Monitoring Governance in Poor Countries. Steve Knack DECRG-PRMPS June 13, 2002

Transcription

1 Monitoring Governance in Poor Countries Steve Knack DECRG-PRMPS June 13, 2002

2 Governance: World Bank definition Good Governance is epitomized by predictable, open and enlightened policy making (that is, transparent processes); a bureaucracy imbued with a professional ethos; an executive arm of government accountable for its actions; and a strong civil society participating in public affairs; and all behaving under the rule of law.

3 Measures pre-dating emphasis on governance Freedom House Civil liberties Political freedoms Political violence frequencies Coups, attempted coups Assassinations, civil wars Riots, strikes

4 Political risk ratings International Country Risk Guide Business International Business Environ. Risk Intelligence

5 ICRG: International Country Risk Guide! Corruption in government! Quality of bureaucracy! Law & order tradition (rule of law)! Risk of government repudiation of contracts! Risk of expropriation

6 Growth & ICRG index (partial plot) Growth (residual) ICRG (residual)

7 KKZ: Aggregating Governance Indicators! Voice and accountability! Political stability! Government effectiveness! Regulatory quality! Rule of Law! Control of corruption

8 CPIA: Country Policy & Institutional Assessment! Property Rights & Rule-based governance! Quality of budgetary & financial management! Efficiency of revenue mobilization! Quality of public administration! Transparency, accountability & corruption in the public sector

9 1 st generation governance indicators! Demonstrate importance of governance for economic outcomes! Help in identifying political & cultural sources of poor governance! Indicate which countries have the most severe governance problems

10 2nd generation governance indicators Need more specific indicators to identify:! which institutional arrangements are most important! what can be done about it! which countries are most deficient in that area

11 2nd generation governance indicators Country ownership requires more transparently constructed and replicable indicators Ownership is also influenced by specificity--governments may resist indicators that do not suggest particular solutions

12 Towards 2 nd Generation Indicators Second generation Second generation replicable Second generation First generation specific

13 The Bank s need for specific & replicable governance indicators! Focusing reform agendas: which institutions matter most?! Conditioning adjustment lending on governance (country ownership)! Monitoring progress (e.g. CAS triggers)! Inputs into CPIA (used for IDA allocations)

14 Surveys of businesses, public officials, households! administrative corruption vs. state capture (WBES)! corruption, employee morale, credibility of rules and policies, resource predictability across agencies! quality of service delivery across regions (FACS surveys)

15 Assessment of budgeting systems in HIPCs! budget formulation: coverage, inclusion of donor funds, classification system, multiyear projections! budget execution: internal control, tracking reliability! budget reporting: regularity of reports, delays in final audited accounts,

16 Cross-National Data on Government Employment and Wages! Employment in civil service, health, education, and police in central and subnational government! Central government wage bill, as share of government spending and GDP! Average central government wage, relative to per capita income and wages in manufacturing, financial services and private sector! Vertical compression ratio

17 Corruption & Civil service pay KKZ Graft index -1-2 Rsq = Civil service pay/per capita GDP

18 Civil service pay and Service delivery 4.5 quality of government services (WDR97) Rsq = Civil service pay/per capita GDP

19 Decentralization data base! fiscal decentralization: sub-national expenditures & revenues, vertical imbalance! administrative decentralization: characteristics of inter-governmental transfer system, regulatory framework on sub-national borrowing! political decentralization: sub-national elections

20 Database on Political Institutions (DPI)! Coverage: 1975-present for 177 countries! Content: 113 variables on elections and electoral rules, party composition of opposition & governing coalitions, indexes of political stability & checks and balances! Applications: receptivity to economic reform, political roots of corruption, sources of the rule of law, management of ethnic divisions

21 Miscellaneous (with data available for many countries)! Budgetary volatility! Number of procedures, fees, time required to start a new business! Number of procedures, time required to collect on a bad debt! Business survey responses: e.g. bribes/revenues, frequency of power outages

22 Miscellaneous (little existing data)! Political appointees in civil service! Vertical, horizontal compression in civil service pay! Within-year deviations in budgeted and actual expenditures! Delays in audits of government accounts reported to Parliament! Share of land titled