Measuring Good Governance: Kaufmann-Kray2OutlineOutline1Assumption definition and datasources of KK1.Assumption, definition, and data sources of KK 2. Constructing aggregate indicators))C )3. Interpreting i) Levels; ii) Changes; and iii) Trends:4. Uses and Limitations of Governance indicators•Why subjective data?• Margins of error for objective indicators?Id l i l biit t?•Ideological biases in expert assessments?• Margins of error and aid allocation rules?5Summary implications & discussion exercise5.Summary, implications & discussion exercise3Discussion ExerciseDiscussion Exercise1. What is meant by the concept of ‘good governance’ and what are itscentral components?2. How would you evaluate the pros and cons of using expert orttittifd?representative surveysto assess perceptions ofgoodgovernance?3. Which of the evaluative criteria selected by Kaufmann-Kray would youprioritize in assessing the performance of good governance, and why?What criteria wouldyou add ordelete?y4. If you were to carry out an expert survey, how would you design asampling frame to collect the perceptions in each country? Who wouldyou include? How could you insure that your sample would be‘representative’?representative ?5. How will you use KK in your reports?4Evaluating the good governance gggindicatorsRecap: Munck and Verkuilen’s criteria– Valid? – Measures the underlying concept– Reliable? – Can be repeated consistently– Comprehensive? – Covers all major dimensions of concept–Equivalence across societies? –Measures like-with-like– Replicable? – Can be recreated using the same stepsBalanced?Not skewed towards only partial aspect–Balanced?–Not skewed towards only partial aspect– Robust? – Generates same results in analysis–Value bias?–Generates consensus Value bias?Generates consensus5Measuring Good GovernanceMeasuring Good Governance GovernanceIndicatorsGovernance IndicatorsDaniel Kaufmann, Aart Kraayand ,yMassimo MastruzziThe World Bank InstituteFor details see:For details see: http://info.worldbank.org/governance/Data is in the QoG dataset67Good governance assumptionsGood governance assumptions• Instrumental goals: • Targeting aid towards countries with good institutions and policies makes sense for efficient investment of limitedpolicies makes sense for efficient investment of limited resources• Transparency:• Using publicly-available eligibility criteria encourages monitoring, accountability, progress•Implementation:•Implementation:• Therefore need effective, comprehensive, reliable and accurate indicators of ‘good governance’8Good governance & democracyGood governance & democracy9DefinitionDefinitionGovernance: the traditions & institutions by which authority is exercised. This includes:1.The process by which those in authority are selected and1.The process by which those in authority are selected and replaced• VOICE & ACCOUNTABILITY;• POLITICAL STABILITY & ABSENCE OF VIOLENCE2. The capacity of government to formulate and implement policies • GOVERNMENT EFFECTIVENESSGOQ•REGULATORY QUALITY3. The respect of citizens and state for institutions that govern interactions among them•RULE OF LAW•RULE OF LAW,• CONTROL OF CORRUPTION10Six indicators of good governanceSix indicators of good governance1. Voice and accountabilityCitizen participation, independent media2. Political instability and violence2. Political instability and violenceThreat of state coup 3. Government effectivenessQuality of civil serviceQuality of civil service4. Regulatory burden“Market-unfriendly” policies5 Rule of law5. Rule of lawPerceptions of crime, effective judiciary,enforceable contracts6. Corruption–Perceptions of corruption–Perceptions of corruption11Data sourcesData sources“Perceptions” (subjective) data on governance from 25 different sources constructed by 18 different organizationsorganizationsData sources include cross-country surveys of firms, commercial risk-rating agencies, think-tanks, government agencies international organizationsgovernment agencies, international organizations, etc.Over 200 proxies for various dimensions of governanceOrganize these measures into six clusters corresponding to definition of governance, for four periods: 1996, 1998, 2000,and 2002, covering up to 199 countries12Why Subjective Governance Data?Why Subjective Governance Data?1. For some dimensions (e.g. corruption), no cross-country objective data existLi it d tit ti f ti f•Limited quantitative measures of corruption focus differences in procurement costs relative to materials purchased2Subjective data can pick up crucial2.Subjective data can pick up crucial distinction between de jure and de facto institutional arrangements –g• Most countries in the world now have elections, anti-corruption commissions, and decent anticorruption laws in the books3. Perceptions do matter13Methodological issuesMethodological issuesPolls of experts reliable and valid?– Small N.– Colored by economic outcomes?– Ideological agenda of rating organizations?Representative surveys reliable?– Larger N.– Interpreted in culturally-specific ways?– Often in smaller range of countries14SourcesSources• Cross-Country Surveys of Firms: – Global Competitiveness Survey, World Business Environment Survey, World Competitiveness Yearbook, BEEPS• Cross-Country Surveys of Individuals:– Gallup International, Latinobarometro, Afrobarometer•Expert Assessments from Commercial Risk Rating Agencies:Expert Assessments from Commercial Risk Rating Agencies:– DRI, PRS, EIU, World Markets Online,• Expert Assessments from NGOs, Think Tanks:Reporters Without Borders Heritage Foundation Freedom House–Reporters Without Borders, Heritage Foundation, Freedom House, Amnesty International• Expert Assessments from Governments, Multilaterals: –World Bank CPIA EBRD State Dept Human Rights Report–World Bank CPIA, EBRD, State Dept. Human Rights ReportInputs for Governance Indicators 2002Publisher Publication Source Country CoverageWefa’s DRI/McGraHill Co ntr Risk Re ie Poll 117 de eloped and de eloping•Wefa’s DRI/McGraw-Hill Country Risk Review Poll 117 developed and developing•Business Env. Risk Intelligence BERI Survey 50/115 developed and developing•Columbia University Columbia U. State Failure Poll 84 developed and developing•World Bank Country Policy & Institution Assessment Poll 136 developing•World Bank Country Policy & Institution Assessment