THE THEORY OF PUBLIC
 ADMINISTRATION


            Linkage Master Programmes
                  g            g
Double Degre...
PLANNING AND BUDGETING
DEVELOPMENT THEORIES

1. THE LINEAR-STAGES THEORY
2. STRUCTURAL-CHANE
2 STRUCTURAL CHANE MODELS
3. THE INTERNATIONAL-DEPEN...
THE LINEAR-STAGES THEORY
    LINEAR STAGES


1. ROSTOW’S STAGES OF GROWTH
  1.
  1 THE TRADITIONAL SOCIETY
  2. THE PRE-CO...
STRUCTURAL-CHANGE MODELS


1. THE LEWIS THEORY OF
   DEVELOPMENT
  LEWIS TWO SECTOR MODEL (TRADITIONAL AND
  MODERN)
2. ST...
THE INTERNATIONAL-
     DEPENDENCE REVOLUTION


1.   THE NEOCOLONIAL DEPENDENCE MODEL
     UNDERDEVELOPMENT IS SEEN AS AN ...
THE NEOCLASSICAL
   COUNTERREVOLUTION

1. FREE MARKETS, PUBLIC CHOICE, &
   MARKET FRIENDLY APPROACHES
  PRIVATIZATIONS, G...
THE NEW GROWTH THEORY


ENDOGENOUS GROWTH
   SEEK TO EXPLAIN THE FACTORS THAT
   DETERMINE THE SIZE OF µ (THE RATE OF
   G...
DEVELOPMENT AS
TRANSFORMATION OF SOCIETY


A MOVEMENMT FROM TRADITIONAL
RELATIONS, TRADITIONAL WAYS OF
THINKING, TRADITION...
THE SUCCESSFUL
  TRANSFORMATION OF SOCIETY


1. RAISE THE GDP PER CAPITA
2. RAISE STANDARD OF HEALTH AND
   LITERACY
3. RE...
THE STRATEGY INCLUDING


1.   PRIVATE SECTOR DEVELOPMENT
2.   PUBLIC SECTOR DEVELOPMENT
3.
3    COMMUNITY DEVELOPMENT
4.  ...
THE PRIORITY


1.   EDUCATION
2.   INFRASTRUCTURE
3.
3    HEALTH
4.   KNOWLEDGE
5.   CAPACITY BUILDING

                  ...
THE UN MILLENNIUM
      DEVELOPMENT GOALS

1.   ERADICATE EXTREME POVERTY AND HUNGER
2.   ACHIEVE UNIVERSAL PRIMARY EDUCAT...
SOME DEFINITIONS OF PLANNING

   PLANNING IS THE APPLICATION OF
   SCIENTIFIC METHODS TO POLICY MAKING
                   ...
PLANNING
 A DELIBERATE AND CONCIOUS ATTEMPT TO
 FORMULATE DECISIONS FROM SOME
 ALTERNATIVES TO ACHIEVE THE GOALS

 THE ELE...
PLANNING CRITERIA

  1. COMPREHENSIVE AND INDICATIVE
  2. CONTROL AND DIRECTING GOVERNMENT
     SPENDING IN ORDER TO STIMU...
THE SHIFT OF DEVELOPMNET
PLANNING

  IN USA AND UK THE DEVELOPMENT
  PLANNING BEEN ABANDONED
                 ABANDONED,

...
OTHER REASON


 DEVELOPMENT PLANNING AND PUBLIC
 REGULATION, NO MORE APPROPRIATE,
 BECAUSE IT HINDERS CREATIVITY,,
 PRIVAT...
THE ROLE OF GOVERNMENT
THROUGH PLANNING

 IRVING SVERDLOW (1963):


   OPERATION (PROVIDING PUBLIC GOODS)
   DIRECT CONTRO...
WHY WE DO PLANNING?


  DECREASING UNCERTAINTY
  INTEGRATING SOME RATIONAL
  METHODS AND TECHNOLOGIES INTO
  PROBLEM SOLVI...
WHY WE DO PLANNING ?



PROVIDING THE CHANCE ANG BLUE
PRINT TO CONTROL AND MONITOR THE
PUBLIC EFFORTS FROM TIME TO TIME
IN...
OTHER REASONS
 IF WE COULD FIRST KNOW WHERE WE ARE,
 AND WHITHER WE ARE TENDING, WE COULD
 BETTER JUDGE WHAT TO DO AND HOW...
OTHER REASONS
  MARKET FAILURE
  RESOURCE MOBILIZATION AND
  ALLOCATION
  ATTITUDINAL OR PSYCHOLOGICAL
  IMPACT
  FOREIGN ...
THE ROLE OF PLANNERS

 WHAT IS OR SHOULD BE THE TOPIC OR FOCUS
 OF PLANNING?
 WHO DOES THE PLANNER WORK FOR?
 WHAT IS THE ...
PLANNING APPROACH

   (1)   POLITICAL
   (2)   TECNOCRATIC
   (3)   PARTICIPATIVE
   (4)   TOP-DOWN
   (5)   BOTTOM-UP



...
THE PLANNING APPROACH

 1. RATIONAL PLANNING
     SYNOPTIC PLANNING, COMPREHENSIVE
     PLANNING
     BASIS FOR MOST PUBLI...
RATIONAL PLANNING
THE STEPS:

1. IDENTIFY A PROBLEM
2. IDENTIFY A GOAL
3. COLLECT BACKGROUND DATA
4. IDENTIFY A MEANS OF A...
RATIONAL PLANNING



6.  ASSESS ALTERNATIVE PLAN SCENARIOS
7.  SELECT THE PREFERRED ALTERNATIVE
8.  IMPLEMENT THE PLAN
9. ...
RATIONAL PLANNING PRACTICE

  TYPICALLY MORE COMPLEX THAN THE STEPS

A. COMPLETE AGENCY PRE-PLANNING
   ACTIVITIES

  1.
 ...
RATIONAL PLANNING PRACTICE




B. ESTABLISH GOALS, GUIDELINES, AND
   STANDARDS

    4. DEVELOP A PLANNING PROCESS TO DO
 ...
RATIONAL PLANNING PRACTICE




C. IDENTIFY NEEDS & PRIORITIES, ESTABLISH
   OBJECTIVES, AND DEVELOP PLAN
   IMPLEMENTATION...
RATIONAL PLANNING PRACTICE




D. PUBLISH AND IMPLEMENT THE PLAN

E. EVALUATE RESULTS & REVIEW,
   REVISE AND UPDATE THE P...
CRITICS ON RATIONAL
PLANNING


 RATIONAL PLANNING IS OFTEN CRITICIZED BUT
 IT STILL REMAINS THE MOST COMMON
 APPROACH TO P...
ASSUMPTIONS
 1. ASSUMES THAT PEOPLE BEHAVE
    RATIONALLY
   -   THAT RATIONALITY IS A PART OF EVERYDAY LIFE
   -   THAT P...
ASSUMPTIONS

3. ASSUMES THAT ONLY FACTS EXIST
  -   NO VALUES (SUBJECTIVE BELIEF SYSTEMS)
                (               ...
INCREMENTAL PLANNING

     AN ALTERNATIVE THEORY THAT ACCEPTS MOST
     OBVIOUS SHORTCOMINGS OF RATIONAL
     PLANNING

  ...
INCREMENTAL PLANNING



4. LIMITED TIME AND MONEY FOR DATA
   COLLECTION
5. SOCIETAL VALUES ARE AS IMPORTANT AS
   FACTS
6...
ADVOCACY PLANNING

  CAME OUT OF 1960S, CONSIDER AS AN
  ADVERSARIAL APPROACH IN THE LEGAL
  PROFESSION

1. DEFENDING THE ...
ADVOCACY PLANNING



3. MAJOR TOOL: DEVELOPMENT OF ‘PLURAL
   PLANS
   PLANS’
    DIFFERENT PLANS FOR DIFFERENT SECTORS OF...
TRANSACTIVE PLANNING


   ALSO CALLED ‘POST RATIONAL PLANNING’

   A RESPONSE TO THE FAILURES OF
   ADVOCACY PLANNING

 BA...
TRANSACTIVE PLANNING



PLANNERS JOB:
  1.
  1 FACILITATE SHARED UNDERSTANDING
     AMONG PEOPLE
  2.
  2 ENGAGE IN MUTUAL...
MUTUAL LEARNING PROCESS

PLANNER CONTRIBUTES quot;PROCESSquot;
KNOWLEDGE
    1. THEORY AND SCIENTIFIC METHODOLOGY
    2. L...
KNOWLEDGE SHARED

PROCESS & PERSONAL KNOWLEDGE
BECOME FUSED THRU:

  1. PERSONAL AND VERBAL INTERACTION
     (DIALOGUE)
  ...
COMPARISON OF APPROACHES
Rational Planning               Advocacy Planning          Transactive Planning

Audience
decisio...
COMPARISON OF APPROACHES


View of change process
controlled / stability            controlled / stability          guided...
ECONOMIC DEVELOPMENT PLAN

  A SPECIFIC SET OF QUANTITATIVE
  ECONOMIC TARGETS TO BE
  REACHED IN A GIVEN PERIOD OF
  TIME...
ECONOMIC DEVELOPMENT PLAN

 A COMPREHENSIVE PLAN SET ITS
 TARGETS INCLUDING ALL ASPECTS OF
 THE NATIONAL ECONOMY
 A SECTOR...
MODELS FOR PLANNING
1. AGGREGATE GROWTH MODELS:
   INVOLVING MACROECONOMIC ESTIMATES OF PLANNED
   OR REQUIRED CHANGES IN ...
PLANNING STAGING

 1. AGGREGATE
 2. SECTORAL
 3. PROJECT




                   49
THE PLAN

 1.   WARTIME PLANNING
 2.
 2    TOWN AND COUNTRY PLANNING
 3.   ANTICYCLICAL PLANNING
 4.   DEVELOPMENT PLANNIN...
DECISION MAKING PROCESS
      PLANNING                     PLANNING
         FROM                         FROM

    TECNOC...
GOOD PLAN



*   ECONOMICALLY EFFICIENT
*   POLITICALLY ACCEPTED
*   ADMINISTRATIVELY WORKABLE
*   IN ACCORDANCE WITH SOCI...
THE FAILURE


AN EXAMINATION OF POSTWAR PLANNING
HISTORY REVEALS THAT THERE HAVE
BEEN MANY MORE FAILURES THAN
SUCCESSES IN...
THE CAUSES


  GAP BETWEEN THEORY AND PRACTICE
  PLANNING PROCESS FAILURE
  - INSUFFICIENT AND UNRELIABLE DATA
  -   UNANT...
PUBLIC SECTOR MANAGEMENT

Decision making    Policies for                    Planning                    Budgets
         ...
LINKING POLICY, PLANNING AND BUDGETING
IN THE ANNUAL PLANNING AND RESOURCE MANAGEMENT
                       CYCLE
       ...
BUDGET AND BUDGETING

  BUDGET IS AN ESTIMATION OF THE
  REVENUES AND EXPENSES OVER A SPECIFIED
  FUTURE PERIOD OF TIME

 ...
BUDGET’S ROLE

  BUDGETS DIRECT EVERYTHING A
  GOVERNMENT DOES THEIR PROCESSES
               DOES.
  ARBITRATE OVER THE A...
BUDGET

   BUDGET IS A PLAN THAT SETS OUT:
1.
1 THE OBJECTIVES AND STRATEGIES OF THE
   GOVERNMENT IN A BUDGET YEAR,
2.
2 ...
BUDGET

4. THE RESOURCES ALLOCATED ACROSS THESE
   PROGRAMMES AND ACTIVITIES,
5.
5 THE REVENUES PROJECTED TO BE COLLECTED ...
BUDGETING PRINCIPLES

    TRANSPARENCY AND
    ACCOUNTABILITY
    COMPREHENSIVENESS OF BUDGET
    PREDICTABILITY OF RESOUR...
BUDGETING THEORIES
  PPBS
    PLANNING, PROGRAMMING
    PLANNING PROGRAMMING, AND
    BUDGETING SYSTEMS

     DEVELOPED IN...
BUDGETING THEORIES

MBO
 MANAGEMENT BY OBJECTIVE

   DETERMINING OBJECTIVES BASED
   ON OVERALL GOALS
   CLOSE COOPERATION...
BUDGETING THEORIES

ZBB
  ZERO BASED BUDGETING

   LARGER BUDGET BROKEN INTO
   SMALLER “DECISION PACKAGES”
   MANAGERS OF...
BUDGETING THEORIES

BUDGETING FOR PERFORMANCE

LINKING:

  INPUTS,
  OUTPUTS, AND
  OUTCOMES



                          ...
BUDGETING THEORIES
BUDGETING FOR PERFORMANCE


INPUT
  CASH/ACCRUAL

OUTPUT
  PERFORMANCE DATA/INDICATORS/STANDARDS
  AUTH...
BUDGETING THEORIES

BUDGETING FOR PERFORMANCE




CLASSIFICATION
    FUNCTIONAL
    PROGRAM
    ORGANIZATIONAL

MULTI-YEAR...
BUDGETING THEORIES

MTEF
MEDIUM TERM EXPENDITURE FRAMEWORK

 FISCAL TARGETS (WHAT IS AFFORDABLE)
 FORWARD ESTIMATES OF EXI...
STAGES OF A MTEF
                                           Top-Down
                                           T   D
    ...
BUDGET CYCLE AND FISCAL
POLICY
BUDGET CYCLE
  THE BUDGET CYCLE IS MADE UP OF THE
  MAJOR EVENTS OR STAGES IN MAKING
  DECISIONS ABOUT THE BUDGET, AND
   ...
BUDGET CYCLE

STAGE 1

BUDGET FORMULATION
THE BUDGET PLAN IS PUT TOGETHER BY
THE EXECUTIVE BRANCH OF GOVERNMENT

STAGE 2

...
BUDGET CYCLE

STAGE 3

BUDGET EXECUTION
THE POLICIES OF THE BUDGET ARE
CARRIED OUT BY THE GOVERNMENT

STAGE 4

BUDGET AUDI...
PUBLIC FINANCE


    GOVERNMENTAL FINANCES TODAY
    ARE “IN THE PUBLIC EYE” AS NEVER
    BEFORE

             (ROSENBLOOM...
FISCAL FUNCTIONS


  THE MAJOR FUNCTION OF FISCAL
  FUNCTIONS ARE:

  1.   ALLOCATION
  2.   DISTRIBUTION
  3.   STABILIZA...
ALLOCATION FUNCTION
 THE PROVISION FOR SOCIAL GOODS, OR
 THE PROCESS BY WHICH TOTAL
 RESOURCE USE IS DIVIDED BETWEEN
 PRIV...
DISTRIBUTION FUNCTION

 ADJUSTMENT OF THE DISTRIBUTION OF
 INCOME AND WEALTH TO ENSURE
 CONFORMANCE WITH WHAT SOCIETY
 CON...
STABILIZATION FUNCTION

 THE USE OF BUDGET POLICY AS A
 MEANS OF MAINTAINING HIGH
 EMPLOYMENT, A REASONABLE DEGREE
 OF PRI...
INSTRUMENTS OF
STABILIZATION FUNCTION

 1. MONETARY INSTRUMENTS
   -   CONTROL OVER MONEY
   -   INTEREST RATE
   -   CRED...
FISCAL-MONETARY MIX POLICY

TO INFLUENCE MACROECONOMIC ACTIVITY

1. TIGHT-MONETARY AND LOOSE-FISCAL
   POLICY WILL TEND TO...
PUBLIC SECTOR IN ECONOMY

                                           HOUSEHOLDS
                INCOME

                  ...
BUDGET DECISION MAKING
PLAYING THE BUDGET GAME

 SOMETIMES BUDGETING TAKES ON
 THE AURA OF A GAME, WITH THE
               GAME
 VARIOUS AGENCY P...
A RATIONAL COMPREHENSIVE
MODEL OF DECISION MAKING

1. VALUES OR OBJECTIVES ARE DETERMINED
   AND CLARIFIED SEPARATELY, USU...
A RATIONAL COMPREHENSIVE MODEL OF DECISION MAKING




4. A “GOOD” POLICY IS, THEREFORE, ONE
      GOOD
   THAT PROVIDES TH...
OBSTACLE TO DECISIONS


1.
1 LACK OF GOAL CLARITY
2. CONFUSION OF THE PUBLIC INTEREST
   WITH THAT OF A CUSTOMER CLIENTELE...
OBSTACLE TO DECISIONS


4. THE TENDENCY TO OVERSIMPLIFY
   REALITY
5. “OVERQUANTIFICATION” AND TENDENCY
   TO DEEMPHASIZE ...
BUDGET DECISION MAKING
PROCESS
       BUDGET                       BUDGET
         FROM                         FROM

    ...
INDONESIA NATIONAL BUDGET
SCHEME (SINCE 2005)
 20 YEARLY    5 YEARLY        YEARLY




             PRESIDENT’S
          ...
THANK YOU




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PLANNING AND BUDGETING

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Linkage Master Programmes Double Degree FIA-UNIBRAW and Japanese Universities Universitas Brawijaya 2006

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PLANNING AND BUDGETING

  1. 1. THE THEORY OF PUBLIC ADMINISTRATION Linkage Master Programmes g g Double Degree FIA-UNIBRAW and Japanese Universities Universitas Brawijaya Lecturer : Prof. Dr. Ir. Ginandjar Kartasasmita jgkar@cbn.net.id www.ginandjar.com g j Assistant Professor : Dr.Ir. Deddy S. Bratakusumah, BE, MURP, M.Sc. deddys@bappenas.go.id
  2. 2. PLANNING AND BUDGETING
  3. 3. DEVELOPMENT THEORIES 1. THE LINEAR-STAGES THEORY 2. STRUCTURAL-CHANE 2 STRUCTURAL CHANE MODELS 3. THE INTERNATIONAL-DEPENDENCE REVOLUTION 4. THE NEOCLASSICAL COUNTERREVOLUTION 5. THE NEW GROWTH THEORY (TODARO, (TODARO 2000) 3
  4. 4. THE LINEAR-STAGES THEORY LINEAR STAGES 1. ROSTOW’S STAGES OF GROWTH 1. 1 THE TRADITIONAL SOCIETY 2. THE PRE-CONDITION FOR TAKE OFF INTO SELF- SUS SUSTAINING GROWTH GG O 3. THE TAKE OFF 4. THE DRIVE TO MATURITY 5. THE AGE OF HIGH MASS CONSUMPTION 2. THE HARROD-DOMAR GROWTH MODEL Y/Y = s/k 4
  5. 5. STRUCTURAL-CHANGE MODELS 1. THE LEWIS THEORY OF DEVELOPMENT LEWIS TWO SECTOR MODEL (TRADITIONAL AND MODERN) 2. STRUCTURAL CHANGE AND PATTERNS OF DEVELOPMENT SO O AGRICULTURE – INDUSTRY – CONSTRUCTION & SERVICES 5
  6. 6. THE INTERNATIONAL- DEPENDENCE REVOLUTION 1. THE NEOCOLONIAL DEPENDENCE MODEL UNDERDEVELOPMENT IS SEEN AS AN EXTERNALLY INDUCED PHENOMENON 2. 2 THE FALSE-PARADIGM MODEL FALSE PARADIGM UNDERDEVELOPMENT IS CAUSED BY FAULTY AND INAPPROPRIATE ADVICE FROM INTERNATIONAL “EXPERT” 3. THE DUALISTIC-DEVELOPMENT THESIS THE EXISTENCE AND PERSISTENCE OF INCREASING DIVERGENCES BETWEEN RICH AND POOR NATIONS AND RICH AND POOR PEOPLES ON VARIOUS LEVEL 6
  7. 7. THE NEOCLASSICAL COUNTERREVOLUTION 1. FREE MARKETS, PUBLIC CHOICE, & MARKET FRIENDLY APPROACHES PRIVATIZATIONS, GOVERNMENTS CAN DO NOTHING RIGHT, “NONSELECTIVE” INTERVENTIONS , 2. TRADITIONAL NEOCLASSICAL GROWTH THEORY OUTPUT GROWTH RESULTS FROM ONE OR MORE OF THREE FACTORS: INCREASES IN LABOR QUANTITY AND QUALITY, INCREASES IN CAPITAL, AND QUALITY CAPITAL IMPROVEMENTS IN TECHNOLOGY Y = AeµtKαL1-α 7
  8. 8. THE NEW GROWTH THEORY ENDOGENOUS GROWTH SEEK TO EXPLAIN THE FACTORS THAT DETERMINE THE SIZE OF µ (THE RATE OF GROWTH OF GDP), THAT IS LEFT GDP) UNEXPLAINED AND EXOGENOUSLY DETERMINED IN THE SOLOW NEOCLASSICAL GROWTH EQUATION Y = AeµtKαL1-α Y = AeµtK 8
  9. 9. DEVELOPMENT AS TRANSFORMATION OF SOCIETY A MOVEMENMT FROM TRADITIONAL RELATIONS, TRADITIONAL WAYS OF THINKING, TRADITIONAL WAYS OF , DEALING WITH HEALTH AND EDUCATION, TRADITIONAL METHODS OF PRODUCTION TO MORE “MODERN” WAYS (STIGLITZ,1998) 9
  10. 10. THE SUCCESSFUL TRANSFORMATION OF SOCIETY 1. RAISE THE GDP PER CAPITA 2. RAISE STANDARD OF HEALTH AND LITERACY 3. REDUCE POVERTY 4. 4 SUSTAINING THE ENVIRONMENT (STIGLITZ,1998) 10
  11. 11. THE STRATEGY INCLUDING 1. PRIVATE SECTOR DEVELOPMENT 2. PUBLIC SECTOR DEVELOPMENT 3. 3 COMMUNITY DEVELOPMENT 4. FAMILY DEVELOPMENT 5. INDIVIDUAL DEVELOPMENT (STIGLITZ,1998) 11
  12. 12. THE PRIORITY 1. EDUCATION 2. INFRASTRUCTURE 3. 3 HEALTH 4. KNOWLEDGE 5. CAPACITY BUILDING (STIGLITZ,1998) 12
  13. 13. THE UN MILLENNIUM DEVELOPMENT GOALS 1. ERADICATE EXTREME POVERTY AND HUNGER 2. ACHIEVE UNIVERSAL PRIMARY EDUCATION 3. PROMOTE GENDER EQUALITY AND EMPOWER WOMAN 4 4. REDUCE CHILD MORTALITY 5. IMPROVE MATERNAL HEALTH 6. COMBAT HIV/AIDS, MALARIA AND OTHER DISEASES 7. ENSURE ENVIRONMENTAL SUSTAINABILITY 8. 8 DEVELOP A GLOBAL PARTNERSHIP FOR DEVELOPMENT 13
  14. 14. SOME DEFINITIONS OF PLANNING PLANNING IS THE APPLICATION OF SCIENTIFIC METHODS TO POLICY MAKING (FALUDI, 1983) PLANNING IS A PROCESS FOR DETERMINING APPROPRIATE FUTURE ACTION THROUGH A SEQUENCE OF CHOICES ( (DAVIDOFF AND REINER, 1983) O , 983) 14
  15. 15. PLANNING A DELIBERATE AND CONCIOUS ATTEMPT TO FORMULATE DECISIONS FROM SOME ALTERNATIVES TO ACHIEVE THE GOALS THE ELEMENTS OF PLANNING: 1. GOALS 2. PRIORITY AND TARGETS 3. TIME FRAME 4. CONSTRAINTS 5. CAPITAL AND RESOURCES, AND ITS ALLOCATIONS 6. 6 IMPLEMENTATION POLICIES AND STRATEGIES 7. IMPLEMENTING AGENCIES AND HUMAN RESOURCES 8. MONITORING, EVALUATION AND CONTROL MECHANISM , 15
  16. 16. PLANNING CRITERIA 1. COMPREHENSIVE AND INDICATIVE 2. CONTROL AND DIRECTING GOVERNMENT SPENDING IN ORDER TO STIMULATE THE PRIVATE INVESTMENT 3. STIMULATE MARKET MECHANISM 4. PEOPLE PARTICIPATION PROCESS 5. AFFIRMATIVE ACTION TO WHOM CAN’T SUIT THE MARKET MECHANISM 16
  17. 17. THE SHIFT OF DEVELOPMNET PLANNING IN USA AND UK THE DEVELOPMENT PLANNING BEEN ABANDONED ABANDONED, THE NEW FOCUS ON: 1. DEREGULATION 2. PRIVATISATION 3. 3 URBAN ECONOMIC ZONE 17
  18. 18. OTHER REASON DEVELOPMENT PLANNING AND PUBLIC REGULATION, NO MORE APPROPRIATE, BECAUSE IT HINDERS CREATIVITY,, PRIVATE INITIATIVE, BURDEN TO INOVATION, AND CREATE A HIGH COST ECONOMY CLASSICAL LIBERAL 18
  19. 19. THE ROLE OF GOVERNMENT THROUGH PLANNING IRVING SVERDLOW (1963): OPERATION (PROVIDING PUBLIC GOODS) DIRECT CONTROL (TARIFF) INDIRECT CONTROL (STANDARDIZATION) DIRECT INFLUENCE (INCENTIVE) INDIRECT INFLUENCE (EXPORT MARKET INFORMATION) 19
  20. 20. WHY WE DO PLANNING? DECREASING UNCERTAINTY INTEGRATING SOME RATIONAL METHODS AND TECHNOLOGIES INTO PROBLEM SOLVING PROCESS AND DECISION MAKING PROCESS 20
  21. 21. WHY WE DO PLANNING ? PROVIDING THE CHANCE ANG BLUE PRINT TO CONTROL AND MONITOR THE PUBLIC EFFORTS FROM TIME TO TIME INCREASING PARTICIPATION FROM THE PEOPLE ON DECISION MAKING AT LEAST MAKING, WIDENING THE HORIZON OF THE PUBLIC EXPONENT 21
  22. 22. OTHER REASONS IF WE COULD FIRST KNOW WHERE WE ARE, AND WHITHER WE ARE TENDING, WE COULD BETTER JUDGE WHAT TO DO AND HOW TO DO, DO IT (ABRAHAM LINCOLN) THE ROLE OF THE STATE IN THE ECONOMIC LIFE OF DEVELOPING COUNTRIES NEEDS TO BE REAPPRAISED…. NOT BY STRONG IDEOLOGICAL OVERTURES, BUT BY PRAGMATIC CONSIDERATIONS OF FEASIBLE ALTERNATIVES (M. SINGH) 22
  23. 23. OTHER REASONS MARKET FAILURE RESOURCE MOBILIZATION AND ALLOCATION ATTITUDINAL OR PSYCHOLOGICAL IMPACT FOREIGN AID ? (TODARO, 2000) 23
  24. 24. THE ROLE OF PLANNERS WHAT IS OR SHOULD BE THE TOPIC OR FOCUS OF PLANNING? WHO DOES THE PLANNER WORK FOR? WHAT IS THE GOAL OF PLANNING? (IS EQUITABLE DISTRIBUTION OF RESOURCES POSSIBLE?) HOW DO WE ACHIEVE OUR GOALS? (IS RATIONAL DECISION MAKING POSSIBLE?) WHAT IS PRACTICAL EXPECTATIONS? (LEW, 1996) 24
  25. 25. PLANNING APPROACH (1) POLITICAL (2) TECNOCRATIC (3) PARTICIPATIVE (4) TOP-DOWN (5) BOTTOM-UP 25
  26. 26. THE PLANNING APPROACH 1. RATIONAL PLANNING SYNOPTIC PLANNING, COMPREHENSIVE PLANNING BASIS FOR MOST PUBLIC PLANNING 2. INCREMENTAL PLANNING 3. ADVOCACY PLANNING 4. TRANSACTIVE PLANNING 26
  27. 27. RATIONAL PLANNING THE STEPS: 1. IDENTIFY A PROBLEM 2. IDENTIFY A GOAL 3. COLLECT BACKGROUND DATA 4. IDENTIFY A MEANS OF ASSESSING ALTERNATIVE PLAN SCENARIOS 5. IDENTIFY ALTERNATIVE PLAN SCENARIOS CONSISTING OF POLICIES AND GUIDELINES TO ACHIEVE THE GOAL 27
  28. 28. RATIONAL PLANNING 6. ASSESS ALTERNATIVE PLAN SCENARIOS 7. SELECT THE PREFERRED ALTERNATIVE 8. IMPLEMENT THE PLAN 9. MONITOR, EVALUATE AND REVISE THE IMPLEMENTATION 10. IDENTIFY NEW PROBLEMS AND BEGIN THE PROCESS AGAIN 28
  29. 29. RATIONAL PLANNING PRACTICE TYPICALLY MORE COMPLEX THAN THE STEPS A. COMPLETE AGENCY PRE-PLANNING ACTIVITIES 1. 1 CLARIFY AGENCY MISSION, ROLE, MISSION ROLE RESPONSIBILITIES 2. DELINEATE INTENDED PURPOSE AND USE OF THE PLAN 3. DETERMINE PLAN FRAMEWORK AND FORMAT 29
  30. 30. RATIONAL PLANNING PRACTICE B. ESTABLISH GOALS, GUIDELINES, AND STANDARDS 4. DEVELOP A PLANNING PROCESS TO DO THIS: - METHODOLOGIES DATA REQUIREMENTS - PARTICIPANTS ORIENTATION/EDUCATION - COORDINATION ORGANIZATIONAL STRUCTURE - EVALUATION PROCEDURE 5. 5 DEVELOP A WORK PROGRAM TO DO THIS 6. ESTABLISH GOALS 7. ESTABLISH GUIDELINES AND STANDARDS 30
  31. 31. RATIONAL PLANNING PRACTICE C. IDENTIFY NEEDS & PRIORITIES, ESTABLISH OBJECTIVES, AND DEVELOP PLAN IMPLEMENTATION STRATEGY 8. 8 DEVELOP THE PLANNING PROCESS 9. DEVELOP THE WORK PROGRAM AND TIME SCHEDULE 10. IDENTIFY NEEDS 11. DETERMINE PRIORITIES 12. ESTABLISH OBJECTIVES 13. DEVELOP THE PLAN IMPLEMENTATION STRATEGY 31
  32. 32. RATIONAL PLANNING PRACTICE D. PUBLISH AND IMPLEMENT THE PLAN E. EVALUATE RESULTS & REVIEW, REVISE AND UPDATE THE PLAN 32
  33. 33. CRITICS ON RATIONAL PLANNING RATIONAL PLANNING IS OFTEN CRITICIZED BUT IT STILL REMAINS THE MOST COMMON APPROACH TO PLANNING BECAUSE IT IS: RATIONAL AND THEREFORE EASIER TO JUSTIFY (LEW, 1996) 33
  34. 34. ASSUMPTIONS 1. ASSUMES THAT PEOPLE BEHAVE RATIONALLY - THAT RATIONALITY IS A PART OF EVERYDAY LIFE - THAT PEOPLE AND EVENTS ARE PREDICTABILITY 2. ASSUMES UNLIMITED PROBLEM SOLVING CAPABILITIES AND PERFECT INFORMATION - COST OF INFORMATION COLLECTION IS AFFORDABLE - ABILITY TO IDENTIFY ALL ALTERNATIVES (‘SYNOPTIC’) 34
  35. 35. ASSUMPTIONS 3. ASSUMES THAT ONLY FACTS EXIST - NO VALUES (SUBJECTIVE BELIEF SYSTEMS) ( ) - ALL VARIABLES EXIST WITHIN AN INTERCONNECTED AND CLOSED SYSTEM (NO UNFORESEEABLE VARIABLES) 4. ASSUMES A RATIONAL-DEDUCTIVE SEQUENCE OF EVENTS - IF ‘A’ HAPPENS, THE ‘B’ WILL FOLLOW - NO NEED FOR POLITICAL STRATEGIES - NOT SUITED FOR CRISIS OR UNFORESEEN EVENTS 35
  36. 36. INCREMENTAL PLANNING AN ALTERNATIVE THEORY THAT ACCEPTS MOST OBVIOUS SHORTCOMINGS OF RATIONAL PLANNING DEVELOPED FROM THE PEACE CORPS IN THE 1960S 1. LIMITED TIME PERIODS/HORIZONS 2. POLITICAL DECISION MAKING 3. LIMITED AND IMPERFECT INFORMATION 36
  37. 37. INCREMENTAL PLANNING 4. LIMITED TIME AND MONEY FOR DATA COLLECTION 5. SOCIETAL VALUES ARE AS IMPORTANT AS FACTS 6. OPEN, RAPIDLY CHANGING SYSTEM; UNFORESEEABLE EVENTS 7. PLANNING IS DISJOINTED, INCREMENTAL AND SERIAL (SERIAL = ONE EVENT AFTER ANOTHER WITH NO GIANT STEPS) 37
  38. 38. ADVOCACY PLANNING CAME OUT OF 1960S, CONSIDER AS AN ADVERSARIAL APPROACH IN THE LEGAL PROFESSION 1. DEFENDING THE WEAK AGAINST THE STRONG WEAK MEANS: THE POOR; DISENFRANCHISED; ENVIRONMENTAL CAUSES 2. 2 SUCCESSFUL IN BLOCKING INSENSITIVE PLANNING ESPECIALLY ‘URBAN RENEWAL’ URBAN RENEWAL 38
  39. 39. ADVOCACY PLANNING 3. MAJOR TOOL: DEVELOPMENT OF ‘PLURAL PLANS PLANS’ DIFFERENT PLANS FOR DIFFERENT SECTORS OF THE COMMUNITY 4. CRITICIZED FOR BLOCKING EFFICIENT PLANNING 5. SOCIAL POLICY & ENVIRONMENTAL JUSTICE BECAME IMPORTANT PLANNING ISSUES 6. SUSTAINABLE DEVELOPMENT IS THE ‘MAINSTREAMING’ OF ADVOCACY ISSUES MAINSTREAMING 39
  40. 40. TRANSACTIVE PLANNING ALSO CALLED ‘POST RATIONAL PLANNING’ A RESPONSE TO THE FAILURES OF ADVOCACY PLANNING BASED ON: 1. SOCIAL LEARNING THEORY HOW DO SOCIETIES LEARN (AND CHANGE) 2. INTERPERSONAL INTERACTION DIALOGUE AND MUTUAL LEARNING 40
  41. 41. TRANSACTIVE PLANNING PLANNERS JOB: 1. 1 FACILITATE SHARED UNDERSTANDING AMONG PEOPLE 2. 2 ENGAGE IN MUTUAL LEARNING WITH CLIENTS/PEOPLE BOTH REQUIRE ‘DIALOGUE’ Q MAJOR CRITICISMS: - VERY TIME CONSUMING AND DIFFICULT - VERY PERSONAL & SUBJECTIVE 41
  42. 42. MUTUAL LEARNING PROCESS PLANNER CONTRIBUTES quot;PROCESSquot; KNOWLEDGE 1. THEORY AND SCIENTIFIC METHODOLOGY 2. LARGER SOCIETAL PERSPECTIVE & CONCERNS CLIENT CONTRIBUTES quot;PERSONALquot; KNOWLEDGE 1. DIRECT PERSONAL EXPERIENCE 2. KNOWLEDGE OF LOCAL CONDITIONS AND NEEDS BOTH ARE OF EQUAL VALUE AND IMPORTANCE 42
  43. 43. KNOWLEDGE SHARED PROCESS & PERSONAL KNOWLEDGE BECOME FUSED THRU: 1. PERSONAL AND VERBAL INTERACTION (DIALOGUE) PUBLIC GOOD IS ACHIEVED 2. EFFORTS TO CREATE INTELLIGENT INSTITUTIONS INSTITUTIONS WHICH ARE SELF LEARNING / SELF-LEARNING EDUCATING / ADAPTING 43
  44. 44. COMPARISON OF APPROACHES Rational Planning Advocacy Planning Transactive Planning Audience decision maker / power holder a community group society / quot;the people” View held by client goal oriented / rational goal oriented / rational experiential View of self (planner) rational analyst & technician rational analyst catalyst / inventor & change agent Methodology science science & politics dialogue & politics Techniques analytical analytical process / synthesis Data objective & processed objective & processed objective / processed & subjective/personal Goal one best solution solution perceived best a working solution & by client continuing process 44
  45. 45. COMPARISON OF APPROACHES View of change process controlled / stability controlled / stability guided / responsive to change View of future comprehensive / time-driven partial / short term evolutionary / long-term Worldview elitist / structural efficiency benevolent / functional participatory / structural & efficiency functional efficiency Problem environment isolated (closed system) isolated (closed system) open system Implementation not planner's problem not planner's problem part of solution process Focus th problem the bl the bl th problem & potential actors t ti l t the th problem & potential actors bl t ti l t (LEW, 1996) 45
  46. 46. ECONOMIC DEVELOPMENT PLAN A SPECIFIC SET OF QUANTITATIVE ECONOMIC TARGETS TO BE REACHED IN A GIVEN PERIOD OF TIME, TIME WITH A STATED STRATEGY FOR ACHIEVING THOSE TARGETS 46
  47. 47. ECONOMIC DEVELOPMENT PLAN A COMPREHENSIVE PLAN SET ITS TARGETS INCLUDING ALL ASPECTS OF THE NATIONAL ECONOMY A SECTORAL AND PARTIAL PLAN ELABORATING ONLY A SPECIFIC SECTOR, FOR EXAMPLE, AGRICULTURE, INDUSTRIAL OR TRADE SECTOR 47
  48. 48. MODELS FOR PLANNING 1. AGGREGATE GROWTH MODELS: INVOLVING MACROECONOMIC ESTIMATES OF PLANNED OR REQUIRED CHANGES IN PRINCIPAL ECONOMIC VARIABLES 2. MULTISECTOR INPUT-OUTPUT MODELS: WHICH ASCERTAIN THE PRODUCTION, RESOURCES, PRODUCTION RESOURCES EMPLOYMENT, AND FOREIGN-EXCHANGE IMPLICATIONS OF A GIVEN SET OF FINAL DEMAND TARGETS WITHIN INTERINDUSTRY PRODUCT FLOWS 3. DETAILED SELECTION OF SPECIFIC INVESTMENT WITHIN SECTOR: THROUGH THE TECHNIQUE OF PROJECT APPRAISAL AND SOCIAL COST-BENEFIT ANALYSIS (TODARO, 2000) 48
  49. 49. PLANNING STAGING 1. AGGREGATE 2. SECTORAL 3. PROJECT 49
  50. 50. THE PLAN 1. WARTIME PLANNING 2. 2 TOWN AND COUNTRY PLANNING 3. ANTICYCLICAL PLANNING 4. DEVELOPMENT PLANNING - NATIONAL - REGIONAL (WATERSTON, 1982) 50
  51. 51. DECISION MAKING PROCESS PLANNING PLANNING FROM FROM TECNOCRATIC POLITIC POINT OF VIEW POINT OF VIEW DISTORTION ACCORDANCE PLAN 51
  52. 52. GOOD PLAN * ECONOMICALLY EFFICIENT * POLITICALLY ACCEPTED * ADMINISTRATIVELY WORKABLE * IN ACCORDANCE WITH SOCIO CULTURAL AND ETHICS 52
  53. 53. THE FAILURE AN EXAMINATION OF POSTWAR PLANNING HISTORY REVEALS THAT THERE HAVE BEEN MANY MORE FAILURES THAN SUCCESSES IN THE IMPLEMENTATION OF DEVELOPMENT PLANS (WATERSTON, 1989) 53
  54. 54. THE CAUSES GAP BETWEEN THEORY AND PRACTICE PLANNING PROCESS FAILURE - INSUFFICIENT AND UNRELIABLE DATA - UNANTICIPATED ECONOMIC TURMOIL - INSTITUTIONAL WEAKNESSES - POLITICAL ASPECT - NO IMPLEMENTATION MANUAL 54
  55. 55. PUBLIC SECTOR MANAGEMENT Decision making Policies for Planning Budgets Nat. Planningg for programs (Seek to achieve) (Defines) (Finance) Implementation Outcomes Outputs Inputs (effectiveness) ( ff ti ) (efficiency) Control indicators Impacts Production Costs indicators Monitoring Evaluation Value-for-money Cost accounting tools Audits & financial audits
  56. 56. LINKING POLICY, PLANNING AND BUDGETING IN THE ANNUAL PLANNING AND RESOURCE MANAGEMENT CYCLE (1) REVIEW POLICY R i h i Review the previous planning and l i d implementation period (2) (6) SET POLICY AND UNDERTAKE EVALUATE AND AUDIT PLANNING ACTIVITY Policy activities, effectiveness and Establish resource frame work, set out feed the results into future plans objectives, policies, strategies and expenditure priorities (3) (5) MOBILIZE AND ALLOCATE MONITOR activities and RESOURCES ACCOUNT for expenditures Prepare Budget (4) IMPLEMENTATION PLANNED ACTIVITIES Collect revenues, release funds, deploy personnel, undertake personnel activities Source : World Bank, “Public Expenditure Management Handbook”, 1998
  57. 57. BUDGET AND BUDGETING BUDGET IS AN ESTIMATION OF THE REVENUES AND EXPENSES OVER A SPECIFIED FUTURE PERIOD OF TIME THE PURPOSE OF BUDGETING: TO CONTROL OVER PUBLIC MONEY AND ACCOUNTABILITY TO PUBLIC AUTHORITY 57
  58. 58. BUDGET’S ROLE BUDGETS DIRECT EVERYTHING A GOVERNMENT DOES THEIR PROCESSES DOES. ARBITRATE OVER THE ALLOCATION OF SCARCE RESOURCES AMONG THE COMPETING DEMANDS OF AGENCIES WHOSE BUSINESS IT IS TO SEE PUBLIC NEEDS FULFILLED (XAVIER, 2001) 58
  59. 59. BUDGET BUDGET IS A PLAN THAT SETS OUT: 1. 1 THE OBJECTIVES AND STRATEGIES OF THE GOVERNMENT IN A BUDGET YEAR, 2. 2 THE PROGRAMMES AND ACTIVITIES THAT WOULD BE CARRIED OUT TO EXECUTE THE STRATEGIES TO ACHIEVE THE OVERALL OBJECTIVES, 3. THE RESPECTIVE OBJECTIVES OF THESE PROGRAMMES AND ACTIVITIES THAT REFLECT THE DISAGGREGATION OF THE OVERALL OBJECTIVES OF GOVERNMENT 59
  60. 60. BUDGET 4. THE RESOURCES ALLOCATED ACROSS THESE PROGRAMMES AND ACTIVITIES, 5. 5 THE REVENUES PROJECTED TO BE COLLECTED TO FINANCE THE EXPENDITURE IN CARRYING OUT THE PROGRAMMES AND ACTIVITIES ACTIVITIES, 6. PERFORMANCE TARGETS – IN TERM OF THE DELIVERY OF SERVICES IN THE RIGHT QUANTITY, QUALITY AND IN A TIMELY AND COST-EFFECTIVE FASHION – THAT WOULD NEED TO BE ACHIEVED TO MEETING THE SUB-OBJECTIVES AND, THEREBY, THE OVERALL OBJECTIVES OF THE GOVERNMENT (XAVIER, (XAVIER 2001) 60
  61. 61. BUDGETING PRINCIPLES TRANSPARENCY AND ACCOUNTABILITY COMPREHENSIVENESS OF BUDGET PREDICTABILITY OF RESOURCES & POLICIES FLEXIBILITY CONTESTABILITY EXISTENCE AND SHARING OF INFORMATION 61
  62. 62. BUDGETING THEORIES PPBS PLANNING, PROGRAMMING PLANNING PROGRAMMING, AND BUDGETING SYSTEMS DEVELOPED IN 1960s BY US DEPT OF DEFENSE BUDGETING BASED ON LONG-TERM PLANNING NEEDS 62
  63. 63. BUDGETING THEORIES MBO MANAGEMENT BY OBJECTIVE DETERMINING OBJECTIVES BASED ON OVERALL GOALS CLOSE COOPERATION BETWEEN A MANAGER AND HIS/HER SUBORDINATES 63
  64. 64. BUDGETING THEORIES ZBB ZERO BASED BUDGETING LARGER BUDGET BROKEN INTO SMALLER “DECISION PACKAGES” MANAGERS OF EACH DECISION PACKAGE JUSTIFIES ENTIRE BUDGET FROM SCRATCH EACH YEAR (ZERO- (ZERO BASE) 64
  65. 65. BUDGETING THEORIES BUDGETING FOR PERFORMANCE LINKING: INPUTS, OUTPUTS, AND OUTCOMES 65
  66. 66. BUDGETING THEORIES BUDGETING FOR PERFORMANCE INPUT CASH/ACCRUAL OUTPUT PERFORMANCE DATA/INDICATORS/STANDARDS AUTHORITY ACCOUNTABILITY OUTCOME CLEAR OBJECTIVES INDICATORS EVALUATION 66
  67. 67. BUDGETING THEORIES BUDGETING FOR PERFORMANCE CLASSIFICATION FUNCTIONAL PROGRAM ORGANIZATIONAL MULTI-YEAR 67
  68. 68. BUDGETING THEORIES MTEF MEDIUM TERM EXPENDITURE FRAMEWORK FISCAL TARGETS (WHAT IS AFFORDABLE) FORWARD ESTIMATES OF EXISTING POLICY INSTITUTIONAL MECHANISMS FOR MAKING THE TRADE-OFFS A FOCUS ON PERFORMANCE ENHANCED PREDICTABILITY 68
  69. 69. STAGES OF A MTEF Top-Down T D Stage 1 Stage 4 Stage 5 Stage 7 Macroeconomic Detailed Approval Review of f framework k dit expenditure f of ti estimates i t in availability of framework & ceilings by MOF and resources sector/ministry Cabinet presentation ceiling for 3 yrs to Cabinet and Parliament Stage 2 Stage 3 Stage 6 Step 1 St Step 3 Sector review Costing Hearings to Preparation of 3-year of ministry (recurrent & agree on estimates by objectives, capital) of objectives & ministries within outputs & p programs/ priority p y Cabinet approved pp activities i ii sub-programs programs ceilings ili for 3 years Step 2 Agreement on sectoral/ministry programs & sub- programs Bottom-up (ADAPTED FROM GERVAIS, 1999)
  70. 70. BUDGET CYCLE AND FISCAL POLICY
  71. 71. BUDGET CYCLE THE BUDGET CYCLE IS MADE UP OF THE MAJOR EVENTS OR STAGES IN MAKING DECISIONS ABOUT THE BUDGET, AND BUDGET IMPLEMENTING AND ASSESSING THOSE DECISIONS DECISIONS. THE SPECIFIC CHARACTERISTICS OF THE BUDGET CYCLE DIFFER FROM COUNTRY TO COUNTRY. NONETHELESS, IN MOST , COUNTRIES, THE BUDGET CYCLE IS LIKELY TO HAVE FOUR STAGES 71
  72. 72. BUDGET CYCLE STAGE 1 BUDGET FORMULATION THE BUDGET PLAN IS PUT TOGETHER BY THE EXECUTIVE BRANCH OF GOVERNMENT STAGE 2 BUDGET ENACTMENT THE BUDGET PLAN MAY BE DEBATED DEBATED, ALTERED, AND APPROVED BY THE LEGISLATIVE BRANCH OF GOVERNMENT 72
  73. 73. BUDGET CYCLE STAGE 3 BUDGET EXECUTION THE POLICIES OF THE BUDGET ARE CARRIED OUT BY THE GOVERNMENT STAGE 4 BUDGET AUDITING AND ASSESSMENT THE ACTUAL EXPENDITURES OF THE BUDGET ARE ACCOUNTED FOR AND ASSESSED FOR EFFECTIVENESS 73
  74. 74. PUBLIC FINANCE GOVERNMENTAL FINANCES TODAY ARE “IN THE PUBLIC EYE” AS NEVER BEFORE (ROSENBLOOM AND KRAVCHUCK, 2005) 74
  75. 75. FISCAL FUNCTIONS THE MAJOR FUNCTION OF FISCAL FUNCTIONS ARE: 1. ALLOCATION 2. DISTRIBUTION 3. STABILIZATION 75
  76. 76. ALLOCATION FUNCTION THE PROVISION FOR SOCIAL GOODS, OR THE PROCESS BY WHICH TOTAL RESOURCE USE IS DIVIDED BETWEEN PRIVATE AND SOCIAL GOODS AND BY WHICH THE MIX OF SOCIAL GOODS IS CHOSEN THIS PROVISION MAY BE TERMED THE ALLOCATION OF BUDGET POLICY (MUSGRAVE AND MUSGRAVE 1989) MUSGRAVE, 76
  77. 77. DISTRIBUTION FUNCTION ADJUSTMENT OF THE DISTRIBUTION OF INCOME AND WEALTH TO ENSURE CONFORMANCE WITH WHAT SOCIETY CONSIDERS A “FAIR” OR “JUST” STATE OF DISTRIBUTION, HERE REFERRED TO AS THE DISTRIBUTION FUNCTION (MUSGRAVE AND MUSGRAVE, 1989) 77
  78. 78. STABILIZATION FUNCTION THE USE OF BUDGET POLICY AS A MEANS OF MAINTAINING HIGH EMPLOYMENT, A REASONABLE DEGREE OF PRICE LEVEL STABILITY, AND AN APPROPRIATE RATE OF ECONOMIC GROWTH, WITH ALLOWANCES FOR EFFECTS ON TRADE AND ON THE BALANCE OF PAYMENTS. WE REFER TO ALL THESE OBJECTIVES AS THE STABILIZATION FUNCTION (MUSGRAVE AND MUSGRAVE, 1989) 78
  79. 79. INSTRUMENTS OF STABILIZATION FUNCTION 1. MONETARY INSTRUMENTS - CONTROL OVER MONEY - INTEREST RATE - CREDIT CONDITIONS 2. FISCAL INSTRUMENTS - GOVERNMENT SPENDING - THE AMOUNT AND TYPE OF TAXES 79
  80. 80. FISCAL-MONETARY MIX POLICY TO INFLUENCE MACROECONOMIC ACTIVITY 1. TIGHT-MONETARY AND LOOSE-FISCAL POLICY WILL TEND TO ENCOURAGE CONSUMPTION AND RETARD INVESTMENT 2. EASY-MONETARY AND TIGH-FISCAL POLICY WILL TEND TO DISCOURAGE CONSUMPTION AND ACCELERATE INVESTMENT 80
  81. 81. PUBLIC SECTOR IN ECONOMY HOUSEHOLDS INCOME SAVING INCOME TAXES CAPITAL MARKET FACTOR SPEND MARKET PRODUCT PUBLIC SERVICE MARKET AND GOODS FIRMS TRANSFER BORROWING PURCHASE GOVERNMENT BUDGET (ADAPTED FROM MUSGRAVE AND MUSGRAVE, 1989) 81
  82. 82. BUDGET DECISION MAKING
  83. 83. PLAYING THE BUDGET GAME SOMETIMES BUDGETING TAKES ON THE AURA OF A GAME, WITH THE GAME VARIOUS AGENCY PLAYERS TRYING TO INCREASE THEIR SHARES AND ELECTED OFFICIALS TRYING, AT LEAST OSTENSIBLY, TO KEEP TAXES DOWN AND PROMOTE ADMINISTRATIVE ECONOMY (ROSENBLOOM AND KRAVCHUCK, 2005) 83
  84. 84. A RATIONAL COMPREHENSIVE MODEL OF DECISION MAKING 1. VALUES OR OBJECTIVES ARE DETERMINED AND CLARIFIED SEPARATELY, USUALLY BEFORE CONSIDERING ALTERNATIVE POLICIES 2. POLICY FORMATION IS APPROACHED THROUGH ENDS-MEANS ANALYSIS, WITH ANALYSIS AGREED-UPON ENDS GENERATING A SEARCH FOR WAYS OF ATTAINING THEM 84
  85. 85. A RATIONAL COMPREHENSIVE MODEL OF DECISION MAKING 4. A “GOOD” POLICY IS, THEREFORE, ONE GOOD THAT PROVIDES THE MOST APPROPRIATE MEANS TO SOME DESIRED END 5. EVERY IMPORTANT RELEVANT FACTOR IS TAKEN INTO ACCOUNT 6. 6 THEORY OFTEN IS HEAVILY RELIED UPON (MILLER, (MILLER 1991) 85
  86. 86. OBSTACLE TO DECISIONS 1. 1 LACK OF GOAL CLARITY 2. CONFUSION OF THE PUBLIC INTEREST WITH THAT OF A CUSTOMER CLIENTELE CUSTOMER, GROUP, OR CONSTITUENCY 3. RIGID CONSERVATISM (IN THE SENSE OF STRICT ADHERENCE TO RULES, PROCEDURES, AND PAST PRACTICES 86
  87. 87. OBSTACLE TO DECISIONS 4. THE TENDENCY TO OVERSIMPLIFY REALITY 5. “OVERQUANTIFICATION” AND TENDENCY TO DEEMPHASIZE OR IGNORE QUALITATIVE FACTORS 6. RELUCTANCE TO ENGAGE IN POLICY AND PROGRAM EVALUATION (ROSENBLOOM AND KRAVCHUCK, 2005) 87
  88. 88. BUDGET DECISION MAKING PROCESS BUDGET BUDGET FROM FROM TECNOCRATIC POLITIC POINT OF VIEW POINT OF VIEW DISTORTION ACCORDANCE BUDGET 88
  89. 89. INDONESIA NATIONAL BUDGET SCHEME (SINCE 2005) 20 YEARLY 5 YEARLY YEARLY PRESIDENT’S VISION LTDP MTDP GWP STRA-PLAN OF DEPT DEPT AP DEPT ABP STATE BUDGET 89
  90. 90. THANK YOU 90
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