In an IMF Working Paper, Richard Allen notes that the development of sound budgetary institutions in countries such as France, the U.K. and the U.S. has taken a very long time – 200 years or more – and is still evolving.
It discusses Douglass North’s prediction – which is supported by available data – that institutional reform is also likely to be very slow in developing countries since the budget is especially prone to rent-seeking influences.
Finally, the paper discusses the currently fashionable emphasis on complex, multiannual PFM reform strategies, which have been strongly promoted by the donor community; and advocates a simpler approach grounded on Schick’s important principle of "getting the basics right".
