Kaufmann, Daniel and Kraay, Aart and Mastruzzi, Massimo (2005): Measuring Governance Using Cross-Country Perceptions Data. Published in:
Download (242kB) | Preview
This paper describes an ongoing project to measure governance using crosscountry perceptions data. The governance indicators measure six dimensions of governance and cover 209 countries and territories for 1996-2004. They are based on several hundred individual variables measuring perceptions of governance, drawn from 37 separate data sources constructed by 31 different organizations. We present the estimates of governance, and the margins of error capturing the range of likely values for each country. We show how these margins of error should be taken into account when considering cross-country differences and changes over time in governance. We find that in a number of countries the quality of governance improved significantly in the short term. Yet deteriorations also took place in some other countries, while in many there was little change. There has been no worldwide improvement in governance on average.
We argue that perceptions-based data provide valuable insights relative to objective data on governance, and that individual objective measures of governance provide an incomplete picture of even the quite particular dimensions of governance that they are intended to measure. We also show that margins of error are not unique to perceptions based measures of governance, but are an important feature of all efforts to measure governance, including objective indicators. We also empirically investigate the importance of ideological biases in expert assessments of corruption and find little evidence that they are present.
Governance indicators and per capita incomes are highly correlated across countries. Recent research shows that this correlation captures an important causal effect running from measures of governance such as these to per capita incomes. Critics of this view argue that the correlation captures substantial reverse causation from incomes to governance, and is tainted by "halo effects" where rich countries receive good ratings simply because they are rich. We review available evidence on these two critiques and find it to be lacking.
|Item Type:||MPRA Paper|
|Original Title:||Measuring Governance Using Cross-Country Perceptions Data|
|Subjects:||H - Public Economics > H0 - General|
|Depositing User:||Laisa Daza|
|Date Deposited:||11. Apr 2008 09:46|
|Last Modified:||11. Feb 2013 17:56|
Acemoglu, Daron, Simon Johnson, and James Robinson. “The Colonial Origins of Comparative Development. American Economic Review. 91(5):1369-1401.
Alcala, Francisco and Antonio Ciccone (2004). “Trade and Productivity”. Quarterly Journal of Economics. 119(2):613-46.
Beck, Thorsten, George Clarke, Alberto Groff, Phillip Keefer, and Patrick Walsh (2001). “New Tools in Comparative Political Economy: The Database of Political Institutions”. World Bank Economic Review. 15:165-176.
Clague, Christopher, Philip Keefer, Stephen Knack, and Mancur Olson (1999). “Contract-Intensive Money: Contract Enforcement, Property Rights, and Economic Performance.” Journal of Economic Growth, 4:185-211.
DiTella, Rafael and Ernesto Shargrodsky (2003). “The Role of Wages and Auditing During a Crackdown on Corruption in the City of Buenos Aires”. Journal of Law and Economics. April.
Djankov, Simeon, Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer (2002). "The Regulation of Entry" Quarterly Journal of Economics 117(1):1-37.
Djankov, Simeon, Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer, (2003). "Courts" Quarterly Journal of Economics. Forthcoming.
Efron, Bradley and Carl Morris (1971). “Limiting the Risk of Bayes and Empirical Bayes Estimators – Part 1: The Bayes Case.” Journal of the American Statistical Association 66:807-15.
——— (1972). “Limiting the Risk of Bayes and Empirical Bayes Estimators – Part 2: The Empirical Bayes Case.” Journal of the American Statistical Association 67:130-39.
Glaeser, Edward, Rafael LaPorta, Florencio Lopez-de-Silanes, and Andrei Shleifer (2004). “Do Institutions Cause Growth?”. Journal of Economic Growth.
Goldberger, Arthur (1972). “Maximum Likelihood Estimation of Regressions Containing Unobservable Independent Variables.” International Economic Review 13(1):1-15.
Golden, Miriam and Lucio Picci (2003). “Proposal for a New Measure of Corruption, and Tests Using Italian Data”. Manuscript, University of Bologna.
Hall, Robert E., and Charles Jones (1999). “Why Do Some Countries Produce So Much More Output per Worker than Others?” Quarterly Journal of Economics, 114(1):83-116.
Hellman, Joel, Geraint Jones, Daniel Kaufmann and Mark Schankerman (2000) ‘Measuring Governance, Corruption, and State Capture: How Firms and Bureaucrats Shape the Business Environment in Transition Economies’, World Bank Policy Research Working Paper No. 2312, Wash. DC.
Kaufmann, Daniel, Aart Kraay and Pablo Zoido-Lobatón (1999a). “Aggregating Governance Indicators.” World Bank Policy Research Working Paper No. 2195, Washington, D.C. http://www.worldbank.org/wbi/governance/pubs/aggindicators.html
——— (1999b). “Governance Matters.” World Bank Policy Research Working Paper No. 2196, Washington, D.C. http://www.worldbank.org/wbi/governance/pubs/govmatters.html
——— (2002). “Governance Matters II – Updated Indicators for 2000/01.” World Bank Policy Research Working Paper No. 2772, Washington, D.C. http://www.worldbank.org/wbi/governance/pubs/govmatters3.html
Kaufmann, Daniel and Aart Kraay (2002). “Growth Without Governance”. Economia. 3(1):169-215.
Kaufmann, Daniel, Aart Kraay and Massimo Mastruzzi (2004). “Governance Matters III: Governance Indicators for 1996, 1998, 2000, and 2002”. World Bank Economic Review. 18:253-287.
Kaufmann, Daniel, and Shang-Jin Wei, ‘Does Grease Money Speed Up the Wheels of Commerce?’ World Bank Policy Research Working Paper No. 2254, Wash. DC, December 1999.
Knack, Steven and Philip Keefer (1995). “Institutions and Economic Performance: Cross-Country Tests Using Alternative Measures.” Economics and Politics, 7, 207-227.
Knack, Steve and Mark Kugler (2002). “Constructing and Index of Objective Indicators of Good Governance”. Manuscript, The World Bank.
Rigobon, Roberto and Dani Rodrik (2004). “Rule of Law, Democracy, Openness, and Income: Estimating the Interrelationships. Manuscript. MIT and Kennedy School.
Rodrik, Dani, Arvind Subramanian, and Francesco Trebbi (2004). “Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development”. Journal of Economic Growth 9(2):131-165.
Sachs, Jeffrey, John W. McArthur, Guido Schmidt-Traub, Margaret Kruk, Chandrika Bahadur, Michael Faye, and Gordon McCord, (2004), “Ending Africa’s Poverty Trap”, Brookings Papers on Economic Activity, 2004(1).
World Bank (2004). “Doing Business in 2004: Understanding Regulation”. Washington: Oxford University Press.