Governance Matters

64 Pages Posted: 5 Nov 1999  

Daniel Kaufmann

Natural Resource Governance Institute (NRGI); The Brookings Institution

Aart Kraay

World Bank - Development Research Group (DECRG)

Pablo Zoido

Stanford University - Graduate School of Business

Date Written: August 1999

Abstract

Six new aggregate measures capturing various dimensions of governance provide new evidence of a strong causal relationship from better governance to better development outcomes.

In a cross-section of more than 150 countries, Kaufmann, Kraay, and Zoido-Lobaton provide new empirical evidence of a strong causal relationship from better governance to better development outcomes. They base their analysis on a new database containing more than 300 governance indicators compiled from a variety of sources. They provide a detailed description of each of these indicators and sources. Using an unobserved components methodology (described in the companion paper by Kaufmann, Kraay, and Zoido-Lobaton, Aggregating Governance Indicators, Policy Research Working Paper 2195), they then construct six aggregate indicators corresponding to six basic governance concepts: voice and accountability, political instability and violence, government effectiveness, regulatory burden, rule of law, and graft. As measured by these indicators, governance matters for development outcomes.

This paper - a joint product of Macroeconomics and Growth, Development Research Group; and Governance, Regulation, and Finance, World Bank Institute - is part of a larger effort in the Bank to study the causes and consequences of governance for development. The authors may be contacted at dkaufmann@worldbank.org, akraay@worldbank.org, or pzoidolobaton@worldbank.org.

JEL Classification: E00,H00,O10,C1,C3,C42,C43,D8,HO,H4,K0,K2,K4

Suggested Citation

Kaufmann, Daniel and Kraay, Aart and Zoido, Pablo, Governance Matters (August 1999). World Bank Policy Research Working Paper No. 2196. Available at SSRN: https://ssrn.com/abstract=188568

Daniel Kaufmann

Natural Resource Governance Institute (NRGI) ( email )

80 Broad Street
New York, NY 10004
United States

HOME PAGE: http://www.resourcegovernance.org

The Brookings Institution ( email )

1775 Massachusetts Avenue, NW
Washington, DC 20036
United States

HOME PAGE: http://www.brookings.edu/experts/kaufmannd

Aart Kraay

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-473-5756 (Phone)
202-522-3518 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/akraay

Pablo Zoido (Contact Author)

Stanford University - Graduate School of Business ( email )

Stanford, CA 94305
United States

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