Transparenting Transparency: Initial Empirics and Policy Applications

Abstract

Major conceptual contributions of a number of Nobel-laureates in putting forth a framework linking the citizenry's right to know and access to information with development, have already had a major influence in various fields. However, implementation of transparency-related reforms on the ground remains checkered around the globe. Further, in contrast with other dimensions of governance - such as rule of law and regulatory burden - there is a gap between the extent of the conceptual contributions in the transparency field and the progress on its measurement and empirical analysis, which has been wanting. And there has been an absence of writings which decompose (or 'unbundle') the generic notion of transparency into specific components, so to provide tools useful for policy advise and interventions. Our paper is a contribution attempting to partly fill these empirical and policy-related gaps. We review the existing literature, present various definitions of transparency, provide an initial empirical framework towards worldwide indicators on various dimensions of transparency, suggest some initial empirical results, and address concrete policy and institutional innovations related to transparency reforms.

We contribute to empirics by undertaking an initial construction of a transparency index for 194 countries based on over twenty 20 independent sources. An Unobserved Component Model (UCM) was used to generate the country ratings and the margins of error. The indices comprise an aggregate transparency index with two sub-components: economic/institutional transparency, and political transparency. The results emphasize variance. First, the preliminary evidence based on these initial indicators suggests enormous variation across countries in the extent of transparency. Exemplary transparency is not the exclusive domain of a particular region, and there are transparency-related challenges in countries in each region and income categories. Further, there is significant within-country variation, with large differences in performance between economic/institutional and political dimensions of transparency. Mindful of the challenges in inferring causality, we also find that transparency is associated with better socio-economic and human development indicators, as well as with higher competitiveness and lower corruption. We suggest that much progress can be attained without requiring inordinate amount of resources, since transparency reforms can be substantial net 'savers' of public resources, and often can serve as a more efficient and less financially costly substitute to creating additional regulations and/or regulatory or governance bodies. We emphasize that different types of transparency reforms are warranted for different stages of political-economic development, and that much more prominence ought to be given to transparency reforms as a core component of second-generation institutional reforms. We provide a number of concrete examples of specific transparency-related reforms within a strategic framework, as well as a brief country illustration - the case of Chile.

Keywords: Governance, transparency, accountability

JEL Classification: C10, H10, H50, O10, O50