Inclusive GovTech: Enhancing Efficiency and Equity Through Public Service Digitalization
InclusiveGovTech:EnhancingEquityandEfficiencyThroughPublicServiceDigitalization ManabuNose WP/23/226 IMFWorkingPapersdescriberesearchinprogressbytheauthor(s)andarepublishedtoelicitcommentsandtoencouragedebate. TheviewsexpressedinIMFWorkingPapersarethoseoftheauthor(s)anddonotnecessarilyrepresenttheviewsoftheIMF,itsExecutiveBoard,orIMFmanagement. 2023 OCT ©2023InternationalMonetaryFundWP/23/226 IMFWorkingPaper FiscalAffairsDepartment InclusiveGovTech:EnhancingEfficiencyandEquityThroughPublicServiceDigitalizationPreparedbyManabuNose* IMFWorkingPapersdescriberesearchinprogressbytheauthor(s)andarepublishedtoelicitcommentsandtoencouragedebate.TheviewsexpressedinIMFWorkingPapersarethoseoftheauthor(s)anddonotnecessarilyrepresenttheviewsoftheIMF,itsExecutiveBoard,orIMFmanagement. AuthorizedfordistributionbyNikolayGueorguievOctober2023 ABSTRACT:HowcouldtheGovTechimprovebudgetprocessesandexecutionefficiency?CouldtheGovTechstrengthenredistributivefunctionofpublicexpenditure?Basedonanevent-studymethod,thispaperfindsthattheintroductionofdigitalbudgetpaymentsande-procurementcouldsignificantlyenhancebudgettransparencyandhelpexpandthecoverageofsocialassistancetoreachthemostvulnerablepopulation.Exploitingstaggeredadoptionofdigitalbudgetpayments,asyntheticcontrolregressionidentifiesmeaningfulincreaseinpre-taxincomesharesamongthebottom50thpercentileandfemaleworkers,especiallyforemergingmarketanddevelopingcountries,witheffectsmaterializinggraduallyover10-yearperiod.Thepaperdelvesintothepotentialmechanismdrivingtheseequitybenefits,highlightingthereductioninbusinessinformalityasaprimarychannel.However,thepaperemphasizesthatthemereadoptionofGovTechstrategiesordigitaltechnologiesisinsufficienttounlockitsfullpotential.Theoutcomesareintricatelylinkedtosupportingpolicies,regulations,organizationalandsystemintegration,androbustdigitalconnectivity.Thepaperunderscoresthatinter-agencycoordinationfacilitatedbyadedicatedGovTechinstitutionemergesasacriticalfactorforreapingbothefficiencyandequitygainsfromGovTechinitiatives. RECOMMENDEDCITATION:,Nose,M.(2023).InclusiveGovTech:EnhancingEfficiencyandEquityThroughPublicServiceDigitalization.IMFWorkingPaper,WP/23/226 JELClassificationNumbers: D31,E60,H11,H50,H61,H83,O23,O38 Keywords: GovTech;Inclusion;Staggeredtechnologyadoption;Syntheticcontrol;Expenditureefficiency;Coordinationinorganizations Author’sE-MailAddress: mnose@IMF.org *TheauthorisgratefultoVitorGaspar,RuuddeMooij,DavidAmaglobeli,NikolayGueorguiev,MarianoMoszoro,CharlesBlanco,LucianoGreco,ShafikHebous,GerardoUna,GiovanniMelina,MarinaTavares,MarcosPoplawski-Ribeiro,AlexandraSolovyeva,AlokVerma,LorenaRiverodelPaso,AndualemMengistu,JoshuaAslett,AndjaKomso,ArbindModi,SolomonFrankosiligi,MarthaTovar,PavisDevahasadin,AlbertNyikuliandtheIMF’sFiscalAffairsDepartment’sGovTechgroupmembersforusefulcommentsandsuggestions.MiyokoAsai,EslemImamoglu,andNusratChowdhuryprovidedexcellentresearchassistance. WORKINGPAPERS InclusiveGovTech:EnhancingEfficiencyandEquityThroughPublicServiceDigitalization PreparedbyManabuNose Contents I.Introduction4 II.DiffusionofGovTech:StylizedFacts6 A.Data6 B.TheNexusBetweenGovTechandInequality9 III.ImpactofGovTechonBudgetTransparencyandExpenditureEfficiency10 A.TheoreticalBackground10 B.WouldGovTechEnhanceBudgetTransparencyandExecution?11 C.WouldGovTechStrengthenExpenditureEfficiency?15 IV.ImpactofGovTechonIncomeInequality18 A.TheoreticalBackground18 B.StaggeredGovTechAdoption:TreatmentEffectbyCohorts19 C.Results21 D.HeterogeneityinInclusionEffectbyEnablers22 E.SyntheticControlEstimation:DynamicImpactwithLags24 V.HowDoesGovTechFosterInclusion?28 VI.Conclusion30 References31 AnnexI.ListofVariables35 AnnexII.CoefficientPlot:HeterogeneousImpactofGovTechServicesonBudgetTransparency38 AnnexIII.RegressionResultsforEMDEs39 AnnexIV.HeterogeneousImpactofGovTechServicesonSocialAssistance40 AnnexV.GovTechAdoptionStatusinOtherRegions41 AnnexVI.SpecificationTest45 FIGURES 1.DiffusioninGovTechAdoption7 2.LevelofGovTechEnablersbyPerCapitaIncome8 3.GovTechMaturityandInclusionCurve9 4.DigitalizationandOBI/PEFAIndex12 5.DigitalizationandGovernanceIndicators12 6.DigitalizationandExpenditureEfficiency16 7.YearofGovTechAdoptionintheAsiaandPacificRegion20 8.CATTofGovTechonIncomeInequality21 9.HeterogeneousEffectofGovTechonIncomeInequality23 10.SyntheticControlEstimationinDigitalBudgetPayment25 11.DynamicTreatmentEffectofDigitalBudgetPaymentswithFMIS/TSA26 12.HeterogeneousTreatmentEffectofDigitalPaymentswithFMIS/TSA27 13.TheChannelsbehindtheInclusionEffectofDigitalPayments28 14.HeterogeneousEffectofGovTechonInformality29 TABLES 1.Two-wayFixedEffectModel,EffectonBudgetTransparency14 2.Two-wayFixedEffectModel–TheCoverageofSocialAssistancePrograminEMDEs17 3.HeterogeneousImpactofDigitalPaymentsontheCoverageofSocialAssistanceProgram18 ANNEXTABLES AI.1.SummaryStatistics:GovTechMeasures35 AIII.1.Two-wayFixedEffectModel–EffectonBudgetTransparencyinEMDEs39 ANNEXFIGURES AII.1.HeterogeneousImpactofGovTechServices(GT2)onBudgetTransparency38 AIV.1.Heter
