Can Centralized Performance Budgeting Systems Be Useful for Line Ministries? Evidence from Chile

Many governments that have implemented performance budgeting systems have followed a centralized, top‐down approach that makes them foreign to the needs of line ministries. In this study, the author analyzes the case of Chile, which despite its top‐down approach, is often regarded as successful. Our findings suggest that while top‐down performance budgeting systems often fail to meet the needs of individual ministries and are prone to principal‐agent issues, under certain conditions—such as involving third‐party experts and having a professional civil service—the performance information from those systems might still be useful and/or might generate positive spillovers for line ministries.