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Measuring institutions

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  1. Measuring institutions Data sources

  2. Problems • Multidimensional concept that is difficult to measure • social norms and traditions • legal rules • governance • Measurement errors and biases • errors • differences in perceptions (expert opinions)

  3. Most comprehensive dataset as of today • Worldwide governance indicators: 1996-2006 Source: World Bank, www.govindicators.org • Sample: 213 countries and territories; 1996, 1998, 2000, 2002-2006 years • Kaufmann, Daniel, Kraay, Aart and Mastruzzi, Massimo, "Governance Matters VI: Governance Indicators for 1996-2006" (July, 2007). Available at SSRN: http://ssrn.com/abstract=999979

  4. Dimensions of governance • 1. Voice and accountability (VA), the extent to which a country’s citizens are able to participate in selecting their government, as well as freedom of expression, freedom of association, and free media • 2. Political stability and absence of violence (PV), perceptions of the likelihood that the government will be destabilized or overthrown by unconstitutional or violent means, including political violence and terrorism • 3. Government effectiveness (GE), the quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government’s commitment to such policies • 4. Regulatory quality (RQ), the ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development • 5. Rule of law (RL), the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, the police, and the courts, as well as the likelihood of crime and violence • 6. Control of corruption (CC), the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as “capture” of the state by elites and private interests.

  5. Methodology (2006) • 276 individual variables measuring different dimensions of governance. • 31 different sources, produced by 25 different organizations. • Aggregation into 6 categories using the principle component analysis • Point estimates and standard errors=>distribution of the measure

  6. Database of political institutions • World Bank, 1990-2004, 177 countries • Variables: • Political system • Executive controls • Party variables • Elective rules • Federalism • Beck, Thorsten, George Clarke, Alberto Groff, Philip Keefer and Patrick Walsh, (2001), "New tools in comparative political economy: The Database of Political Institutions," 15:1, 165-176 (September), World Bank Economic Review.

  7. Measuring corruption • Transparency international (TI) at www.transparency.org • Corruption perception index • The CPI ranks more than 150 countries by their perceived levels of corruption, as determined by expert assessments and opinion surveys. • Global corruption barometer • public opinion survey, 59,661 respondents in 63 countries. • Bribe payers index 2006 • 30 leading exporting countries, responses of 11,232 business executives from companies in 125 countries

  8. Corruption perception index 2006

  9. CPI 2006: Eastern Europe and Former Soviet Union

  10. Global Corruption Barometer 2006: bribes

  11. Global Corruption Barometer 2006: corruption of institutions in a sample of countries

  12. Correlation between CPI and global barometer

  13. Bribe payers index

  14. Transition countries • EBRD Transition report: http://www.ebrd.com/country/sector/econo/stats/index.htm • The Business Environment and Enterprise Performance Survey (BEEPS): http://info.worldbank.org/governance/beeps/

  15. International trade, geography, and distances (New Economic Geography will be offered in the Mini Term III January-March 2008) • CEPII (France) • http://www.cepii.fr/anglaisgraph/news/accueilengl.htm • World integrated trade solution • http://wits.worldbank.org/witsweb/

  16. General economic indicators • World development indicators (WDI) • http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,contentMDK:20398986~menuPK:64133163~pagePK:64133150~piPK:64133175~theSitePK:239419,00.html • United Nations • http://unstats.un.org/unsd/databases.htm • OECD • http://www.oecd.org/statsportal/0,3352,en_2825_293564_1_1_1_1_1,00.html • EuroStat • http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1090,30070682,1090_33076576&_dad=portal&_schema=PORTAL