EFFECTS OF PARTICIPATORY BUDGETING AND TRANSPARENCY ON BUDGET ALLOCATION OUTCOMES IN SOUTH KOREA

Abstract

Despite a growing literature stream, debates continue regarding the effects of citizen participation in public budgeting on budget allocation outcomes. This study addresses this research gap by analyzing data from the early stages of mandatory participatory budgeting implementation in South Korea and providing empirical evidence. It examines the effects of two independent variables: participatory budgeting maturity and enhanced transparency through information disclosure. These factors are hypothesized to influence budget allocation by shifting decision-making power from bureaucrats to citizens. This study models these effects as sequential interactions, showing that increased citizen involvement results in a statistically significant increase in social expenditures, including welfare, education, and health services, while having a smaller effect on administrative expenses. Information disclosure further reduces participation costs, thereby enhancing the overall effect of participatory budgeting on promoting more equitable public resource distribution.