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Governance: Challenging Orthodoxies through the Power of Data

Governance Matters – Democracia, Politicas Institucionales y Desarrollo: Nuevos Desafios de lecciones empiricas Daniel Kaufmann, The World Bank Apertura del Semestre Academico de la Universidad UOC Barcelona, 9 de Marzo. Governance: Challenging Orthodoxies through the Power of Data.

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Governance: Challenging Orthodoxies through the Power of Data

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  1. Governance Matters – Democracia, Politicas Institucionales y Desarrollo:Nuevos Desafios de lecciones empiricasDaniel Kaufmann, The World Bank Apertura del Semestre Academico de la Universidad UOC Barcelona, 9 de Marzo

  2. Governance: Challenging Orthodoxies through the Power of Data • Good Governance and Democracy a Luxury good? • Improved Governance by Enforcement (vs. Incentives)? • Improved Governance = Control of Corruption? • Governance as a Public Sector Challenge? • Administrative Bribery as key Corruption challenge? • Unreliability & Unavailability of Data in governance? These orthodoxies will be answered in the negative

  3. Una Encuesta Instantanea: El Sobre con dinero en el estacionamento... En el estacionamento, solo/a, encuentras un sobre con US$2,000 Que haces con el sobre?

  4. 33% reporta y devuelve los fondos 50% sin decidirse 17% se lo llevan Test, parte 1: A. If no possibility that anyone could know [Si no hay supervision, o camara, nadie] ‘Green light’ ‘Yellow light’ ‘Red light’

  5. 22% no se deciden 4% se lo llevan 74% Reporta y devuelve los fondos Test, parte 2: La misma pregunta anterior, parte B donde hay ahora un 30% de probabilidad de que hay una camara oculta en el estacionamiento que quizas es supervisada

  6. Broadening Analytical Framework: Governance: A working definition • Governance is the process and institutions by which authority in a country is exercised: (1) the process by which governments are selected, held accountable, monitored, and replaced; (2) the capacity of governments to manage resources efficiently, and to formulate, implement, and enforce sound policies and regulations; and, (3) the respect for the institutions that govern economic and social interactions among them

  7. Operationalizing Governance: Unbundling its Definition into Components that can be measured, analyzed, and worked on Each of the 3 main components of Governance Definition is unbundled into 2 subcomponents: • Voice and Accountability • Political Stability and lack of Violence&Terror • Quality Regulatory Framework • Government Effectiveness • Control of Corruption • Rule of Law We measure these six governance components…

  8. Control of Corruption: one Aggregate Indicator (selected countries from 155 worldwide, for illustration, based on 1998 research data*) Good Corruption Control Margin of Error Corruption Level GOOD POOR Source: ‘Governance Matters’, PRWP 2196 by Kaufmann, Kraay and Zoido. http://www.worldbank.org/wbi/governance/

  9. Rule of Law Index, 2001 (preliminary, selected countries): Failed States, in Crisis, Vulnerable, Out of Danger… Poor Good Rankings were calculated on the basis of 2001 country estimates. Source: KKZ01. Preliminary

  10. Governance Indicators for Angola, 1997/98-2000/01 Note: the thin lines depict 90% confidence intervals. Source: KKZ Governance Research Indicators 2002. Chart and data downloaded from web-interactive program at : http://www.worldbank.org/wbi/governance/govdata2001.htm

  11. ‘Traffic Light’ World MapsRule of Law – 2000/01 Source for data: http://www.worldbank.org/wbi/governance/govdata2001.htm ; Map downloaded from : http://info.worldbank.org/governance/kkz/gov2001map.asp Colors are assigned according to the following criteria: Red, 25% or less rank worse; Orange, between 25% and 50%; Yellow, between 50% and 75%; Light Green between 75% and 90% ; Dark Green above 90%

  12. ‘Traffic Light’ World MapsRule of Law – Adjusted Rankings, 2000/01 Source for data: http://www.worldbank.org/wbi/governance/govdata2001.htm ; Map downloaded from : http://info.worldbank.org/governance/kkz/gov2001mapYadj.asp Colors are assigned according to the following criteria: Red, 25% or less rank worse; Orange, between 25% and 50%; Yellow, between 50% and 75%; Light green between 75% and 90% ; Dark green over 90%

  13. ‘Traffic Light’ World Maps Control of Corruption – 2000/01 Source for data: http://www.worldbank.org/wbi/governance/govdata2001.htm ; Map downloaded from : http://info.worldbank.org/governance/kkz/gov2001map.asp Colors are assigned according to the following criteria: Red, 25% or less rank worse; Orange, between 25% and 50%; Yellow, between 50% and 75%; Light Green between 75% and 90% ; Dark Green above 90%

  14. ‘Traffic Light’ World Maps Control of Corruption – Adjusted Rankings, 2000/01 Source for data: http://www.worldbank.org/wbi/governance/govdata2001.htm ; Map downloaded from : http://info.worldbank.org/governance/kkz/gov2001mapYadj.asp Colors are assigned according to the following criteria: Red, 25% or less rank worse; Orange, between 25% and 50%; Yellow, between 50% and 75%; Light green between 75% and 90% ; Dark green over 90%

  15. ‘Traffic Light’ Map – Latin AmericaControl of Corruption – 2000/01 Source for data: http://www.worldbank.org/wbi/governance/govdata2001.htm ; Map downloaded from : http://info.worldbank.org/governance/kkz/gov2001map.asp Colors are assigned according to the following criteria: Red, 25% or less rank worse; Orange, between 25% and 50%; Yellow, between 50% and 75%; Light Green between 75% and 90% ; Dark Green above 90%

  16. Mapa “Luz de Semaforo” – America LatinaControl de la Corrupción – 2000/01, Ajustado por Ingreso Fuente de datos: http://www.worldbank.org/wbi/governance/govdata2001.htm ; Grafico bajado de : http://info.worldbank.org/governance/kkz/gov2001map.asp Los colores estan assignados de acuerdo a los siguientes criterios: Rojo, 25% o menos ; Naranja, entre 25% y 50%; Amarillo, entre 50% y 75%; Verte, mas de 75%

  17. ‘Traffic Light’ Map – Latin AmericaVoice and Accountability – 2000/01 Source for data: http://www.worldbank.org/wbi/governance/govdata2001.htm ; Map downloaded from : http://info.worldbank.org/governance/kkz/gov2001map.asp Colors are assigned according to the following criteria: Red, 25% or less rank worse; Orange, between 25% and 50%; Yellow, between 50% and 75%; Light Green between 75% and 90% ; Dark Green above 90%

  18. Mapa “Luz de Semaforo” – America LatinaVoz y Rendición de Cuentas – 2000/01, Ajustado por ingreso Fuente de datos: http://www.worldbank.org/wbi/governance/govdata2001.htm ; Grafico bajado de : http://info.worldbank.org/governance/kkz/gov2001map.asp Los colores estan assignados de acuerdo a los siguientes criterios: Rojo, 25% o menos ; Naranja, entre 25% y 50%; Amarillo, entre 50% y 75%; Verte, mas de 75%

  19. Zimbabwe Over Time (vs. Botswana)6 Aggregate Governance Indicators(Percentile Rankings, 1997-98 / 2000-01) Rankings were calculated on the basis of 2001 and 1998 country estimates. Sources: KKZ98/KKZ01. Number of countries in worldwide sample, depending on component of governance ranges between 161 and 194.

  20. Per Capita Income and Infant Mortality and Corruption Regulatory Burden 12,000 90 80 10,000 70 8,000 60 50 6,000 40 4,000 30 20 2,000 10 0 0 Weak Average Good Weak Average Good Development Regulatory Burden Control of Corruption Development x x Dividend Dividend Literacy and Rule of Law Per Capita Income and Voice and Accountability 100 10000 9000 8000 75 7000 6000 50 5000 4000 3000 25 2000 1000 0 0 Weak Average Good Weak Average Strong Development Development Rule of Law x x Voice and Accountability Dividend Dividend The ‘Dividend’ of Good Governance :

  21. Probabilidad de Perder su Inversion Extranjera por Corrupcion(Dentro de 5 anhos. SP/DRI, 2000, Algunos paises selectos; sujeto a margen de error, ilustrativo) Con Certeza [%] Probability of Losing FDI due to Corruption No pierde

  22. Lower Income Households ‘Pay’ Disproportionally Bribe/Total Income ratio % ( A Latin American Country )

  23. Citizen Voice Improves Accessibility of Public Services to the Poor Based on Public Officials Survey. The sample of institutions includes 44 national, departmental, and municipal agencies which are a prior anticipated to be accessible to the poor

  24. Citizen Voice Helps Control Bribery in country in LatAm Based on 90 national, departmental, and municipal agencies covered in the Bolivia Public Officials Survey.

  25. Transparency within Government Agencies Prevents Purchase of Public Positions Based on 90 national, departmental, and municipal agencies covered in the Public Officials Survey.

  26. Defining and Measuring State Capture Elite firms illicitly shape rules of the game to their advantage, particularly through: • private purchase of legislative votes • private purchase of executive decrees • private purchase of court decisions • Illicit influence of Central Bank regulations/policies • illicit political party financing

  27. Measuring State Capture

  28. …at an enormous Socio-Economic Cost

  29. Do Foreign Firms bring Good Governance?

  30. Towards a Solution:More Political Competition Pace of Econ Reform Political Reforms

  31. Towards a Solution: Collective Action by Firms

  32. Una formula simple en el proceso anti-corrupción: • AC = D + L + A • Anti-corrupción = Datos.Informacion + … • ...+ Liderazgo + ... • ... + Accion Colectiva

  33. Strategic Implications for Debate • Prioritized, Differentiated ‘Comprehensiveness’ • Governance Indicators as strategic input, for Monitoring, for lessons from failures and successes • Need to complement with in-depth country Diagnostic • Emphasize role of Incentives • Addressing challenge of State Capture(not just gov’t…) • Upgrade role of private/business sector / associations • Citizen Voice and Transparency as key developmental variables -- Collective Action & Power of Data Webtool access to data, charts, analysis and methods: http://www.worldbank.org/wbi/governance/

  34. Datos Presentados por el Analisis e información de Consejos Politicos, no para Precisar Rankings Los datos contenidos en esta presentación se originan de encuestas de muchas fuentes (y agencias de ‘rating’) y están sujetas a un margen de error. El propósito es de ilustrar características de gobernabilidad para analizar y discutir implicaciones. No se intenta en esto ‘jerarquizar’/ranking de países con estas fuentes externas, sino estudiar los retos al niver ‘micro’ dentro de cada pais. Estos datos y resultados no necesariamente refleja opiniones algunas del Banco Mundial o su Junta Directiva. Para mas informacion y datos, visitar: http://www.worldbank.org/wbi/governance

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