Municipal Finances and the Adoption of Participatory Budgeting in Germany : An Empirical Analysis of Adoption Patterns From an Economic Perspective

Participatory Budgeting (PB) is one of the most popular democratic innovations of recent times. Since its first implementation in Germany in 1998, a growing number of municipalities have experimented with it. Unlike in other countries, PB processes in Germany follow primarily the goal of increasing transparency, efficiency, and service-orientation as part of an effort to modernize public administration. In global comparison, the diffusion of PB in Germany has been rather slow. In this book, the author investigates the question how this specific adoption pattern occurs. For that purpose, she applies theories from Public Administration, Fiscal Federalism, Public Choice, and diffusion of innovations to explain the incentives driving politicians to adopt PB from a public finance point of view. According to empirical analysis by the author, municipalities with a relatively worse financial situation are more likely to adopt a PB process. Consequently, PB processes seem to be used as a tool to spread responsibility, gain legitimacy, and raise understanding by citizens for necessary budget cutting decisions. Acknowledgement Contents Abbreviations List of Figures List of Tables 1 Introduction 2 Municipal Finances in Germany 2.1 The Federal System of Germany 2.1.1 Fiscal Federalism in Germany 2.1.2 Intergovernmental Financial Relations 2.2 Municipal Finances 2.2.1 Legal Basis of Municipalities in the Federal System of Germany 2.2.2 Municipal Finances—Tasks and Expenditure 2.2.3 Municipal Finances—Revenues 2.2.4 Income from Debt 2.3 The Municipal Budget—Principles and Procedure 2.3.1 Budgetary Principles in Germany 2.3.2 Legal Bases, Structure of the Budget and Budget Cycle 2.4 Chapter Summary 3 Participatory Budgeting—Origins, Diffusion and Research Findings 3.1 Definition, Origins and Global diffusion of PB 3.1.1 Definition 3.1.2 Origins and Global Diffusion 3.1.3 Typology of PB processes 3.2 PB in Germany 3.2.1 The Background of PB in Germany 3.2.2 Diffusion of PB Processes in Germany 3.2.3 A German Peculiarity: Saving Budgets 3.3 Literature review of PB 3.3.1 Adoption and Diffusion of PB—Research Findings 3.3.2 Goals, Process Design and Outcomes of PB—International Research Findings 3.3.3 Effects and Process Design of PB in Germany 3.3.4 Critical Review of PB Processes 3.4 Chapter Summary 4 Theoretical Framework and Hypotheses—Examination of Factors Explaining PB Adoption and Diffusion 4.1 Explanatory Factors Based on Public Administration Research 4.2 Explanatory Factors Based on Fiscal Federalism Theories 4.3 Explanatory Factors Based on Public Choice Theory 4.4 Explanatory Factors Based on Diffusion Theory of Innovation 4.5 Research Hypotheses Regarding PB Adoption in Germany 4.6 Chapter Summary 5 Empirical Analysis 5.1 Variables and Data 5.2 Differences Between Municipalities with and Without PB 5.2.1 Cluster Analysis 5.2.2 Mean value comparisons 5.3 Factors Affecting Adoption of PB Processes 5.3.1 Methodology: Population-Averaged Logistic Regression Analysis 5.3.2 Presentation of Regression Results Regarding PB Adoption 5.3.3 Diagnostics 5.3.4 Robustness Test 5.4 Factors Influencing Different Phases of PB Adoption 5.4.1 Results of an Ordered Logistic Regression Analysis 5.4.2 Diagnostics 5.5 Chapter Summary 6 Conclusion and Outlook 6.1 Outlook & Limitations List of Primary Sources Bibliography