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The recent global economic crisis has posed significant questions not only to the management of the financial institutions but also to the budgeting and, furthermore, to the Governance structures.
The paper reviews the different periods of budgeting theory, starting from the one- size- fits- all “Performance Based Budgeting”, going on to the managerial era, when budgeting had been transformed to the basic tool of a social engineering, and from there to the New Public Management which was considered as an instrument of “cutting back” policies and, finally, to the Governance concepts of the new millennium.
The paper sees the current crisis as an opportunity for the emergence of a sounder budgeting theory, since all basic notions, such as steering, trust , regulatory capture, etc. have indicated the theoretical and practical vacuum of the current Governance/Budgeting theorems.
The main point of the theoretical proposal of the paper is a re-balancing between the global, regional and local identities which participate in the governing and budgeting process. To that direction a lot of systemic failures can be avoided. The paper concludes with some theoretical work assumptions after having examined a typical budgeting failure concentrating on the Greek case.