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Capacity Constraints and Public Financial Management in Small Pacific Island Countries

Author: Tobias A Haque; Dinuk S Jayasuriya; David S Knight
Publisher: Washington, D.C. : The World Bank, 2012.
Series: Policy research working papers.
Edition/Format:   eBook : Document : International government publication : EnglishView all editions and formats
Summary:
Drawing on Public Expenditure and Financial Accountability assessment scores from 118 countries, this paper provides the first comparative analysis of public financial management performance in small Pacific Island Countries (PICs). It applies a Tobit regression model across the full cross-country sample of Public Expenditure and Financial Accountability scores and country variables to identify potential causes for  Read more...
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Additional Physical Format: Print version:
Haque, Tobias A.
Capacity Constraints and Public Financial Management in Small Pacific Island Countries.
Washington, D.C. : The World Bank, 2012
Material Type: Document, Government publication, International government publication, Internet resource
Document Type: Internet Resource, Computer File
All Authors / Contributors: Tobias A Haque; Dinuk S Jayasuriya; David S Knight
OCLC Number: 843210698
Description: 1 online resource (38 pages).
Series Title: Policy research working papers.
Responsibility: Tobias A. Haque.

Abstract:

Drawing on Public Expenditure and Financial Accountability assessment scores from 118 countries, this paper provides the first comparative analysis of public financial management performance in small Pacific Island Countries (PICs). It applies a Tobit regression model across the full cross-country sample of Public Expenditure and Financial Accountability scores and country variables to identify potential causes for the observed underperformance of Pacific Island countries relative to other countries of similar income. First, the analysis finds small population size to be negatively correlated with Public Expenditure and Financial Accountability scores, with the "population penalty" faced by small Pacific Island countries sufficient to explain observed underperformance. Second, through application of a new capacity index of Public Expenditure and Financial Accountability dimensions, it finds strong evidence in support of the hypothesis that small population size impacts scores through the imposition of capacity constraints: with a limited pool of human capital, small countries face severe and permanent challenges in accessing an adequate range and depth of technical skills to fulfill all functions assessed through the Public Expenditure and Financial Accountability framework. These findings suggest that approaches to strengthening public financial management in small Pacific Island countries should involve: i) careful prioritization of public financial management capacity toward areas that represent binding constraints to development; ii) adoption of public financial management systems that can function within inherent and binding capacity constraints, rather than wholesale adoption of "best practice" imported systems; and iii) consideration of options for accessing external capacity to support public financial management systems on a long-term basis, from regional agencies, the private sector, or donors.

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