# **_1.1 Objectives_**

In this paper, we explore the key question of whether there is evidence linking open budgeting to high level development outcomes that reflect improvements in the lives of the poor. For the purposes of this investigation, we follow the conventional way poverty reduction is typically operationalized in the area of open budgeting and public financial management that is, as improved access to better quality public services for the poor. We explicitly do not focus on macroeconomic benefits nor include any empirical literature about the relationship between fiscal transparency and growth in this review.

We identify and piece together evidence demonstrating the development impact of Open Budgeting by conducting a review of the available literature. We examine evidence supporting and refuting various small incremental steps in a results chain to establish linkages between open budgeting and improved human development outcomes and improvements in public services. This approach first draws from existing studies of transparency and accountability initiatives and then follows their references to broaden the evidence base. The review is not exhaustive but is instead intended to highlight findings for further investigation and discussion.

The second key question we explore is whether or not we can identify “leading indicators of institutional change impact.” These are concrete observable milestones marking points of progress in open budgeting interventions that eventually contribute to development outcomes for the poor.

In this paper, we start with the overall goal of poverty reduction and unpack it as improvements for the poor in the delivery of basic public services such as health, water, sanitation, roads and transport. We then look to see whether studies identified indicators of institutional changes that affect the success of various open budgeting interventions and if so how they were defined. Unpacking how changes in institutional conditions influenced development outcomes through observable leading indicators would provide insights on which institutions to target and how.

# **_1.2 Institutional changes: Transparency, accountability and participation_**

We explore this by considering three key institutional changes and how they affect poverty: fiscal transparency, accountability, and participation. Fiscal transparency refers to the public disclosure of fiscal information related to the budget process (OECD 2002). This includes publication of information in a timely and systematic manner. Accountability refers to “answerability,” in terms of the need for government leaders to provide information and justify their actions and “enforceability,” reflecting potential negative consequences when the answerability falls short (McGee and Gaventa 2011).

Accountability can include procedures for public hearings and investigations, public audits, and transparency institutions and independent judiciaries. Participation is about citizens participating in the budget decision making monitoring and audit process and how and when public funds are spent. Participatory budgeting (PB) can happen through direct citizen involvement in voting for 3