practices and Procedures Database; Lienert (2005).

spending bias, which was argued particularly in Swedens case in the late
1980s (Wehner 2007). This counterargument focused mostly on the inuence legislatures can have in adjusting budgetary allocations, however,
which would only make up three points in the authority measure in
Table 3, leaving eight points focused on the accountability-enhancing
aspects of legislative engagements. The fact remains that some more effective governments score substantially less than 8 and that the variation in
scores is still evident.
The observation further weakens any one-best-way argument about
what good or effective government looks like and suggests the importance
of examining context to understand what kind of system a country needs.
Table 3 alludes to one important contextual aspect that seems to dene the
level of legislative authority that may be possible or appropriate to a given
governmentits type. The table suggests that presidential governments
like the United States tend to have higher levels of legislative authority,
while parliamentary governments (and Westminster governments in particular) have lower levels. Lienert (2005) argues that this may not in fact be
as strong a pattern as the table suggests, partly because most government
types are now hybrids. Other important inuences relate to political
legacy (with French-inuenced systems looking quite different from
others, for example),24 the broader political engagement of citizens and
civil society, demand for information, and demand for legislative activism.
Where these factors vary, one can expect variation in government structures, which seems appropriate and necessary for contextually signicant
effectiveness.
One can also expect differences in acceptability of certain practices that
dene dimensions of good or effective government, like corruption and
responsiveness. Various observers explain pork barrel spending as a function of the peculiar government type and legislative strength in the United
States, for example. Most decry the practice, as referenced by Brinkerhoff
and Goldsmith (2005, 213):

28

MATT ANDREWS

Pork-barrel spending is almost always viewed critically, as the embodiment of

bad governance. . . . [It] not only tends to bust the government budget but also
leads to excessive spending on local projects relative to projects in the national
interest.

Brinkerhoff and Goldsmith go on to suggest, however, that this kind of

practice may have some appropriateness in context, facilitating broad
resource allocation decisions in complex negotiation environments and
contributing to overall political stability (213):
[G]overnment funds have to be spent for various government projects in different locations. Some method is needed to allocate these funds, and bargaining
among politicians may be as good as many others. In large and diverse societies
such as the United States, political pork is a vehicle for placating different
regions and ethnic groups. Often, the widening of a local road, the dredging of
a local waterway, or a similarly mundane act adds to political legitimacy and
thus, indirectly, to democratic governance.

Concluding Thoughts
The data and discussion around Figures 58 constitute a challenge to the
good governance proposition that good government looks the same in
different countries. Countries that exhibit good outcomes can have very
different governance structures. This evidence should challenge the
current predilection for one-best-way models of PFM systems and government structures in general. These models are being foisted on developing countries with the implied promise of development but without
evidence that the developed countries themselves uniformly adopt the
model elements. Countries that come out reecting good government
according to the inuential good governance indicators actually look very
different, varying on the very dimensions that indicators imply are central
to good government. I show this point here with regard to basic public
nancial constructs where many would probably believe there is one way:
Imagine the variation with more controversial aspects of governance.
I believe that the development community should pay more attention
to this variation. Such attention will require closer focus on the importance
of context in shaping governments. Instead of building an ever-growing
list of good governance characteristics we would like developing countries to adopt, researchers should focus on better understanding what
structures government actually do adopt and why.
It is important to note that elements of the good government picture
painted by governance indicators are already xtures in global public
sector reform programs, and context appropriateness is not a strong point
in most development engagements. A recent study of 31 African countries PFM reforms nds governments commonly pursuing multiple best
practice constructs in the form of a model: like multiyear budgets (29 of
the 31); program, activity, or performance budgets (25 of the 31); external
audit and legislative reform (28 of the 31); and internal audit (25 of the 31)

GOOD GOVERNMENT MEANS DIFFERENT THINGS

29

(Andrews 2008b). One should note the cross-country variation in this

sample: About half had Francophone histories (where external audit did
not exist in the modern guise), 7 of the 31 countries had experienced
serious social and political upheaval in the last ve years, 6 had not
produced an annual budget in at least one of the last three years, at least
half had major discrepancies in the line item classication scheme they
used, and most had only 2050 qualied accountants in the country
(private and public sector, the numbers present in the United States in the
1880s). Surely, the variation in countries should have led to varying types
of reform proposals, composed of different mixes of the best practice
constructs (and perhaps some constructs that are not best practice).
Surely, the major differences between these contexts and those in
which new ideas were hatched should raise red ags to those advocating
replication.
The stories of replicated best practice reform designs abound, as do
tales of failed reforms. The latter are partly to blame (I believe) gpt the fact
that effective government elements underlying reforms resemble the principles of administration that Herbert Simon decried as problematic proverbs 60 years agoquotable and convenient constructs for rationalizing
past behavior or justifying future decisions but defective in providing
serious theoretical explanation or practical advice. Simon argued that, as
with all proverbs, the principles of administration of his day stood well
when applied alone and in the right context but poorly when considered
in tandem with others: For every principle one can nd an equally plausible and acceptable contradictory principle (Simon 1947, 53).
The discussion of variation in good government structures suggests
to me that leading world governments do not treat these sets of potentially
conicting principles (or proverbs) as elements of one strict model but
rather as items in a menu. Put metaphorically, Sweden chose to have a
large but decentralized government system for providing its health care,
because it t the context.25 The United States has a system dominated by
the private sector perhaps because it t that context as well. The two
governments and societies adopted different menu selections of different
practices, to achieve similar objectives (provide world-class health care).
Interestingly, there is evidence of choice even within governments and
over time. While authors like Wehner (2007) show that wealthier, more
developed countries are also more transparent in their PFM systems, most
wealthy governments choose lower levels of transparency in certain
sectorslike defense.
History tells us that such choices change as contexts change as well
National Aeronautics and Space Administrations (NASA) early space
program successes, arguably a major highlight in twentieth-century
administrative achievement, were born out of considerably less transparency and best practice management and governance than its more
recent (though less remarkable) endeavors (Bizony 2006; Lambright 1998).
McCurdy (1994) notes that the early NASA exhibited a frontier mental-

30

MATT ANDREWS

ity that was later changed as exibility decreased and bureaucracy

increased. McCurdy likens the NASA story to that of another great
twentieth-century achievement, the 1933 Tennessee Valley Authority
work, which was also given huge exibility at its start, shaped to reect
what today might be called shoddy governance: In setting up the Tennessee Valley Authority (TVA) in 1933 . . . the US Congress exempted the
new agency from burdensome administrative regulations during its formative years and placed its governing board in Knoxville, Tennessee, in
part to distance it from the constant oversight imposed on federal executive housed in Washington, D.C. (McCurdy 1994, 100).
Conceptualizing governance constructs as menu items to be chosen,
rather than essential elements of a one-best-way model, is, I believe, an
important step to better understanding why good government looks different in different settings. I imagine it will be a helpful step for developing country governments, especially if linked to thoughts on how
governments should choose from the menu. The development community could start addressing this question by asking why the worlds more
effective governments exhibit different combinations of better practices
(as shown in Figures 58 and Tables 13). What current cross-country
characteristics and/or historical factors led to these menu choices? With
regard to the NASA-type interventions, what internal factors lead governments to adopt different governing solutions? While the current article
does not provide denitive answers to these questions, the discussion
does point to some design factors that academics and practitioners
engaged in PFM reforms might nd interesting:
Stringent controls (like scal rules) may be more feasible in governments that can reference a memorable meltdown (like Sweden),
dened either by a severe economic or political failure in the last
generation.
Governments facing the uncertainty of special costs may be more
likely to have lower levels of control and higher levels of exibility in
their systems.
Governments with stronger political systems may be able to accommodate less formalized control than others because of a higher political ability to control.
Governments with consensual internal cultures may accommodate
lower levels of performance management than governments with
individualistic internal cultures.
Broad social culture may inuence the kinds of structures a government can introduce, inuencing the normative fabric in which
change occurs. This holds particularly for structures emerging from
professions that must exist in a society to facilitate effective transfer
of norms required to make structures effective.

GOOD GOVERNMENT MEANS DIFFERENT THINGS

31

Countries with low capacity may accommodate lower levels of structural innovation in governments, necessitating more basic systems.
Government entities providing different services should have different structures, reecting task sensitivity, the degree to which tasks
are performance oriented, and the degree to which users inuence
task production.
Future research should aim to develop these ideas into real answers to
the questions posed earlier. This would be very valuable for developing
countries, not only showing an honest respect for the fact that good government looks different in different contexts but also actually trying to
explain why.
Notes
1.
2.
3.

4.

5.
6.
7.
8.

These six countries that scored above 2 and make up the top 5% in the
81-country sample.
These countries scored above 1.5 and rounded out the top 10% in the sample.
The WGI regulatory burden element has, as one of its core sources, scores
on the Heritage Foundation/Wall Street Journal Index for government
intervention in the economy, which is measured in terms of the following:
government consumption as a percentage of the economy, government ownership of businesses and industries, share of government revenues from
state-owned enterprises and government ownership of property, and economic output produced by the government.
The numbers draw from my own assessment of question 4, ak, in the 2007
OECD Budget Practices and Procedures Database, which asks about the
legal basis of the following: the form and structure of the annual budget and
related legislation, the timing of the annual budget process, roles and
responsibilities of different parts of the executive in budget formulation and
execution, roles and responsibilities of the legislature and the executive in
the budget process, provisions on what happens when the budget is not
approved by the beginning of the scal year, requirement for legislative
authorization of spending, requirement for legislative authorization of taxes,
rules for the use of contingency or reserve funds, requirement for audit of
government accounts by the supreme audit institution, requirements for
internal audit structures in line ministries, and management and reporting
relating to off-budget expenditures.
The entire group of governments was in scal trouble in the early to mid1990s, the tail of a scal expansion period that led to some signicant
adjustments in the past 15 years.
See also British Department for International Development (DFID) (2001)
and World Bank (1998), or the Asian Development Banks online toolkit:
http://www.adb.org/Governance/gov_toolkits.asp#3.
Anderson (2006) is a good reference point for this, making the prescriptive
comment: In sum, bottom up: disaster; top down: success.
Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, Costa Rica,
Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary,
Iceland, Ireland, Israel, Italy, Japan, Luxembourg, Mexico, the Netherlands,
New Zealand, Norway, Peru, Poland, Portugal, Slovak Republic, Slovenia,
Korea, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States,
and Venezuela.

32

MATT ANDREWS

9.
10.
11.
12.

13.

14.

15.

16.

17.

18.

19.

20.

Anderson (2006, 2) noted that decits were reentering the agenda in 2006,
stating: Fiscal decits have reclaimed their place as a pressing public policy
issue around the world.
Not just different degrees of adoption as suggested, for example, by Blndal
(2003).
See OECD (2002) for more detailed analysis of scal rules that conrm the
information in the table. One (Australia) has had surpluses the past few
years, while the other (United States) has recorded decits.
Anderson (2006, 31) argues that the rigid rules have not stemmed expenditures at the local level (not covered by rules) and have led to increased use
of tax expenditures to introduce new policies without breaching the ceiling
or requiring balancing measures.
Posen (2005, 5) writes: Germany, along with other Eurozone members
France, Portugal, and more recently Italy, has been in repeated violation of
these rules. Posen argues that this is partly because Germany has of course
suffered from a prolonged recession and historically high unemployment
since 2001, which has put signicant pressure on scal policy (5).
The U.S. experience is well discussed in Anderson (2006) and in Schick
(2005), who discusses the situation as such: The Gramm-Rudman-Hollings
laws (GRH) enacted in 1985 and 1987 purported to limit annual budget
decits; the 1990 Budget Enforcement Act (BEA) capped annual appropriations and required that any legislation increasing the decitor decreasing
the surplusbe offset. BEA expired at the end of scal 2002, but some of its
rules have been reimposed in congressional budget resolutions. These have
not been effective.
Interestingly, a country like Sweden may face less pressure from such costs
because of the historical role government has played in providing social
welfare (something that was criticized in the decit years of the early 1990s).
This established role decreases uncertainty about future demands.
In some instances, this will be reected in structural decit measures, which
should account for economic cycles, but these measures do not reect potential social challenges that may be demographically induced, or other challenges that governments may face. Countercyclical budget management
approaches are increasingly being introduced to facilitate policy continuity
and guide spending.
Andrews and Hill (2003, 126) note this in a study of performance budgeting
in the U.S. states: In essence, PBB [performance-based budgeting] reforms
involve the introduction of new rules and norms to drive budgeting behavior, which have to overcome the inuence of pre-existing rules and norms
(usually associated with incremental and program budgeting systems) in
order to inuence behavior.
This is a problem for clean, one-best-way-type theory and for data heads
gathering information about such. How do you develop clean theory or
gather clean data about the extent of a practices implementation when such
is implemented in the presence of an existing practice, is often interrupted
by the introduction of new practices, and has formal and informal dimensions? The common approach is to look at legislation and see whether
innovation A or B is in place, which is obviously problematic.
Some countries interpret this function as the equivalent of inspectorates, for
example, and in some Eastern European settings, the internal audit ofce is
literally the remnants of the KGB (the National Security Agency of the
USSR). In the countries identied here, one can expect very signicant
differences in who the internal auditors are, what they do, etc.
The U.S. Institute of Internal Auditors (IIA) was founded in 1941, although
the internal audit function was entrenched in industry in the 1930s.

GOOD GOVERNMENT MEANS DIFFERENT THINGS

21.
22.

23.
24.
25.

33

The IIAs Benelux Chapter was established as a professional organization for

auditors in 1977 and had 70 members in its rst year. Belgium had its own
institute in 1994.
The precise questions and highest scores for each are: (1) Does the legislature approve each year an updated budget strategy covering at least three
years (including the new budget year)? (two points, depending partly on
extent of legislative review); (2) Does the legislature have unlimited powers
to amend the draft budget proposed by the executive? If there are any
restrictions, how severe are these? (three points depending on severity of
restrictions); (3) How many months does the legislature receive the draft
budget from the executive? (two points, depending on time); (4) Does the
legislature have a specialized budget advisory/research organization
attached to provide budgetary analyses independent of the executive? (two
points, partly dependent on size of unit); and (5) Does the legislature oblige
the government to implement its expenditure programs exactly as adopted?
If not, what restrictions are there on the governments powers to modify the
budget during implementation? (two points, partly dependent on severity
of restrictions).
This is the title of Oppenheimers 1983 article.
See Andrews (2008b).
I am aware that the choice of words here will create problems for many
readers. The idea that a country actively chooses one form over another is
obviously controversial and requires greater analysis. I do not propose to do
this here, but I believe that the issue is how, along paths of development,
countries do adopt highly varying government structures.

References
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