1- Introduction

     In this 21st century, the globalization concept is more effective compared to the previous periods and it is accelerating parallel to the free market trend. In this formation, the developed countries opened their economies to the competition and started to take new steps within the government-economy relations. The globalization that required the economic, social and political integration of the countries over the world has also closely affected the government perspective and the conception of an interventionist and functional government left its place for a small and effective government conception.

      In parallel with these developments in the government perspective, the duties, roles and responsibilities of the government in financial domain have changed. The budget policy-taking place in this scope became a budget policy, which is balanced and is depending on the rules. Globalizatıon and new government perpective influences budget approach. In perıod of globalization, fiscal discipline and control, fiscal transparency, balanced budget, performance based budgeting are very important. Government budget approach have change ın thıs period. For this reason budget reform is necessary.

     One of the efforts of Turkey to take its place in the process of globalization and new government perspective experienced by the countries over the world, is the transition to the analytical budget classification and performance based budget system.  This system is one of the applications of the government to provide the financial transparency and the financial discipline at the same time.

      In thıs work, the changıng  government perspective in the changıng world,  the globalızatıon and the new government perspective, new budget perspective (understandıng) and the case of  Turkey will be analyzed.             

2- The Changing Government Perspective In The Changing World

     In this century, the need to meet the increasing demands of the rapidly rising world population and the expectations parallel to the population increase is accompanied by the globalization concept which marked the 21st century. The 2000’s are a period when the economic, political and all sort of inter-countries boundaries would be surmounted and consequently the traditional closed economies would start to transform rapidly into economies.

     In today’s world where the globalization is standing in the forefront, some parallel changes occured in the government perspective and the government concept gained different functions and duties. The government, which represents the common legitimate sanction power of the society, takes place in the essential subjects of the economic thought. The reason of the government existence in the economy created a long and complicated discussion for a longtime and the government-economy relation and the weight of the government in the economy always formed a subject of the agenda.

      The information revolution, the financial revolution, the existence of the supra-national values and institutions, the changing national preferences in the world, the personal and national security which takes new meanings, the operable localisation and free market economy are some of the consequences of the globalization. Consequently, globalization also led to some important changes in the government perspective. Firstly, the economic role of the government was rearranged. The relation between the government and the economic life brought in the foreground the organizing and control function of the government instead of its interventionism.  

a) The Globalization And The New Government Perspective

     The globalization concept has appeared in the mid 1980’s. The globalization, this concept expressed as internationalization or universalization, defines the increase of the cross-border activities between the countries in general and of the economic relations in particular. In fact, in the last years the globalization started to affect the inter-countries economic relations. Samely the limitless globalization contributed to the formation of the inter-countries externalities and international external extensions (Tanzi, 1998:32).

     The execution by the government of the activities in the new economic process is progressing parallel to the government’s transaction capability and to its organization. The government should be directed to the activities that it would efficiently fulfill as an institution and should focus on the compulsory works. However, with the capacity of efficient execution, the innovation of the government institutions and the organization of the service institutions capable to meet the social expectations are the outcomings of the new government perspective. Nowadays, in the countries affected by the globalization, the efficient-small-respectable government perspective started to prevail.

     The globalization process which arised in the late periods accompanied by the above-mentioned government perspective, gave rise to the idea of the necessity of being a participatory institution in order to establish the civilian social order and to assure the institutionalization. Consequently, the new government perspective which was designed by the new economic conception emerged as a result of the globalization process after 1980, is based to a small but efficient and also a participatory government perspective.

     Beside the above-mentioned functions of the government, the protection of environment and the resolution of the problems arising particularly from the increasing world population, the struggle against the environmental pollution and the finance and offer of the global public goods by nation governments are placed among the functions that must be fulfilled by the government in the scope of globalization and new economy.

     The social cost of the continuous growth of the government in respect to its duties and functions is the emergence and the proliferation of the economic and political degenerations. However apart from the political degenerations, the government, which functions and duties are continuously increasing, causes the emergence and the permanency of the economic problems. The increasing tax burden, the debit burden and the emission policy, which has some inflationist effects, are some of these negative consequences. The mentioned negativities can cause at the same time some destructive consequences in the economy such as the slowing down of the economic growth, the collapse of the tax ethics and the expansion of the underground economy (Aktan, 1997:305).

     Another concept, which reveals the new government perspective, is the progress of information and communication technologies, which take place among the basic dynamics of globalization. The information, which plays a major role in, the social changes in many respects; became an important productive element and sector for the economy (Toprak and Others, 2001:25). In fact, it is obvious that the underlying components of the international economic integration are partially technological changes, which reduce the transportation and communication costs (Rodrik, 2000:19).

     The importance of information concerning the development of new production technologies, the discovery of new products and markets and the development of new methods of marketing and management has been accompanied by the information revolution. This fact affected closely the government perspective and the countries over the world increased their effort to become countries where the information and communication are used intensely.

         The aim of the globalization process which arised as a result of the lowering costs of communication and transportation is to eliminate the obstacles which prevent goods, services, capital, information and persons from passing beyond the boundaries. The globalization aimed also to establish new institutions, which would work inter-boundries beside the present institutions. The international institutions, which provided the cross border circulation of not only the capital and the goods but also the technology, strengthened the globalization. Besides, the interest of the former international institutions towards the globalization has been rejuvenated and the organizations such as the International Labour Organization, the World Trade Organization took their place in the global world order (Stiglitz, 2002:31).  

b) The Reflection Of The New Government Perspective On The Budget Policies And Budget Reform Necessity                                                             

          The new economy, is the economy created by the cyber connections, the economic multipliers and limitless activities beyond nations which expresses the qualitative and quantitative transformation of the economic rules in the last 15 years and which is based to information and to conception (Aykın, 2002:4).

     The basic elements defining the new economy are the radical changes in industry and professions, the dynamic entrepreneurship and the globalization. These elements are continuously carried to higher dimensions by the progress in the information technologies. The mental activities of the persons are prevailing in the new economy and the renewal at the globalization process dominated by the information technologies is becoming important. So, the new economy brings the new competitive conditions, new types of organizations and new managerial technics. Also, the principles of high productivity, improved investment management, soft labour market and the prevailing professions in the service sector are the important principles which form the basis of the new economy.

        With the process of globalization, the new economic order was reflected on the international platform and an effort has been made to bring the free market economy to an international level. In this connection, the main target was to put an end to the protectionist policies and the government intervention in the industrial, commercial, banking and financial sectors and to dispose of the present public enterprises by means of rapid privatization or liquidation, to extend the personal resolutions by decreasing the social security expenditures, to provide the perfect freedom by eliminations of all of the obstacles standing in front of the mobility of goods-services-capital and so, to provide the efficient resource allocation (Sönmez, 1998:512).

        In the new economic order brought by the process of globalization the duties, roles and responsibilities of the government in the financial domain are also modified. Concerning the two functions of government cited by Buchanan as productive (the offer of some limited goods which can not be offered by the market for diverse reasons) and protective (the protection of persons and their properties) functions, it is possible to say that today, the productive role of the government is limited to a small area. The protective role of the government has got a new dimension (Aktan ao., 2004:37).

      The conception of budget in the new government perspective is based on the principle of the balanced budget. Another sugestion of the new government perspective is the obligation for the budget deficits to be depending on the constitutional and legal rules in order to assure the financial discipline.

     Instead of a government, which intensely and directly intervenes to the national economy, culture and personal privacies; the perspective of a government, which assures the institutional and legal infrastructure and is rejuvenated according to the demands of the civil society is prevailing. The conception of a nation government which is the absolute ruler in the economic, political, cultural and social domains gave its place to the conception of a limited-sovereign government which is bound by the supra-national values and principles.

     With the free market economy adopted in the period after 1980 when the globalization process accelerated, the supply oriented economic thought also closely affected the budget policies. During this period, a program oriented budget perspective, which required the reduction of the expenditures and the allotments proper to the targets in the public finance, has been adopted (Kelly, 2005:103). So, in this period the obligation for a majority of the countries to balance their budgets and their borrowing made necessary the rearrangement of the public revenues and expenditures (Johnson and Ley, 1993).

     The experience of the last three decades indicates that the objective of reforms has been more limited. Its primary aim has been to improve efficiency rather than reduce expenditures. This objective has been sought through the measurement of costs of government. It should be recognized, however, that the tests have been primarily concerned with the cost of services, not the quality. Also, stabilization goals may require additional spending, not less. Another proposed test has been that changes in budget concepts and procedures be evaluated, not in terms of instrumental criteria-such as comprehensiveness and procedural control- but in terms of the outcomes of the budget process (Premchand, 1981:19). 

     The limited-sovereign government conception brought by the globalization current after 1980’s adopted the limited-controled-program oriented budget perspective with respect to the above-mentionad developments. In this scope, the budgeting system used to reach the anticipated targets for the budget policies has been changed and the performance based butget system was accepted in almost every country.

     The performance based budgeting, arised as a budget system where the efficiency of the resource allocation was provided and stratejic planning was stressed, which aimes to found a relation between the input and the output of the public sector, which provides the establishment of the budget-plan relation and the efficiency of reaching the targets envisaged for the future periods (Mcgill, 2001:4). In fact, the use of the public revenues in order to provide the productivity at the supply of the public services is possible by means of the budget that is an important instrument of public finance management. It is very important to determine the technics used for the application of the public budgets while taking into consideration the cost notion (Jones and Thompson, 1986:46).

     The performance based budgeting, is the budgeting type that exposes the information about the use by the public administrations of the allocated resource. According to the OECD definition, the performance-based budget is briefly the budget type where the funds are allocated after being associated to the results. In other words, the performance based budgeting is the budgeting approach where the performance informations are included in the budget documents or where the allowances are classified according to the outputs or the results (Erüz, 2005).

     The basis of the new performance budgeting model found in some more advanced OECD countries, based on five main elements (Diamond, 2002:11);

• a clear ex ante specification of the performance expected of each agency head,


• devolution of decision-making authority to give agency heads the degree of managerial autonomy they need to achieve the tasks assigned to them,


• incentives and sanctions to encourage agency heads to act in the government’s interests,


• a clear performance assessment process involving ex post reporting of actual performance against the initial specification; and


• agreed ex ante arrangements for the collaction of all the information required to assess performance.   

     According to Aktan (2004), Today, the balanced budget notion is the basic reason for the financial discipline perspective to be considered highly important. Now many countries try to cut the excessive public expenditure, to reduce public share in the economy and to take some measures to assure the financial discipline in order to reduce the budget deficits. Also, the importance given by the traditional finance perspective to the budget principles is being discussed. The traditional principles of the budget, the generality and the unity, have impovered the financial discipline. The new finance, by targeting the balanced budget, suggests opinions to support some new principles beside the traditional budget principles. For example, the budget transparency principle is strongly respected in this context. The comporasion pertaining to classical budget perspective and new budget perspective are displayed in table 1.

Table 1: Classical Budget Perspective and New Budget Perspective  
  

Source: Author’s illustration adopted from Aktan (2004) 

3- Reform Of Budget In Public Financial Management Reorganization In Turkey

     The most important concept of the end of the 20th century and the beginning of the 21st century is the globalization and the economic globalization that arised in this scope. One of the dimensions of this concept consists of the liberalization and the competition and the second one consists of the increasing integration and interdependence of the national economies. In other words the globalization process where the free market forces go beyond the nation governments’control is transformed to the process of a market mechanism, which directs and designs the economy in the international platform. As a result, the national economies became more fragile and vulnerable to crisis and many countries including Turkey were affected by this situation.

     The fact that the bipolar world is transforming into a unipolar world and the following New World Order have been important for surmounting the obstacles to the global capital. The developments in the computer and telecommunication domains, the elimination of the commercial boundaries, the changes in the consumption patterns and the consumer tastes, the demand for the quality, the personnel choices, the extension and intensity of the public services, the globalization of the international competitive and financial markets and the flexibility of the rules are the developments following the globalization in Turkey and all over the world. However, the level of these developments and their consequences on the economy were differing regarding the conditions of the countries.

     Nowadays, the globalization process where the efficiency of the public administration, the social capital and cultural values, the environmental sensibility and particularly the scientific and technological progress are highly contributing to the economic development, is a current which is obviously effecting Turkey too.

     Turkey has experienced the reflection of new government perspective in the globalization on its budget policies in recent years. During this process, most of the Turkish public foundations and institutions have carried out many studies towards the restructuring of the public finance administration and control. The Turkish Ministry of Finance and the World Bank on 11.10.1995 signed a project agreement concerning the resolution of the “Expenditure Management” system in order to restructure the public finance administration. The validity of the Public Finance Administration and the Law on the Supervision is imposed as a pre-condition by IMF to confirm the sixth revision dated 31.10.2003. Also, the completition of the legal adjustments concerning the harmonization of the legislation about the budgetary duties and financial supervising to the EU acquis and the development of the budget plannification, application and supervision system, is getting importance in the process of harmonization to the EU (Yılmaz and Susam, 2005).

     The reflections on Turkey of the new government perspective which is characterised by the financial discipline and transparency in the public finance administration has actually started in 1995 with the studies on a new budget classification in the scope of a Public Finance Admininstration Project targeting the restructuring of the public sector. In 1998, a classification model based on the Governmental Finance Statistics principle was introduced as a result of the studies carried out with IMF experts. At the same period, the new budget code structure has been reviewed and has been harmonized to the GFS modifications and to the (ESA’95) European System of Integrated Economic Accounts standards (Ministry of Finance, 2004).

      The Law of Public Finance Administration and Supervision ratified as a result of the above-mentioned developments on 10.12.2003, numbered 5018; is aiming at economically and efficiently obtaining and using the public resources in respect of the policies and targets included in the development plans and programs, providing the structure and operation of the public finance administration, the preparation and the application of the public budgets, the accountability and reportability of all the financial transactions and the financial supervision (Bayar, 2003:47). In order to provide the mentioned targets the enforcement date of the law was determined as  01.01.2006.

     With the application in 2004 to all of the institutions defined governmental of the “Analytical Budget System” whose preparations started at end of 1990’s; a new perspective has been brought to the budget classification and it is aimed at providing the financial order and supervision by means of the budget. 

4- Conclusion

     Budget is very important tool in all of public financial management.  Economic activities of government is related to government budget. On the other hand, definition of public services which is necessary because of public requirements and the other is defining and planning of government income sources for financing of expenditures of these activities are very important. Government budgets have different kind of functıon for realizatıon these activities. Because of provıdıng these goals, it is necessary that budget must be prepared and practiced under modern budget principles.

      In the 21 Century, new goverment perspective has been put on global agenda with globalization process including free movement of goods, services and capital. In this process, government perspective has been on the direction of small, esteemed and audit based government perspective in addition to free market economy. New economy process with globalization fact, beginning of a period of removed economical, political and other barriers among countries, has always supported new government perspective.

     New government perspective has had important effects on public finance management and government’s new role in the finance sector has also influenced budget policy. Regulative role of government ın the legal and institutional area, to increasing localization fact, privatization and international collaboration in taxation field have led to reorganization of government’s duties and authority in public finance management. In this contex, the objective has been having a systematic, clear and understandable budget policy ensure auditing in public finance management. Budget and budget policy with new government perspective focus on a audit based and efficient government perspective. The analytical budgetory approach, performance budget system and law of 5018 put into practice recently is an indicator of this movement ın Turkey.

Mrs. Demircan is Lecturer at Canakkale Onsekiz Mart University, Biga IIBF. Author received her BA, MA and PhD degreees in Public Finance field from Dokuz Eylul University, Izmir, Turkey. She is author of many articles on budget and budget policy.   
 
 

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