The Basic Budgeting Problem: Approaches to Resource Allocation in the Public Sector and their Implications for Pro-poor Budgeting

Working and discussion papers
June 2001
Adrian Fozzard

All of the approaches to the basic budgeting problem – whether normative or positivist in intent – have influenced the design of budget institutions, procedures and analytical methods. Changes in budget practice have, moreover, tended to proceed incrementally and cumulatively, so that many of the innovations introduced in early reforms are still in place today. Thus, today’s budget governance structures are essentially the same as those introduced in the late 19th and early 20th centuries when modern budgeting systems were first established. Similarly, the analytical methods and process proposed by rationalists in the 1960s continue to be used today. Indeed, the rationalist approach is still the prevailing paradigm for policy makers.

Consequently, an understanding of the various approaches to the budget problem continues to be relevant today, even where the validity of these approaches has subsequently been questioned, and research on these approaches is still ongoing.

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