governace crossroads an empirical perspective
Download
Skip this Video
Download Presentation
Governace Crossroads : An Empirical Perspective

Loading in 2 Seconds...

play fullscreen
1 / 22

Governace Crossroads : An Empirical Perspective - PowerPoint PPT Presentation


  • 224 Views
  • Uploaded on

Governace Crossroads : An Empirical Perspective. Daniel Kaufmann www.worldbank.org/wbi/governance Background Slides. It draws from the Chapter in WEF’s GCR 2002-2003 (forthcoming). National Governance: A working definition.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Governace Crossroads : An Empirical Perspective' - Sharon_Dale


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
governace crossroads an empirical perspective

Governace Crossroads:An Empirical Perspective

Daniel Kaufmann

www.worldbank.org/wbi/governance

Background Slides. It draws from the Chapter in WEF’s GCR 2002-2003 (forthcoming)

national governance a working definition
National Governance: A working definition
  • Governance is the process and institutions by which authority in a country is exercised:

(1) S -- the process by which governments are selected, held accountable, monitored, and replaced;

(2) E -- the capacity of gov’t to manage resources and provide services efficiently, and to formulate and implement sound policies and regulations; and,

(3) R -- the respect for the institutions that govern economic and social interactions among them

slide3
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 External 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 for almost 200 countries:

www.worldbank.org/wbi/governance

inputs for governance indicators
Inputs for Governance indicators

Publisher Publication Source Coverage

  • Standard and Poor’s Country Risk Review Poll 106 developed and developing Countries DRI/McGraw-Hill
  • Wall Street Journal Central European Survey 27 transition economies Economic Review
  • EBRD Transition Report Poll 26 transition economies
  • Economist Intelligence Unit Country Risk Service & Poll 114 developed and developing Country Forecast
  • Freedom House Freedom in the World Poll 172 developed and developing
  • Freedom House Nations in Transit Poll 24 transition economies
  • Political Economic | Asia Intelligence Survey 11 Asian countriesRisk Consultancy
  • Gallup International 50th Anniversary Survey Survey 44 mostly developed countries
  • World Ec Forum / CID Global Competitiveness Survey 75 developed and developing
  • Heritage Foundation/ Economic Freedom Index Poll 154 developed and developing Wall Street Journal
  • Political Risk Services Intern’tnl Country Risk Guide Poll 140 developed and developing
  • World Bank World Business Environment Survey 80 developed and developing
  • World Bank/EBRD BEEPS Survey 22 transition economies
  • IMD, Lausanne World Competitiveness Yrbk Survey 46 developed and developing
  • CUD Columbia U. State Failure Poll 100 developed and developing
  • PriceWtrhseCoopers Opacity Index Poll 60 developed and developing
governance stagnation worldwide

Governance stagnation worldwide?

Evidence points to little progress worldwide on key dimensions of governance.

This is in contrast with other developmental variables, (such as macro-stability, quality of infrastructure, science education, effective absorption of new technologies, etc.), where there is evidence of progress.

This matters, since the developmental and growth ‘dividend’ of good governance is enormous.

There is high variation cross-country (even within each region), and thus averages mask selective improvements in governance, from which we also learn.

slide7
Quality of Infrastructure -- Improving(Regional Averages of High/Low Quality every year, EOS-WEF firm surveys -- GCR ‘97-’02)

High

Low

slide8
Effective Absorption of New Technologies -- Progress(Regional Averages of High/Low Absorption every year, GCR 1997-2002)

High

Low

Note: No data exists for 2000.

control of corruption on average lack of progress
Control of Corruption: On average, lack of progress

Good Control

of Corruption

Low

Source: ICRG, 1984-2002. Averages for shown periods and across countries for OECD & New Industrialized Countries in East Asia; for former socialist Transition Economies, and Emerging Economies.

quality of rule of law little progress in recent years
Quality of Rule of Law: Little Progress in recent years

High

Low

Source: ICRG, 1984-2002. Averages for shown periods and across countries for OECD & New Industrialized Countries in East Asia; for former socialist Transition Economies, and Emerging Economies.

slide11
Extent of Independence of the Judiciary -- stagnant (Regional Averages of Extent/Lack of Independence every year, GCR 1998-2002)

Independent

Non-Independent

unbundling corruption regional averages based on eos wef firm survey 2002 80 countries
Unbundling Corruption – Regional AveragesBased on EOS-WEF firm survey 2002, 80 countries

Extent of

Bribery for:

%

the dividend of good governance
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

Note

: The bars depict the simple correlation between good governance and development outcomes. The line depicts the

predicted value when taking into account the causality effects (“Development Dividend”) from improved governance to better

development outcomes. For data and methodological details visit http://www.worldbank.org/wbi/governance.

soundness of banks vs control of corruption
Soundness of Banks vs. Control of Corruption

Sound

Relatively Unsound

Source: Executive Opinon Survey 2002; KKZ 2000/01Governance Indicators, http://www.worldbank.org/wbi/governance/govdata2001.htm The Sample of 80 countries has been divided into 3 sub-samples according to their rating in Control of Corruption. The 3 columns therefore represent the average ratings for Soundness of Banks within each sub-sample. The fitted line instead represents the predicted value of Bank Soundness controlling for the effects of GDP per capita and Regulatory Quality through an OLS regression. Each fitted value is computed as the sum of the estimated constant plus the value of Control of Corruption within each group times the estimated coefficient plus the mean values of Regulatory Quality and GDP per capita times their respective estimated coefficients.

slide15
Transparency, Ethics and GDP Growth: Closely linked

Annual GDP Growth (%)

Source: Annual GDP growth over 1999-2001 is taken from WDI 2002; GDP is computed in PPP terms. The various transparency / governance variables drawn from Executive Opinion Survey, 2002.

slide16
Collective Responsibility in Improving Governance

-- The Public Sector & Political system not responsible alone for the Governance and investment climate Policies in each country-- Inequality of Influence by segments of private sector in shaping the rules of the game – is key-- ‘State Capture’ as extreme manifestation of undue influence in shaping rules of the game-- Consequently, improving governance requires collective action, w/ major role for private sector

also where capture grand corruption greater property rights insecurity for all others
Also, where Capture/Grand Corruption: Greater Property Rights Insecurity for All Others

% Share of Firms with Secure Property Rights

Source: J. Hellman, G. Jones, D. Kaufmann. 2000. “Seize the State, Seize the Day: State Capture, Corruption and Influence in Transition” World Bank Policy Research Working Paper 2444.

bribery in procurement and corporate ethics linked
Bribery in Procurement and Corporate Ethics – linked

High

r = -0.88

Low

Low

High

Source: Source: WEF GCR 2002. Firms were asked for their assessment of the extent of bribery within their industry for procurement, as well as their rating of the quality of corporate ethics in their industry.

corruption in judiciary and corporate ethics closely linked
Corruption in Judiciary and Corporate Ethics closely linked

High

r = -0.88

Low

Low

High

Source: WEF GCR 2002. Firms were asked for their assessment of the extent of bribes in their industry for the judiciary, as well as their rating of the quality of corporate ethics in their industry.

governance rethinking main tenets
Governance: Rethinking Main Tenets

(1)Governance: broader & integrated approach needed

(2) Power of Data – Quantification, analysis & monitoring

(3) Sobering Evidence: Little progress recently (on average)

(4) Challenge of Localizing Know-How – Diagnostic tools

(5) Promoting Voice, Participation & Transparency is key

(6) Imperative of Incentives (& less exhortation/PR)

(7) Private-Public Sector Governance Nexus: Institutions of Capture/Elite Influence – not just focus on Public Sector

(8)Rethink ‘Investment Climate’: linking corporate-public governance – elite firms and MNCs help shape I-climate

(9) Governance in Finance, in Natural Resources, Social

(10) Impact on the Ground – Collective Action, Nat’l & Int’l

data for analysis and informing policy advise not for precise rankings

Data for Analysis and informing Policy Advise, not for Precise Rankings

Data in this presentation is from aggregate governance indicators, surveys, and expert polls and is subject to a margin of error. Not intended for precise comparative rankings across countries, but to illustrate performance measures to assist in drawing implications for strategy. It does not reflect official views on rankings by the World Bank or its Board of Directors. Errors are responsibility of the author, who benefited in this work from collaboration with World Bank, WEF and others.

www.worldbank.org/wbi/governance

ad