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.