Budget Openness of Hong Kong, Macao and Taiwan: Preliminary Comparative Observations

By Dr. Brian C. H. Fong, Academy of Hong Kong Studies at the Education University of Hong Kong— Dec 05, 2017

A note from the International Budget Partnership: the budget transparency scores presented in this post were calculated by the author using the Open Budget Survey methodology but are not considered to be official Open Budget Index scores.

Hong Kong, Macao, and Taiwan are important economies in East Asia and, though all three are part of the People’s Republic of China, they are all independent entities in terms of public finance management. Under the constitution, Hong Kong and Macao enjoy full fiscal autonomy, while Taiwan is a de facto sovereign state within the Republic of China. Because the International Budget Partnership’s Open Budget Survey (OBS) measures budget transparency, participation, and oversight at the central government level of countries around the world, it does not cover subnational governments. Thus the latest round of the survey, the OBS 2017, includes 115 countries but does not include Hong Kong, Macao, and Taiwan.

Hong Kong Financial Secretary Paul Chan and other finance ministry executives at a press conference after delivering the 2017-18 budget, via budget.gov.hk

Hong Kong, Macao, and Taiwan, however, merit an in-depth investigation along the lines of the OBS research because these three regions are currently at different stages of democratization. This position makes them perfect cases for examining the relationship between democratization and government budget transparency and accountability. In recent years, the OBS methodology has gained growing prominence in the field of comparative assessments of public finance management, and many of the existing OBS-based empirical studies investigate the causes or drivers of greater budget transparency and accountability. A 2013 study by Joachim Wehner and Paolo de Renzio compared OBS 2008 data with different measures of democracy. They found a positive correlation between the holding of free and fair elections and greater budget openness, particularly during periods of transition from authoritarianism to democracy. Specifically, they found that open budget reforms were often undertaken during democratization.

Based on these and similar research outcomes, our research team undertook in 2016 a comparative study of the budget openness of Hong Kong, Macao, and Taiwan using the OBS methodology. Our focus was on the extent to which the degree of democratization in Hong Kong, Macao, and Taiwan has determined and shaped their state of budget openness. Our preliminary studies of the three regions aligned with the earlier research that found correlations between democratization and budget openness. Taiwan — a full democracy with a popularly elected executive and legislature — demonstrated higher levels of budget transparency opportunities for public engagement in budget processes, and stronger formal oversight institutions (i.e., the legislature and supreme audit institutions) than were found in Hong Kong and Macau —hybrid regimes in which the executives are not elected by the people and the legislatures are only partially democratized. These two regions attained lower scores on all the aforesaid indicators.

The Open Budget Index (OBI) is a comparative, regular measure of budget transparency that is calculated from a subset of OBS questions that focus on the amount, level of detail, and timeliness of budget information the government makes publicly available. Each country assessed receives an OBI score between 0 and 100. In our study, we used the OBI methodology to calculate transparency scores for the three regions. Interestingly, while Hong Kong and Macao attained almost the same transparency scores, the former performed better in terms of the other two factors measured by the OBS, strength of formal oversight and opportunities for public engagement in the budgetary process. This is very likely a reflection of the relatively more competitive political environment of Hong Kong compared to Macao. Specifically, Hong Kong has stronger democratic opposition and a legacy of consultative politics from its history of British rule.

Budget Transparency Scores for Hong Kong, Macao, and Thailand

Budget DocumentHong KongMacaoTaiwan
Executive’s Budget Proposal514255
Pre-Budget Statement1300
Enacted Budget78093
Citizens Budget42330
In-Year Reports635854
Mid-Year Review0058
Year-End Report395762
Audit Report616167
Overall Budget Transparency Score434254
These scores are based on data from 2015/2016 and were calculated using the OBS methodology for the Open Budget Index. They are not considered to be official Open Budget Index scores.

Measures for Oversight Institutions and Public Participation for Hong Kong, Macao, and Thailand

MeasuresHong KongMacaoTaiwan
Strength of the Legislature261554
Public Engagement in the Budget Process907
Strength of the Supreme Audit Institution0067
These scores are based on data from 2015/2016 and were calculated using the OBS methodology. They are not considered to be official Open Budget Survey scores.

There is no question that these preliminary findings are subject to further analysis and examination. We intend to collect time-series data based on OBS methodologies to enable a more comprehensive and thorough assessment on the relationship between levels of democratization and the state of budget transparency, public participation, and oversight institutions in Hong Kong, Macao, and Taiwan over the decades. All in all, our preliminary comparative studies of the three regions demonstrate the great potential for scholars and researchers to apply the OBS methodology to more countries and regions around the world in order to contribute to the evidence on the causes and consequences of greater budget transparency and accountability and on the place of open budgets in the context of democratization and governance.

About the Author

Dr. Brian C. H. Fong is Associate Director of The Academy of Hong Kong Studies at The Education University of Hong Kong. Prior to joining the University, Dr. Fong was a lecturer in the Division of Social Sciences of the City University of Hong Kong. Before joining academia, Dr. Fong was an Executive Officer of the Hong Kong Special Administrative Region (HKSAR) Government from 2001 to 2007. Dr. Fong’s research interests include center-periphery relations, territorial autonomy, democratization, legislative studies, and budgetary politics. He has published extensively in international peer-reviewed journals such as China Quarterly, Modern China, Asian Survey, Democratization, and International Review of Administrative Sciences. Dr. Fong was awarded the 2014 Gordon White Prize by China Quarterly for his article entitled “The Partnership between the Chinese Government and Hong Kong’s Capitalist Class: Implications for HKSAR Governance, 1997–2012”. Dr. Fong is an active commentator for various media and regularly publishes commentaries. He is also very active in community services, leading the work of several civil society organizations. Contact him at chfong@eduhk.hk.

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