The World Bank
World Bank Institute
Global Governance Group
Development Research Group
Macroeconomics and Growth Team
The Policy Research Working Paper Series disseminates the fndings o\ue000 work in progress to encourage the exchange o\ue000 ideas about development issues. An objective o\ue000 the series is to get the fndings out quickly, even i\ue000 the presentations are less than \ue000ully polished. The papers carry the names o\ue000 the authors and should be cited accordingly. The fndings, interpretations, and conclusions expressed in this paper are entirely those o\ue000 the authors. They do not necessarily represent the views o\ue000 the International Bank \ue000or Reconstruction and Development/World Bank and its a\ue000fliated organizations, or those o\ue000 the Executive Directors o\ue000 the World Bank or the governments they represent.
Scholars, policymakers, aid donors, and aid recipients
acknowledge the importance o\ue000 good governance \ue000or
development. This understanding has spurred an intense
interest in more refned, nuanced, and policy-relevant
indicators o\ue000 governance. In this paper we review progress
to date in the area o\ue000 measuring governance, using
a simple \ue000ramework o\ue000 analysis \ue000ocusing on two key
questions: (i) what do we measure? and, (ii) whose views
do we rely on? For the \ue000ormer question, we distinguish
between indicators measuring \ue000ormal laws or rules 'on
the books', and indicators that measure the practical
application or outcomes o\ue000 these rules 'on the ground',
calling attention to the strengths and weaknesses o\ue000
both types o\ue000 indicators as well as the complementarities
between them. For the latter question, we distinguish
This paper\u2014a joint product o\ue000 the Global Governance Group, World Bank Institute, and the Macroeconomics and Growth Team, Development Research Group\u2014is part o\ue000 a larger e\ue000\ue000ort in the Bank to study governance. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The authors may be contacted at kdau\ue000mann@ worldbank.org, email@example.com.
between experts and survey respondents on whose views
governance assessments are based, again highlighting
their advantages, disadvantages, and complementarities.
We also review the merits o\ue000 aggregate as opposed to
individual governance indicators. We conclude with some
simple principles to guide the refnement o\ue000 existing
governance indicators and the development o\ue000 \ue000uture
indicators. We emphasize the need to: transparently
disclose and account \ue000or the margins o\ue000 error in all
indicators; draw \ue000rom a diversity o\ue000 indicators and exploit
complementarities among them; submit all indicators to
rigorous public and academic scrutiny; and, in light o\ue000
the lessons o\ue000 over a decade o\ue000 existing indicators, to be
realistic in the expectations o\ue000 \ue000uture indicators.
1818 H Street N.W., Washington, DC 20433, firstname.lastname@example.org, email@example.com. We
would like to thank Shanta Devarajan for encouraging us to write this survey for the World Bank Research
Observer, three anonymous referees for their helpful comments, and Massimo Mastruzzi for assistance.
The views expressed here are the authors' and do not necessarily reflect those of the World Bank, its
Executive Directors, or the countries they represent.
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