The Reality of Budgetary Reform in OECD Nations

The Reality of Budgetary Reform in OECD Nations

Trajectories and Consequences

Edited by John Wanna, Lotte Jensen and Jouke de Vries

The Reality of Budgetary Reform in OECD Nations investigates the impacts and consequences of budgetary reform through a comparative assessment of advanced Organisation for Economic Co-operation and Development (OECD) democracies that have undertaken budget reforms over the past two to three decades.

Chapter 8: Korea’s Four Major Budgetary Reforms: Catching up with a Big Bang

John M. Kim

Subjects: economics and finance, public finance, public sector economics


John M. Kim In 2003 the Korean government launched the ‘Four Major Fiscal Reforms’. This was a package of four budget system reforms that were implemented simultaneously. The ambitious ‘big bang’ reform package was designed to transform almost overnight Korea’s old budget system,1 which lacked virtually all of the modern features found among Organisation for Economic Co-operation and Development (OECD) countries’ systems, into one which incorporated most of their best practices. Following several years of design and provisional implementation, the reforms were finalized with the passage of the National Fiscal Act 2007, which replaced the decadesold Budget and Accounts Act2 as the law that formally defines the government’s budget system. Widely viewed as a successful attempt, some weaknesses have nonetheless come to light in the short time since the reforms were introduced. This chapter will offer a reassessment of the Four Major Fiscal Reforms and identify factors and processes that account for the more successful outcomes compared to those that ultimately resulted in potential defects. Before doing so, the chapter argues that Korea’s reforms are noteworthy for several reasons. First, ‘big bang’ reforms that redesign the entire budget system are rare enough. The Korean reforms merit special attention because the country undertook a major transformation in one go. Second, the Four Major Fiscal Reforms attempted to graft features usually found in countries with parliamentary systems to one that followed the presidential system of government. The Korean reforms illustrate how the nature of the political system can impact on the...

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