Measuring governance has traditionally been an elusive challenge, but one that is crucial in understanding the link between governance and development, and for enabling countries to monitor their performance.

A newly updated set of World Bank indicators that tracks the quality of governance across the globe can help assess how countries perform in this critical area of development.

The indicators trace six areas of governance from 1996 to the present in almost 200 countries. They create a unique source of benchmarks for policy makers, donor agencies, civil society and development experts.

The authors, Daniel Kaufmann and Aart Kraay of the World Bank, define governance as the traditions and institutions by which authority in a country is exercised.

To create the indicators, they divided the concept of governance into six categories aimed at capturing how governments are selected, monitored, and replaced; a government’s capacity to formulate and implement sound policies; and the respect of citizens and the state for the institutions that govern them.

The six measured indicators are:

• Voice and Accountability
• Political Stability and Lack of Violence
• Government Effectiveness
• Regulatory Quality
• Rule of Law
• Control of Corruption

Kaufmann, Director of Global Governance at the World Bank Institute, says that the World Bank uses these indicators to help countries identify areas of weakness so that capacity building and assistance strategies are more effective.

However, the authors caution against using this data to run "horse races" among countries with similar ratings. While the researchers' methodology reduces the margins of error, those margins of error can still be large enough to make precise rankings of similarly rated countries impossible.

They also dispelled the myth that good governance is a ‘luxury’ that only wealthy countries can afford, as exemplified by emerging economies with good governance, such as Botswana, Chile or Slovenia.

They found that a country that has an income windfall from, for example, higher oil prices, would not automatically benefit in terms of improved governance. To the contrary.

Income growth alone does not guarantee better rule of law or improved voice and democratic accountability. Governance reforms are continuously required instead, and they then result in higher incomes.

The indicators are based on 25 separate data sources at 18 different organizations, including the World Bank itself, Gallup International, the Economist Intelligence Unit, IMD, DRI/McGraw-Hill, Columbia University, Freedom House, Afrobarometer, Latinobarometro, the World Economic Forum, and Reporters Without Borders. The database covers four time periods (1996, 1998, 2000 and 2002) and will be updated regularly.

Useful Links:  Click here to read the full press release. 
Click here to access the indicators.