Does Openness Enhance Public Trust: A Cross-Country Assessment of the Relationship Between Openness of Budgeting Processes and Perceptions of Government Corruption

Abstract

In the last two decades, openness of public budgeting processes garnered the attention of governments, non-governmental organizations and donors, evidenced by a proliferation of budget transparency and accountability initiatives worldwide (McGee & Gaventa, 2010; De Renzio & Angemi, 2012). Designed to facilitate productive citizen-government interaction around resource allocation, open budgeting initiatives should contribute to strengthening public trust in political institutions (Sayogo & Harrison, 2012; Hakhverdian & Mayne, 2012). Using corruption perceptions as a measure of public trust, this study analyzes the relationship between the openness evident in the budgeting processes of 70 countries and corruption perceptions over a five-year period, 2006-2010. As a traditionally obtuse, closed process, public resource allocation and expenditure is an arena particularly ripe for "wealth-maximizing" civil servants to engage in corruption (Spada, 2009; Rose-Ackerman, 2004). Open budgeting processes that improve citizen awareness of, and provide opportunities for their participation in, government budgeting processes should theoretically improve, not only the incidence of actual corruption, but also citizens' perceptions regarding the level of corruption within their government (Anderson & Tverdova, 2003; Martinez-Moyano et al., 2007). It was hypothesized that citizens in countries with greater transparency, consultation and public monitoring in their budgeting processes perceive lower levels of corruption and higher levels of government anti-corruption effectiveness. OLS and fixed effects regressions found suggestive evidence to support the contention that consultation and openness were positively associated with perceived anti-corruption effectiveness. In contrast, once confounding factors were controlled for, there was no clear evidence to support the contention that openness, either as a composite or its three sub-components, was negatively correlated with perceived government corruption. Furthermore, the results imply that the cumulative effect of the components of transparency, consultation and monitoring may have a stronger impact on perceptions of anti-corruption effectiveness and government corruption than they do as stand-alone activities.