Worldwide Governance Indicators (WGI) www.govindicators.org Aart Kraay, Development Research Group World Bank Youth Summit Workshop October 7, 2014 The WGI are a research dataset. The indicators do not reflect the official views of the World Bank, its Executive Directors, or the Countries they represent.

Overview Aggregate indicators of six broad dimensions of governance Voice and Accountability Political Stability and Absence of Violence/Terrorism Government Effectiveness Regulatory Quality Rule of Law Control of Corruption Covering 215 countries/territories, 1996-2013

WGI Are Aggregate Indicators Synthesizing information from from 30 different existing data sources Two main types: Surveys of households and firms, e.g. Gallup World Poll, World Economic Forum enterprise surveys Expert Assessments by (i) commercial rating agencies such as EIU, Global Insight; (ii) NGOs such as Freedom House, Global Integrity; (iii) public sector agencies such as US State Dept Trafficking in Persons, World Bank CPIA

WGI Rely on Subjective Perceptions of Governance Perceptions matter: people act based on their view of how much they trust government, believe in elections, feel police can help them, etc. Perceptions complement “de jure” data: especially when rules on paper are not well-enforced in practice Perceptions are sometimes the only alternative: especially when measuring things that are formally illegal such as corruption

Aggregation At Work Many different indicators of broader concepts of governance, e.g. Trust in police -> RULE OF LAW Satisfaction with public services -> GOVERNMENT EFFECTIVENESS Trust in elections -> VOICE AND ACCOUNTABILITY Personal experience with bribery -> CONTROL OF CORRUPTION Assign several hundred such variables to six broad dimensions of governance

Benefits of Aggregation WGI are a (somewhat sophisticated) average of the many different questions within each of six broad topics Average gives sense of extent to which sources agree with each other, but… Standard errors give sense of extent to which sources disagree with each other Latter as important as former for interpretation of governance data!

Illustration: WGI Rule of Law Length of bar shows rank among all countries (higher is better)

Illustration: WGI Rule of Law Black lines are “margins of error” – 90% chance that “true” value lies somewhere in this range

Illustration: WGI Rule of Law Who’s better in 2008?

Illustration: WGI Rule of Law Is Uganda improving?

Not All Bad News Many “statistically significant” comparisons are possible – both over time and across countries However is very important to take margins of error into account when comparing governance across countries Measuring governance is inherently imprecise undertaking – uncertainty is present in all governance indicators even if it is not noted/acknowledged explicitly

Aggregate Indicators

Underlying Source Data

Case Study: WGI Control of Corruption and MCC Eligibility US Millennium Challenge Corporation gives grant aid based on set of indicator-based eligibility criteria Ruling Justly (6 indicators) Investing in People (6 indicators) Economic Freedom (8 indicators) “hard hurdle” on corruption: country must be in top half of eligible countries in order to receive MCC aid

FY15 Potentially-Eligible LICs

FY15 Potentially-Eligible LICs Median = -0.73

Questions to Think About How would countries like Benin and Burkina Faso fare relative to this criterion? How should threshold criteria be interpreted? How might countries be misclassified using a criteria like this? How should “borderline” countries be treated? What would you do differently?

Basic Data: Control of Corruption 2013

Margins of Error Are Important

Margins of Error Are Important

Classify by Probability?

Classify by Probability?

Classify by Probability?

Classify by Probability? Burkina Faso Benin

Thank you For more information and to access WGI data, visit www.govindicators.org