Governance Matters

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Governance Matters Democracia, Politicas
Institucionales y DesarrolloNuevos Desafios de
lecciones empiricas Daniel Kaufmann, The World
Bank Apertura del Semestre Academico de la
Universidad UOC Barcelona, 9 de Marzo
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Governance Challenging Orthodoxies through the
Power of Data

• Good Governance and Democracy a Luxury good?
• Improved Governance by Enforcement (vs.
  Incentives)?
• Improved Governance Control of Corruption?
• Governance as a Public Sector Challenge?
• Administrative Bribery as key Corruption
  challenge?
• Unreliability Unavailability of Data in
  governance?
• These orthodoxies will be answered in the
  negative

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Una Encuesta Instantanea El Sobre con
dinero en el estacionamento...

• En el estacionamento, solo/a, encuentras un sobre
  con US2,000
• Que haces con el sobre?

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Test, parte 1
A. If no possibility that anyone could know
Si no hay supervision, o camara,
nadie
Green light
Yellow light
Red light
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Test, parte 2
La misma pregunta anterior, parte B donde hay
ahora un 30 de probabilidad de que hay una
camara oculta en el estacionamiento que quizas es
supervisada
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Broadening Analytical Framework Governance A
working definition

• Governance is the process and institutions by
  which authority in a country is exercised
• (1) the process by which governments are
  selected, held accountable, monitored, and
  replaced
• (2) the capacity of governments to manage
  resources efficiently, and to formulate,
  implement, and enforce sound policies and
  regulations and,
• (3) the respect for the institutions that govern
  economic and social interactions among them

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Operationalizing Governance Unbundling its
Definition into Components that can be measured,
analyzed, and worked on

• Each of the 3 main components of Governance
  Definition is unbundled into 2 subcomponents
• Voice and Accountability
• Political Stability and lack of ViolenceTerror
• Quality Regulatory Framework
• Government Effectiveness
• Control of Corruption
• Rule of Law

We measure these six governance components
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Control of Corruption one Aggregate Indicator
(selected countries from 155 worldwide, for
illustration, based on 1998 research data)
Good Corruption Control
Margin of Error
Corruption Level
GOOD
POOR
Source Governance Matters, PRWP 2196 by
Kaufmann, Kraay and Zoido. http//www.worldbank.or
g/wbi/governance/
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Rule of Law Index, 2001 (preliminary, selected
countries) Failed States, in Crisis,
Vulnerable, Out of Danger
Poor
Good
Rankings were calculated on the basis of 2001
country estimates. Source KKZ01. Preliminary
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Governance Indicators for Angola, 1997/98-2000/01
Note the thin lines depict 90 confidence
intervals. Source KKZ Governance Research
Indicators 2002. Chart and data downloaded from
web-interactive program at http//www.worldbank.
org/wbi/governance/govdata2001.htm
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Traffic Light World MapsRule of Law 2000/01
Source for data http//www.worldbank.org/wbi/gove
rnance/govdata2001.htm Map downloaded from
http//info.worldbank.org/governance/kkz/gov2001ma
p.asp Colors are assigned according to the
following criteria Red, 25 or less rank worse
Orange, between 25 and 50 Yellow, between 50
and 75 Light Green between 75 and 90 Dark
Green above 90
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Traffic Light World MapsRule of Law Adjusted
Rankings, 2000/01
Source for data http//www.worldbank.org/wbi/gove
rnance/govdata2001.htm Map downloaded from
http//info.worldbank.org/governance/kkz/gov2001ma
pYadj.asp Colors are assigned according to the
following criteria Red, 25 or less rank worse
Orange, between 25 and 50 Yellow, between 50
and 75 Light green between 75 and 90 Dark
green over 90
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Traffic Light World MapsVoice and
Accountability 2000/01
Source for data http//www.worldbank.org/wbi/gove
rnance/govdata2001.htm Map downloaded from
http//info.worldbank.org/governance/kkz/gov2001ma
p.asp Colors are assigned according to the
following criteria Red, 25 or less rank worse
Orange, between 25 and 50 Yellow, between 50
and 75 Light Green between 75 and 90 Dark
Green above 90
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Traffic Light World MapsVoice and
Accountability Adjusted Rankings, 2000/01
Source for data http//www.worldbank.org/wbi/gove
rnance/govdata2001.htm Map downloaded from
http//info.worldbank.org/governance/kkz/gov2001ma
pYadj.asp Colors are assigned according to the
following criteria Red, 25 or less rank worse
Orange, between 25 and 50 Yellow, between 50
and 75 Light green between 75 and 90 Dark
green over 90
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Traffic Light World Maps Control of Corruption
2000/01
Source for data http//www.worldbank.org/wbi/gove
rnance/govdata2001.htm Map downloaded from
http//info.worldbank.org/governance/kkz/gov2001ma
p.asp Colors are assigned according to the
following criteria Red, 25 or less rank worse
Orange, between 25 and 50 Yellow, between 50
and 75 Light Green between 75 and 90 Dark
Green above 90
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Traffic Light World Maps Control of Corruption
Adjusted Rankings, 2000/01
Source for data http//www.worldbank.org/wbi/gove
rnance/govdata2001.htm Map downloaded from
http//info.worldbank.org/governance/kkz/gov2001ma
pYadj.asp Colors are assigned according to the
following criteria Red, 25 or less rank worse
Orange, between 25 and 50 Yellow, between 50
and 75 Light green between 75 and 90 Dark
green over 90
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Traffic Light Map Latin AmericaControl of
Corruption 2000/01
Source for data http//www.worldbank.org/wbi/gove
rnance/govdata2001.htm Map downloaded from
http//info.worldbank.org/governance/kkz/gov2001ma
p.asp Colors are assigned according to the
following criteria Red, 25 or less rank worse
Orange, between 25 and 50 Yellow, between 50
and 75 Light Green between 75 and 90 Dark
Green above 90
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Mapa Luz de Semaforo America LatinaControl
de la Corrupción 2000/01, Ajustado por Ingreso
Fuente de datos http//www.worldbank.org/wbi/gove
rnance/govdata2001.htm Grafico bajado de
http//info.worldbank.org/governance/kkz/gov2001ma
p.asp Los colores estan assignados de acuerdo a
los siguientes criterios Rojo, 25 o menos
Naranja, entre 25 y 50 Amarillo, entre 50 y
75 Verte, mas de 75
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Traffic Light Map Latin AmericaVoice and
Accountability 2000/01
Source for data http//www.worldbank.org/wbi/gove
rnance/govdata2001.htm Map downloaded from
http//info.worldbank.org/governance/kkz/gov2001ma
p.asp Colors are assigned according to the
following criteria Red, 25 or less rank worse
Orange, between 25 and 50 Yellow, between 50
and 75 Light Green between 75 and 90 Dark
Green above 90
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Mapa Luz de Semaforo America LatinaVoz y
Rendición de Cuentas 2000/01, Ajustado por
ingreso
Fuente de datos http//www.worldbank.org/wbi/gove
rnance/govdata2001.htm Grafico bajado de
http//info.worldbank.org/governance/kkz/gov2001ma
p.asp Los colores estan assignados de acuerdo a
los siguientes criterios Rojo, 25 o menos
Naranja, entre 25 y 50 Amarillo, entre 50 y
75 Verte, mas de 75
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Zimbabwe Over Time (vs. Botswana)6 Aggregate
Governance Indicators (Percentile Rankings,
1997-98 / 2000-01)
Rankings were calculated on the basis of 2001 and
1998 country estimates. Sources KKZ98/KKZ01.
Number of countries in worldwide sample,
depending on component of governance ranges
between 161 and 194.
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The Dividend of Good Governance

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Probabilidad de Perder su Inversion Extranjera
por Corrupcion(Dentro de 5 anhos. SP/DRI, 2000,
Algunos paises selectos sujeto a margen de
error, ilustrativo)
Con Certeza

Probability of Losing FDI due to Corruption
No pierde
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Lower Income Households Pay Disproportionally
Bribe/Total Income ratio ( A Latin American
Country )
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Romania Disproportionally Negative Impact on
the Poor
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Citizen Voice Improves Accessibility of Public
Services to the Poor
Based on Public Officials Survey. The sample of
institutions includes 44 national, departmental,
and municipal agencies which are a prior
anticipated to be accessible to the poor
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Citizen Voice Helps Control Bribery in country in
LatAm
Based on 90 national, departmental, and municipal
agencies covered in the Bolivia Public Officials
Survey.
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Transparency within Government Agencies Prevents
Purchase of Public Positions
Based on 90 national, departmental, and municipal
agencies covered in the Public Officials Survey.
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Defining and Measuring State Capture

• Elite firms illicitly shape rules of the game to
  their advantage, particularly through
• private purchase of legislative votes
• private purchase of executive decrees
• private purchase of court decisions
• Illicit influence of Central Bank
  regulations/policies
• illicit political party financing

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An Index of State Capture
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Measuring State Capture
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at an enormous Socio-Economic Cost
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Do Foreign Firms bring Good Governance?
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Towards a SolutionMore Political Competition
Pace of Econ Reform
Political Reforms
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Towards a Solution Collective Action by Firms
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• Una formula simple en el proceso anti-corrupción
• AC D L A
• Anti-corrupción Datos.Informacion
• ... Liderazgo
  ...
• ... Accion Colectiva

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Strategic Implications for Debate

• Prioritized, Differentiated Comprehensiveness
• Governance Indicators as strategic input, for
  Monitoring, for lessons from failures and
  successes
• Need to complement with in-depth country
  Diagnostic
• Emphasize role of Incentives
• Addressing challenge of State Capture (not just
  govt)
• Upgrade role of private/business sector /
  associations
• Citizen Voice and Transparency as key
  developmental variables -- Collective Action
  Power of Data

Webtool access to data, charts, analysis and
methods http//www.worldbank.org/wbi/governance/

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Datos Presentados por el Analisis e información
de Consejos Politicos, no para Precisar Rankings

• Los datos contenidos en esta presentación se
  originan de encuestas de muchas fuentes (y
  agencias de rating) y están sujetas a un margen
  de error. El propósito es de ilustrar
  características de gobernabilidad para analizar y
  discutir implicaciones. No se intenta en esto
  jerarquizar/ranking de países con estas fuentes
  externas, sino estudiar los retos al niver
  micro dentro de cada pais. Estos datos y
  resultados no necesariamente refleja opiniones
  algunas del Banco Mundial o su Junta Directiva.

Para mas informacion y datos, visitar
http//www.worldbank.org/wbi/governance