Click here for search results

Growth Without Governance

HomeDataPapersProgramsDiagnosticsIn the News

by D. Kaufmann and A. Kraay (Fall 2002) Economia, Volume 3, Number 1

Per capita incomes and the quality of governance are strongly positively correlated across countries. We propose an empirical strategy that allows us to separate this correlation into: i) a strong positive causal effect running from better governance to higher per capita incomes, and ii) a weak and even negative causal effect running in the opposite direction from per capita incomes to governance. The first result confirms existing evidence on the importance of good governance for economic development. The second result is new and suggests the absence of "virtuous circles" in which higher incomes lead to further improvements in governance. This motivates our choice of title, "Growth Without Governance". This finding has important policy and institutional implications.

We document this evidence using a set of worldwide governance indicators covering 175 countries for the period 2000/01. We speculate as to the potential importance of elite influence and state capture in accounting for the surprising negative effects of per capita incomes on governance and suggest priorities for actions to improve governance when such pernicious elite influence shapes public policy.

Access the Governance Indicators 1996–2004 database


Note: The updated indicators for 1996–2002, available in May 2003, supersede the previously posted indicators for 1998 and 2000.

line_middle.gif

Comment on this paper (view posting guidelines)

ssrn.gif
Download paper and full abstract from SSRN


excel.gif
Download article (234 kb)


Governance and Growth: Causality Which Way?
excel.gif
Download Synthesis and Conclusions 
(48 kb)



Access this article's datasets


 
Icon Repec
Download abstract and paper from RePEc
 

FandD.gif

Back to top 520



Permanent URL for this page: http://go.worldbank.org/R2EO4G00M0