Understanding the factors impacting public financial management capacity in small island states is crucial for strengthening governance and accountability. Existing research has shown that the small populations in many Pacific island countries result in limited pools of human capital. This leads to shortages of technical skills and capacity in public financial management, and is considered one of the primary causes of poor performance, as measured by the results of Public Expenditure and Financial Accountability (PEFA) assessments.
To date, limited attention has been given in the research literature to other factors that may affect public financial management performance, such as colonial heritage, systems of government and geographical location. This paper explores these other factors that contribute to the relative performance of public financial management systems and processes in small island states around the world, including the Caribbean, and the Pacific, Indian and Atlantic Oceans.
Through examination of PEFA assessments conducted in 43 small island states and territories, trends in relative performance have emerged. It was expected that the greatest variances in average scores would be between groups of islands with different historical backgrounds and thus different systems of government and approaches to public financial management (e.g. former British vs. French colonies), rather than geographical locations.
This was generally found to be the case. Of the 28 performance indicators (PIs) measured by the PEFA assessments (i.e. excluding three related to donor practices), small island states in the Indian Ocean had the highest number of mean scores for the PIs, followed by the Pacific and Atlantic Oceans and the Caribbean. In addition to average scores, the standard deviations of scores were also considered. States in the Atlantic Ocean had the largest variances between scores for 57% of the PIs, with the Caribbean the lowest at 4%.
Those with a French heritage scored the highest number of mean scores for the PIs, followed by Other, British and Spanish / Portuguese heritages. With similar results to the mean scores, French heritage states had the largest variations in scores for 50% of the PIs, with the British heritage states the lowest at 7%.
This suggests that average public financial management performance is more consistent between small island states in the same geographical region rather than between those with similar political and historical backgrounds elsewhere in the world.
This may have implications for governments, donors and international development partners when planning and prioritising public financial management reform, particularly for regional approaches.
G1 - Accounting and Accountability – Constructing society – History, culture, politics and
