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Porto Alegre
The first full participatory budgeting process was developed in the city of Porto Alegre, Brazil, starting in 1989. In its first Title, the 1988 Constitution of Brazil states that “All power originates from the people, who exercise it by the means of elected representatives or directly, according to the terms of this Constitution.” The authoring of the Constitution was a reaction to the previous twenty years of military dictatorship, and the new Constitution sought to secure individual liberty while also decentralizing and democratizing ruling power, in the hope that authoritarian dictatorship would not reemerge.

Brazil’s contemporary political economy is an outgrowth of the Portuguese empire’s patrimonial capitalism, where “power was not exercised according to rules, but was structured through personal relationships” (Novy & Leubolt, 2005). Unlike the Athenian ideal of democracy, in which all citizens participate directly and decide policy collectively, Brazil’s government is structured as a republic with elected representatives. This institutional arrangement has created a separation between the state and civil society, which has opened the doors for clientelism. Because the law-making process occurs behind closed doors, elected officials and bureaucrats can access state resources in ways that benefit certain ‘clients’, typically those of extraordinary social or economic relevance. The influential clients receive policy favors, and repay elected officials with votes from the groups they influence. For example, a neighborhood leader represents the views of shop owners to the local party boss, asking for laws to increase foot traffic on commercial streets. In exchange, the neighborhood leader mobilizes shop owners to vote for the political party responsible for the policy. Because this patronage operates on the basis of individual ties between patron and clients, true decision-making power is limited to a small network of party bosses and influential citizens rather than the broader public (Abers).

Participatory budgeting has its origins in the Brazilian Workers’ Party (Partido dos Trabalhadores). In the 1980s, near the peak of resistance to the military occupation, the Workers’ Party was launched, drawing its members from “a coalition of grassroots movements, radical labor unions, and formerly revolutionary leftist militants and intellectuals” (Abers 516). The Party organized itself through hyperlocal, broad-based associations centred around neighborhoods, schools and workplaces. Steeped in a spirit of egalitarianism and grassroots participation, this “pyramid” structure of decision-making attempted to reverse the top-down paradigm and expedite the process through which popular will found expression in concrete, binding decisions.

In 1989, Olívio Dutra won the mayor’s seat in Porto Alegre. In an attempt to encourage popular participation in government and redirect government resources towards the poor, Dutra institutionalized the PT’s organizational structure on a citywide level. The result is one example of what we now know as Participatory Budgeting.

Expansion
The initial success of PB in Porto Alegre made it attractive to other municipalities in Brazil. By 2001, more than 100 cities in Brazil had implemented PB, while in 2015, thousands of variations have been implemented in the Americas, Africa, and Europe.

Firstly, PB requires that citizens deliberate with the exact goal of creating a concrete financial plan (ie a budget) that allocates scarce resources to varying purposes.

Secondly, the institutional structure of a participatory budgeting scheme must give subjurisdictions authority over a the larger political jurisdiction of which they are part. Neighborhood budget committees, for example, must have authority to collectively determine the citywide budget, not simply the allocation of resources for their particular neighborhood. There is, therefore, need for a method of aggregating the budget preferences expressed by individual subjurisdictions into a single budget.

Third, PB cannot be a single event; it must take place over several years (and, data show, it can take several years for the full democratizing effect of PB to emerge //Porto Alegre example in World Bank paper//.

Fourth, PB requires the creation of new institutions in which citizens can deliberate. //Can this be combined with 2? Also, do I agree with this statement?//

Fifth, transparency and accountability are required so that citizens understand what happens to the concrete result of their deliberation (a budget proposal) after it is submitted to an aggregating mechanism and either approved or denied.