|2017 GIFT PUBLIC PARTICIPATION IN FISCAL TRANSPARENCY AND BUDGET MAKING SUBMISSION|
This case was produced by Thaneshwar Bhusal, PhD Candidate at the Institute for Governance and Policy Analysis (IGPA) / Centre for Change Governance, University of Canberra. Thaneshwar.firstname.lastname@example.org | email@example.com
Since the (re)introduction of parliamentary democracy in 1990, several decentralisation reforms were implemented in Nepal. These reforms have focused on enhancing traditional forms of participatory forums, creating new participatory institutions, and combining both traditional and modern types of mechanisms to institutionalise participatory decision-making at the local level (Administrative Reform Commission 1992; Government of Nepal 1999). Participatory planning is an example of the institution that integrates new and old forms of participatory practices with the aim to directly engage citizens in various aspects of local governance, including formulating annual budgets and programs, implementation of such programs and in some cases involving citizens in monitoring and evaluation committees in municipalities (Ministry of Federal Affairs and Local Development 2013).
Participatory planning was grafted on the representative setting of local democracy, i.e. elected leaders at the local level were supposed to be steering the planning process. However, as there were no local election between 2002 and 2016, the operationalization of the planning process was contingently handed over to appointed bureaucrats in 2003; and therefore, the practice of participatory planning was governed by bureaucrats as an administrative process until the end of 2016 (Government of Nepal 2003).
This case study reports the assessment of a municipal planning process that was organised in 2014/15 in Butwal sub-metropolitan city in State number 5 in Nepal. While the assessment aims to inquire what had happened with citizens’ participation in local budget and policymaking when there were no elected officials in power for over a decade, it should be noted that the data were generated for about three years starting in November 2014 through to the end of 2016.
|Butwal is in a sub-metropolitan city situated in the intersection of Nepal’s two different National Highways, Mahendra Highway and Siddhartha Highway. It connects western Nepal with capital Kathmandu through highway and air links. It is one of the fastest-growing cities in Nepal for education, infrastructure, highway, marketing, health and safety, communication, trade and banking sectors. It has highway connections to the Indian border at Sunauli and to the hilly towns in Tansen and Pokhara valley. Butwal has a population of over 118,000 (in 2011).
“Butwal” in Wikipedia, https://en.wikipedia.org/wiki/Butwal, consulted 02 December 2017.
- Stage in Fiscal Policy Cycle: Formulation, Enactment, Implementation
- Lead institution: Executive
- Levels of Government involved: Local
The main objective of offering public participation in planning was to legitimately formulate local public policies and developmental programs, particularly given the context that legitimate elected leadership was not available for over a decade until the middle of 2017. On the one hand, the local appointed officials would claim that the way they were formulating local public policies and developmental projects was incorporating public sentiments as a range of consultative and deliberative activities at almost all the neighbourhoods. On the other hand, ordinary citizens would not only know the overall public resources that the municipality was exploiting, but also influence such resources through different channels offered by the participatory planning process.
To measure success, there were both quantitative and qualitative aspects. These measures were officially utilised by the Local Bodies’ Fiscal Commission, a central government agency that measures the performance of local bodies for distributing grants on the basis of their performances. The measures were also used unofficially by local political parties and civil society organisations.
Qualitative measures include the following questions:
- Does the municipality have an annual handbook of policy and programs that was formulated in a participative manner (by utilising the planning process)?
- Whether local officials provide a detailed list of policy guidelines and budgetary frameworks to stakeholders, communities and minorities in advance? What mechanisms were adopted to inform them?
- Within the forum of planning, the extent to which ordinary people were given chances to speak, and the degree to which their voices were reflected in the annual handbook of policy and programs?
- The degree to which civil society organisations were empowered to help ordinary citizens understand the budget, local fiscal policies (that were embedded in the policy guidelines), explore the needs of ordinary citizens, and thereby develop their preferences?
- Whether the planning process was systematically institutionalised?
- The extent to which marginalised communities (Dalit, women, poor, people with disabilities and so on) were given emphasis to participate and also to reflect their voices in policymaking?
Quantitative measures include:
- Number of proposals raised at informal, semi-formal and formal forums
- Number of ordinary citizens that participated across informal, semi-formal and formal forums
- Number of collaborative projects formulated
Two aspects of the authorizing environment should be acknowledged. First is the Local Self-Governance Act, 1999 that obliged municipalities to organise annual participatory planning process to formulate their local policies and programs. Such a process should not only aim to formulate policies, but also to develop an environment in which local decisions and small-scale development projects would be implemented in collaboration with stakeholders.
The second enabling environment aspect was the legislative autonomy that municipalities were given. Several piecemeal reforms were enacted, especially to address the issues related to the absence of elected leadership at the local level, which have been catalysts in operationalizing the planning process in relatively autonomous environment. This would require the appointed officials to be vigilant about the consultative forums at the neighbourhood level (where informal forums organise planning activities), to be the organizer at the ward level (where municipality itself engages in organising the process but the procedures are determined by selected participants) and to be the steerer at the municipal level (where representative participants deliberate the proposals).
Who and How
The participatory planning process
The overarching objective of planning is to formulate the annual handbook of policy and programs to guide, and mandate – to the maximum extent, the concerning municipality for the implementation of local public policies, small-scale development projects and service-related decisions. As the Figure 1 shows below, the planning process has three distinct yet interrelated activities. While each of these activities contains its own organizational structure, operational procedures and specific objective to contribute to planning, each has its important implications for the fiscal policy cycle.
Figure 1 Institutional arrangement of Butwal sub-metropolitan city.
Formulation of fiscal policies for the forthcoming fiscal year is the fundamental task of planning. For example, municipalities exclusively provide details about different sources of funding (tax, non-tax and other sources such as grants and loans) in advance of the planning process so that citizens can provide their inputs on these arrangements at different planning forums (Tole Bhèlas, Ward Bhèlas and the (IPFC) Integrated Planning Formulation Committee). Although there is a question of the degree to which citizens’ views on revenue sources or expenditure headings are incorporated in fiscal policies, it was observed in Butwal municipality in 2015 that municipal officials were greatly cautious to translate the views of ordinary people into actual fiscal policy decisions.
Enactment of fiscal policy decisions was seemingly participative, though there are certain elements to scrutinize systematically. On the one hand, the planning process was designed to offer opportunities to citizens of different types in the making of local decisions about fiscal and developmental and service delivery aspects of local governance. It was observed that each forum of planning was heavily deliberating the issues with the aim to produce a list of prioritized demands and needs. On the other, the ultimate decision-making authority was not delegated to citizens’ forums, hence participatory forums of different types were simply deliberating the issues on behalf of the municipal council, a supposedly elected legislative body in municipalities. While the IPFC was observed to be the most influential participatory forum in terms of deliberating the issues, the ultimate decisions were not carried out at and by the IPFC.
Citizen participation in the implementation of decisions that are carried out through the planning process is relatively less emphasized, although in Butwal municipality, it was observed that communities were encouraged to be part of the implementation process. A range of policy implementation tools were in place, such as User’s Committees in which beneficiaries of certain local public policy or developmental projects would participate both in terms of co-investment, putting certain proportion (up to 70%) of money in the fund by communities of which the remaining amount would be bridged by the municipality.
Municipalities are the leading institution of the planning process. Although, the Local Self Governance Act (1999) had a provision that both the political wings (i.e. council) and administrative departments (i.e. planning division) of municipalities would be equally involved in the implementation of planning, the political scenario between 2002 and 2016 showed that there were no elected authorities hence the political wing of municipalities was absent in the implementation of planning. Instead, the roles and responsibilities of the council were contingently handed over to the Executive Officer of municipalities.
Irrespective of whoever was the in-charge of the implementation of planning, it is regarded as important to understand the structure of municipal governance in which the planning was operationalized. Two different sets of institutions were observed to be heavily involved in planning in Butwal during the field study (Figure 1). The first is the municipality and its sub-municipal entities, and the second is the community-based organisations such as Tole Lane Organisations (TLOs) and Ward Citizens Forums (WCFs). While both of these sets of institutions have different roles to play in the making of fiscal and other non-fiscal policies, it was observed that the involvement of both of these organisations were regarded as conducive to facilitate citizens’ participation in local policymaking.
The planning process is set up in such a way that was reframed to the extent that, on the one hand, appointed officials play key roles in steering the process by, for example, setting up general procedural guidelines to be adopted and allocating the budget ceiling for wards; and, on the other, that civil society organisations could play key roles in deliberating their most pressing social and developmental issues on the other. Thus, the participatory planning process includes two aspects of institutional changes: steering which can be characterised as institutionalizing planning as a top-down process; and deliberating which can be analysed as a bottom-up process.
These three stages of planning feature how municipal officials (appointed bureaucrats) had redesigned the planning process during the absence of elected authorities in power (2002-2016). Stage 1 involves those activities that were pertinent in setting up general procedural guidelines to be adopted throughout the planning process (that would last for three months starting from November every year), allocating budget ceiling for wards, and circulating for community consultation across different neighbourhoods within the territorial boundaries of different wards. Stage 2 features community consultations across neighbourhoods, wards and at the municipal level. Stage 3 involves a combination of both consultative and decision-making activities at the municipal level.
Figure 2. The participatory planning process (in Butwal)
Most of the deliberative functions of planning were organized at Stage 2. Tole Bhèlas were the most bottom-level forums where all the residents of the relevant neighbourhoods were informed (not selected) to participate, hence citizen participation in Tole Bhèlas was voluntary. Civil society organizations like the Tole Lane Organisations (TLOs) organized such forums with the aim to facilitate discussions amongst neighbourhood level participants on their most pressing problems. The discussion points (issues, or proposals) produced at the Tole Bhèla were prioritized by the organizers and then forwarded to the Ward Bhèla for further deliberation.
The Ward Bhèlas involved citizens from a wide range of geographic areas (within the ward of a municipality), policy areas (health, education etc.) and issues (women, children etc.). While the majority of the participants in the Ward Bhèla were invited by the ward committee secretariats, a number of other individuals also volunteered to participate and express their opinions. One of the functions of the Ward Bhèla was to organise comprehensive discussions amongst both invited and volunteer participants so as to be able to prepare a broad list of policy and developmental proposals that would address the problems of the particular ward. Such proposals were then prioritized by a committee (Project Selection and Prioritisation Committee) formed at the Ward Bhèla, and then forwarded to the Integrated Planning Formulation Committee (IPFC).
The IPFC was a committee formed by the municipality by involving selected representatives from diverse communities to ensure the representation of different geographic areas (wards, Toles etc.), policy sectors (health, education and forestry), issues (women, children and minorities) and agendas (social justice, sustainable development and so on). Unlike other forums, the IPFC met in closed sessions and deliberated the issues somewhat in comprehensive manner. The committee had got the mandate to deliberate the proposals that were forwarded through Ward Bhèlas for making a concrete list of proposals to be approved by the municipal council. The approved proposals became actual policies.
Figure 3: The hierarchy of participation
As the Figure 3 above shows, these forums were organised to perform in somewhat pyramidal setup. The Tole Bhèlas were placed on the bottom of the pyramid as informal public forums; the Ward Bhèlas, were placed in the middle of the pyramid as semi-formal forums; and the IPFC was placed at the top as the formal forum of planning. Altogether they would look sequential both in terms of citizen participation i.e. some participants of Tole Bhèlas could also participate upward in Ward Bhèlas and IPFC, and decision-making i.e. some issues raised at Tole Bhèla could escalate upward to the IPFC and thereby incorporated as subjects of actual decisions.
Discussions at each of these forums are facilitated by a range of individuals: at Tole Bhèlas by a member of the TLO; at Ward Bhèlas mostly the community mobiliser or the Ward Committee Secretary; and at the IPFC, the Executive Officer or an officer who is in-charge of the planning division in the municipality. The discussions are generally noted in the official minutes of the hosting organisations (i.e. TLOs in the case of Tole Bhèlas; Ward Committee Secretariat in the case of Ward Bhèlas and the planning division in the case of the IPFC), but there is a question of the extent to which such notes are carefully considered whilst making decisions. In other words, decisions made at each of these planning forums are produced in a way that organizers are required to prepare a list of prioritized proposals and demands.
Results and Impact
The annual handbook of policy and programs that all the municipalities must formulate by adopting the participatory planning incorporates the annual (and sometimes, multiyear) policies and programs. The contents in the handbook are only those which are deliberated across different forums of planning, hence it is the participatory planning that determines how the municipality utilizes its resources, where the budget is spent and how the resources are generated. As a result, in Butwal municipality alone, about 30% of the programs formulated through the planning process were implemented in collaboration with stakeholders. The role of municipality in such collaborative implementation was to contribute with a given percentage of the total budget, monitor the progress and facilitate for the smooth implementation process.
There does not seem to have any exclusive feedback mechanism that would go back to participants. However, all the decisions that are taken through the planning process are published once they are recommended by the IPFC to be approved by the council.
The intermediate impacts on participants is that they were informed about the municipal budget, its sources and style of expenditure. They were also gradually becoming capable enough in developing their individual confidence in exploring their most pressing social problems, as well as developing several alternatives to solve such problems. Moreover, they were also being able to expand their social relations, develop networks among civil society organisations, and enhance the skill to negotiate with local officials (i.e. Bhusal 2017).
Local officials, on the other hand, were reaching to communities via the planning process. There were no other such mechanisms that would oblige local officials to go to the most bottom level of the society to hear their problems, and also to generate understanding about what citizens think about the way the existing service delivery mechanisms were implemented. In short run, this would help local officials in legitimizing their deeds, enhancing their accountability toward citizens, and thereby strengthening the quality of the way local governance has been materialising in that particular locale. In long run, however, it would help authorities to institutionalise the planning process so that participatory decision-making at the local level would help communities to come forward, and have their say on the local budget, and other issues of budgeting.
The participatory planning process in Butwal was able to bridge the gap between ordinary people and decision-makers at the local level, by for example, making the initial budget proposal transparent, enabling ordinary people to participate in different types of planning forums and also by engaging them in the implementation of small-scale development programs. From this point of view, the planning process was regarded as instrumental in solving the problems of local democracy in Nepal, many of which were caused in absence of local elections for over a decade until 2016.
A key aspect is that requirements deliberative functions of planning that happen at the Tole Bhèlas are organized by civil society organizations like the Tole Lane Organisations (TLOs), which involve neighbourhood level participants to discuss their most pressing problems, but it is the organizers who prioritize the issues and proposals to be then forwarded to the Ward Bhèla for further deliberation. In designing practices that deepen participation, it is important to include a methodology that involves the consulted community in the prioritization of issues. Something similar happens at the Ward Bhèlas level, where the Ward Committee Secretariat take notes of the discussions, but the decisions made at each of these planning forums are produced to comply with the required list of prioritized proposals and demands.
Principles of Public Participation in Fiscal Policy
This section analyses the planning process in accordance with GIFT’s Principles of Public Participation in Fiscal Policy. It suggests that participatory planning in Bhutwal illustrates four of the principles in practice: openness, inclusiveness, timeliness and sustainability. Openness refers to the extent to which there is information about the purpose of each public engagement, its scope, intended outcome, process and timelines. Inclusiveness refers to the extent to which structures of planning are accessible to ordinary people, and procedures are understandable to participants. It also indicates the degree to which the most deprived group or community is specifically targeted to include in the process of making local decisions. Timeliness concerns whether planning is organized on a regular and predictable basis and there is sufficient time for public inputs to be considered before decisions are taken. And sustainability means the possibility of planning to be sustained over time through inclusion of requirements to engage the public in laws or regulations, and through the use of public inputs to review policy design and implementation.
While the hosting organisations are given adequate flexibilities to determine the procedures of public deliberations, participants were observed to have good understanding about the discussions. In informal forums such as Tole Bhèlas, participants were noted to be simply putting forward their demands to organizers whereas participants in Ward Bhèlas were considering the availability of budget, limitations or anticipation of the policy guidelines that are circulated by the national government, and other resource-related constraints of the concerning municipality. Working procedures of the IPFC, on the other hand, were not complex for participants but it was noted in Butwal municipality in 2015 that some participants were consistently raising and defending fringe issues such as blacktopping the road, fixing the street lights and so on while others were impressively putting forward their views about what fiscal policies and public spending should be adopted by the municipality.
The assessment of the planning process in Butwal suggests that the structures of planning are accessible to ordinary citizens but there are notable variances across the forums. Tole Bhèlas offer unrestricted avenues for all who want to participate. Ward Bhèlas are also open for all however a range of individuals from a number of local communities and organizations are specifically invited to participate and express their views. IPFC, in contrast, is not open for all, though participants of the IPFC represent a number of geographic locations, policy areas and other crosscutting issues.
Two forms of inclusiveness are impressive to note about planning in Nepal. The first is the presence aspect of inclusiveness which means that the organizers of different forums of planning are specifically required to ensure the presence of women, children and other minority groups such as Dalits and Muslims. In each of the planning forums, a careful attention was found to be given to ensure adequate participation by women (at least 33%), a reasonable number of children (mostly from high schools in the relevant area in the municipality), and a considerable number of marginalized communities and groups (depending upon where the planning forum was being organized).
The second is the voice aspect of inclusiveness. Although organizers were cautious about the participation of women, children and other people from marginalized communities, it would not be any meaning of their participation if there was not any mechanism to ensure their voices to be reflected in the actual policy decisions. To ensure the voice of women, children and other minorities to be heard in actual policy decisions, there is a provision that a total of 35% of the capital budget is earmarked and distributed to those programs that are decided for women (10%), children (10%) and minority communities (15%). Consequently, it was observed in an annual handbook of policy and programs of Butwal municipality that the following proportion of budget was distributed to women, children and minority groups:
Table 1 Annual budget of Butwal sub-metropolitan city 2015/16
Under the Local Self Governance Act (1999), a typical timeline of the planning process was devised to be commenced in the early weeks of November every year. In villages, the process would run for about two months; in municipalities the process would run for about three months; and in districts, the process would run for about four to five months. In 2014/15 when the planning processes was being observed in Butwal, the following activities were found to be organized at different points in time (Table 2).
Table 2 The participatory planning process in timeline view
Under the legislative jurisdiction of the Local Self-Governance Act (1999), it was envisioned that all local governments must organise the planning process every year to formulate local public policies and developmental programs. The process was therefore mandatory to all local governments even when there were no elected leaders at the local level. Consequently, it was observed in the case study municipality that planning was institutionalised in such a way that none of the key policy decisions would be carried out through other mechanisms.
The recently promulgated Local Government Act (2017) has also inherited planning as one of the fundamental policymaking mechanism in municipalities. Although municipalities are now relatively independent in terms of when they organise the process, the law obliges municipalities to make decisions through the planning process. This can be regarded as the continuation of the planning process, though there requires further assessment on, inter alia, how elected politicians organise the planning process in the changing context of local governance in Nepal, and the degree to which it sustainably facilitates the participation of ordinary people in the making of local public (fiscal and non-fiscal) policies.
Nepal is a small, landlocked South Asian country. It has experienced significant political transformation towards democratization during the last three decades, with important highlights such as the emergence of multiparty democracy in 1990, a people’s movement that overthrew the monarchy in 2007, and the promulgation of a new Constitution in 2015. These changes have set Local Governments as the stage for the growth in number and strengthening of a voice of ordinary citizens in the governance process, mostly through civil society organizations (Government of Nepal 2015, 2017).
- Type of government : Nepal had a centralized unitary polity, until the 2015 Constitution transformed the government into a federal state.
- Civic space (size of civil society, regulatory framework)
Nepal has experienced significant political transformation towards democratization during the last three decades, with important highlights like the emergence of multiparty democracy in 1990, a people’s movement that overthrew monarchy in 2007, and the promulgation of a new Constitution in 2015. These changes have set the stage for the growth in number and strengthening of a voice of civil society organizations. However, as the International Center for the Not-for-profit Law (ICNL) acknowledges “the broad concept of civil society is not yet well understood by most Nepalese, including civil society members themselves”. 
The Constitution guarantees freedom of association, however the legal framework that regulate it is yet to be updated, for civil society organizations in Nepal are still governed by the Association Registration Act 1977, which was amended only in 1992. Among other legal obstacles that discourage the full development of civic space is the very definition of civil society organizations. The Act “envisions and defines CSOs as service providers and thus fails to encompass the diverse range of organizations with multiple objectives – human rights, social accountability, civic education and concientization. The inadequacy in the scope of the Act gives rise to confusion and has been used for delaying or even refusal to register an association.”
According to the ICNL, “CSOs often criticize the existing legal framework for carrying forward the controlling legacy from the previous royal regime. Moreover, CSOs still suspect that the government is trying to restrict civic space in one way or another. The statements and remarks of government officials and political leaders often lend credence to such suspicions.”
- Open Budget Survey scores –
On the 2015 Open Budget Survey. Nepal scored 24 overall and 19 in public participation.
Nepal’s score of 24 on the 2015 Open Budget Index is substantially lower than its score in 2012, when it was 44. However, the regression in transparency observed in Nepal appears to be temporary in nature. The decline in Nepal’s OBI score was largely due to its failure to make the fiscal year 2013-2014 Executive’s Budget Proposal publicly available. However, since the end of the Open Budget Survey research period on 30 June 2014, Nepal has returned to its previous practice of publishing the Executive’s Budget Proposal in a timely manner.
Since 2012, the Government of Nepal has increased the availability of budget information by improving the comprehensiveness of the Enacted Budget. However, the Government of Nepal has decreased the availability of budget information by failing to make the Executive’s Budget Proposal publicly available. Moreover, the Government of Nepal has failed to make progress in the following ways: not producing a Pre-Budget Statement and a Citizens Budget.
With respect to public participation, Nepal’s score of 19 out of 100 indicates that the provision of opportunities for the public to engage in the national budget process is weak. It is similar in the different stategs of the budget cycle: at the executive, legislative, and the supre audit instritution.
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