July 26, 2013Doug Hadden
Carlos Lipari, FreeBalance Governance Advisory Services
Introduction to the Study
Greater effectiveness, efficiency, transparency and accountability throughout the budget preparation cycle are key government reform objectives in the modern world. FreeBalance assists governments in efforts to improve Public Financial Management (PFM), through modern Government Resource Planning (GRP) software and advisory services. FreeBalance solutions cover the entire budget cycle, at all levels of central, regional & local government and external aid projects. These solutions contribute to improve public sector governance.
The ultimate goal for FreeBalance, a for-profit social enterprise, is to assist governments to raise citizens’ standards of living. This goal can be achieved through improved economic growth and public policies. It is, therefore, essential to efficiently manage public resources and invest wisely. It is also very important to attract new foreign direct investment or development assistant funds to extend public resources to encourage growth and employment. FreeBalance believes that good governance is required to sustain growth and should be considered as integral to economic development. Good governance can lead to growth sustainability. By growth sustainability, we mean lasting, fruitful, affordable and consistent economic development. And, PFM is critical to improving governance.
FreeBalance is much more than a provider of GRP software to governments. The company is about providing a good balance for public budgets to meet government development goals. How well are FreeBalance clients leveraging GRP software and PFM processes to meet these goals? Clearly there are countless variables to be used in explaining the social and economic achievements and failures of any country government. Is there any relationship between being a FreeBalance client and improved economic growth? How have the economies of FreeBalance government customers been performing compared to global and regional trends? How well have these countries managed public debt? What are the public revenue and expenditure trends in these countries? Is there any relationship with government effectiveness ratings? What is the economic outlook of FreeBalance client economies?
These are the type of questions that we will briefly try to address in this paper. We have included only countries that are using FreeBalance software at the national or federal level in order to focus our analysis in where the impact of FreeBalance solutions may be measured. Countries that have been considered are Kosovo, Timor-Leste, Afghanistan, Mongolia, Guyana, Iraq, Antigua, Sierra Leone, South Sudan and Liberia. The maturity of PFM reform and the functions of FreeBalance GRP software used differ among these 10 countries.
This is not meant to be an exhaustive study. Such a goal would not be realistic in a short paper. Instead, we aim to provide a brief governance analysis for FreeBalance GRP customers and some food for thought for further discussion.
Summary of Findings
Findings of this study show that countries operating FreeBalance Governance Resource Planning (GRP) solutions have been outperforming in their economic regions in several relevant economic indicators. Among these indicators, we highlight the economic growth rate, the investment rate, the fiscal consolidation process and fast public debt reductions achieved in recent years. It also seems clear that this positive momentum is expected to continue in the years to come, providing a positive economic outlook for its citizens and investors. Also, in order to better understand how good governance can positively influence economic growth, we run an econometric cross-sectional analysis on economic growth of 172 countries across the World, finding empirical evidence suggesting that strong government effectiveness and investment levels deliver superior economic growth rates.
- Introduction to the Study
- Government Revenue
- Government Expenditures
- Government Gross Debt
- Country Investment
- Real Investment Growth Rates
- Government Effectiveness
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