Budgeting for Growth: Is BED a Game Changer?

This chapter interrogates the transformative potential of the Budget for Economic Development framework as an alternative to traditional budgeting models in shaping growth trajectories, particularly in developing economies. Conventional approaches—such as line-item and programme-based budgeting—emphasise short-term fiscal discipline and administrative efficiency but often fail to align resource allocation with long-term economic development and structural transformation. The Budget for Economic Development emerges as a paradigm shift, integrating fiscal policy with national development strategies to prioritise investment in infrastructure, education, industrialisation, and social equity. Drawing on Keynesian principles, the fiscal multiplier theory, and the power theory, the chapter demonstrates how the Budget for Economic Development can stimulate aggregate demand while counteracting elite capture and institutional distortions in budgetary processes. Case studies from Nigeria, Argentina, Ethiopia, South Africa, Ghana, and beyond illustrate how power dynamics, international financial institutions, and domestic governance structures shape budget outcomes, highlighting both opportunities and constraints for adoption of the Budget for Economic Development. The chapter also introduces a formalised Budget for Economic Development equation that integrates infrastructure investment, human capital, diversification, governance quality, fiscal sustainability, and political distortions as key determinants of developmental outcomes. Comparative analysis using hypothetical data from selected African and Asian economies underscores how the Budget for Economic Development could serve as a policy tool to balance fiscal sustainability with inclusive growth. While the Budget for Economic Development presents a compelling framework for aligning budgets with economic transformation, its success depends on institutional capacity, governance integrity, and resilience to external shocks. Ultimately, the chapter positions the Budget for Economic Development as a potential game changer in public financial management, with implications for achieving structural transformation, poverty reduction, and sustainable economic development.