Results-oriented Budget Practice in oecd countries odi working Papers 209

Chapter 3: Definitions 
This chapter examines the context in which results oriented management and budgeting has 
developed in OECD countries. It sets out a set of definitions of differing approaches to 
management and budgeting and examines a number of drivers behind the shift to a results-
orientation. It begins by setting out the OECD agenda and draws upon a deliberately limited range 
of sources to define that agenda. 
The changing approach to public sector budgeting is part of a more general move to improve public 
sector performance referred to by the OECD as ‘performance management’: 
“In general one could argue that, under performance management, input-oriented 
budgets are turned into performance budgets, cash-based accounting systems are 
changed into accrual based cost accounting systems ….. or performance reporting 
systems, and compliance and financial audits are complemented by performance audits 
and evaluations” (OECD, 1997, p 21). 
Focusing specifically on management and budgeting, Kristensen et al (2002) identify three 
approaches to management and budgeting: an input focus, an output focus and an outcome focus.
These summarise approaches taken by various OECD countries at different points in time. Inputs-
focused management and budgeting is the traditional approach to this activity. Many OECD 
countries have moved away from this method whilst many transitional and developing countries 
retain the approach. This approach meets the needs of bureaucratic control and demands for 
economy of inputs to the policy process and hence the control of budgets. 
“Input-focused management and budgeting is oriented toward how much resources, 
staff, facilities, etc. are made available for a programme or ministry. The amount of 
money being spent on a programme or problem is often the main performance measure 
when managing to input. The internal management information of an input system does 
not reveal what the resources actually bought or achieved were and often an input focus 
is accompanied by process regulation – i.e. standards and rules on how inputs should be 
aligned, how things should be done.” (Kristensen et al, 2002, p 8) 
Moves towards an output-focus have been apace in some countries for several decades. Table 5 
sets out definitions of the key terms.