Saturday, June 16, 2007

Good Governance => Economic prosperity: Discuss

Karl Miller of the Arms Reduction Campaign asked me about the accuracy of measurements for the Index of Human Rights. I searched, and behold, came up with a big study of governance carried out by the World Bank in 1999. A Decade_of_Measuring_Governance

It is a heavy-duty governance study. They focus on
  1. Voice and accountability, democracy, free expression, free association, media
  2. political stability, absence of violence
  3. governance quality
  4. regulatory quality - permitting private sector development
  5. rule of law
  6. corruption
Now we might have some doubts about the importance of No 4, being perhaps more keen on regulation than the WWorld Bank might be but the rest of it is pretty much what we could endorse.
Here are their findings

Good governance pays a very large development dividend. An

improvement in governance of one standard deviation can triple

a nation’s per capita income in the long run. Higher income also

correlates with better governance, but the causal relationship

is mostly from governance to income.

Although governance quality on average changes slowly,

it can in some countries decline sharply in a few short years,

but it can also quickly improve.

Responses to specific questions on governance from citizens,

firms, and country experts are important, because stakeholders

make decisions based on those views and perceptions.

Direct data from citizens, firms, and experts, even if they

contain a subjective element, can paint a richer picture of actual

conditions on the ground than counting laws and regulations,

which in fact may not be enforced or observed.

Aggregate indicators yield more reliable information about

governance than any individual indicator can provide.

Margins of error are implicit in all indicators (including specific

measures as well as so-called objective indicators), although

their imprecision may not be reported or acknowledged.

Seemingly precise country rankings based on such indicators

can, therefore, be misleading.

Robust aggregate indicators, such as those discussed here,

specify margins of error that should be taken into account when

assessing the quality of governance and changes over time.

They specifically address measurement:

Governance can be measured, given the wide range of possible indicators now available.

None is perfect, of course. But the Worldwide Governance Indicators are transparent and

precise about the degree of imprecision in the data. Falling short of total precision does not

detract from the usefulness and relevance of the data: many meaningful comparisons are

both feasible and useful for policy analysis.

So, we have backup for the Index of Governance from an unexpected source, and an unexpected point to make in argument :

good governance = human rights protection => economic prosperity.

Nobody can argue with that.

Or can they?

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