Why has Participatory Budgeting Declined in Brazil? ^*

Participatory Budgeting (PB) is a democratic policy innovation created in Brazil in the early 1990s, recognized worldwide as an effective policy tool for directly involving the population in budget decisions. Its diffusion in Brazil was strongly stimulated by the Workers' Party (Partido dos Trabalhadores - PT) as a showcase of the ‘Petista Way of Governing’. However, after the party took the presidential office, PB lost its status as a top participatory policy. Without its leading promoter, PB gradually declined in Brazil. What explains such a drastic change in PT’s policy preference? What are the possible explanations for the retrenchment of PB? We argue that gradual changes in fiscal laws have led to lower investment and tighter local budgets, reducing the effectiveness of PB and discouraging further adoption of this policy, thus resulting in its decline in Brazil. The shift in PT’s policy preference is therefore explained by the fact that the party adapted to the context of increasing budgetary rigidity. Using panel data analysis, we found that both the adoption and the continuity of PB at the local level between 1996 and 2016 are strongly correlated with budget and investment, a finding that supports our initial hypothesis.

Participatory budgeting; policy failure; local politics; fiscal policy; participation