What is good governance: main aspects and characteristics

Roman Mogilevsky

Center for Social and Economic Research

CASE-KyrgyzstanPresentation at the Roundtable VIII of the Fostering Global

Responsibility Project, Chisinau, Moldova, 10 June 2010

KYRGYZSTAN

Contents

Notion and definitions of governance

Importance of good governance for development

Key areas of governance

Measuring governance

Practical implications

2

Development and governance

Early thinking– resource scarcity is a cause of poverty and under-development; so, more resources are needed

Next step – right policies

Next step – right (formal) institutions

Next step – rules, which govern formation and functioning of society-specific institutions

Governance is a key

3

Definitions of governance

Many definitions exist

“Traditions and institutions by which authority in a country is exercised” (World Bank)

“The process of decision-making and the process by which decisions are implemented” (UNESCAP)

“Governance refers to the formation and stewardship of the formal and informal rules that regulate the public realm, the arena in which state as well as economic and societal actors interact to make decisions” (ODI)

International, national, local, corporate governance4

The role of governance on national and local level

Key factors of development—education, health, security etc.—are public goods to be provided by central and local governments

The share of GDP managed by government is positively correlated with the level of country’s development

Performance of government is a central component of governance and a pre-requisite for successful development of a country

5

Good governance

Some types of governance produce better outcomes than others

Understanding of good governance inspired by Universal Declaration of Human Rights

Principles of good governance

6

Dimensions of governance (WGI)

7

Voice and Accountability

Political Stability and Absence of Violence

Government Effectiveness

Regulatory Quality

Rule of Law

Control of Corruption

Arenas of governance (WGA)

Civil society

Political society

Government

Bureaucracy

Economic society

Judiciary

8

Measuring governance

Many frameworks exist

All contain expert judgment as a key element

International and local experts

Two examples:

World Governance Indicators (WGI)

World Governance Assessment (WGA)9

World Governance Indicators

Developed by the World Bank

Period from 1996 to 2008

212 countries and territories

Six aggregate indicators measuring various dimensions of governance

Range from -2.5 to 2.5; the higher the better

Based on hundreds of specific and disaggregated individual variables

10

World Governance Indicators (2)35 data sources provided by 33 different

organizations

Some data sources:

Allow for cross-country comparisons and for measuring progress over time 11

- Afrobarometer - Freedom House

- Business Environment and Enterprise Performance Survey

- WEF Global Competitiveness Survey

- Bertelsmann Transformation Index - EBRD Transition Report

- Heritage Foundation Index of Economic Freedom

- Open Budget Index

Etc.

World Governance Assessment

Initiated by the UN University (Tokyo) and continued by ODI/DHF

Two rounds – 2000-2001 (23 countries) and 2006 (10 countries, of which 6 countries for the second time)

Survey of 70-80 Well-Informed Persons (WIPs) in every participating country

WIPs represent ten categories: Academics, Business, Civil Servants, Government Ministers, International Organizations, Judicial, Media, NGOs, Parliamentarians, and Religious 12

World Governance Assessment (2)36 indicators/questions

Each question relates to the situation now and five years ago

Response scale from 1 (very low quality) to 5 (very high quality)

Comments of WIPs and country coordinators

Comparable with other governance measuring techniques

Allow for cross-country comparisons and for measuring progress over time

13

Use of governance assessmentsAnalytical work, formation of policy agenda and

advocacy

Allocation of aid resources by international financial institutions – governance indices as a proxy for absorption capacity

- Country Policy and Institutional Assessments by the World Bank, African Development Bank, Asian Development Bank

- Rural Sector Performance Assessments by the International Fund for Agricultural Development

14

Governance agenda in relations between donors and recipient countries

Governance-related issues are perhaps the most sensitive part of donors’ conditionality

Donor-government conflicts around governance are many and sometimes end with non-disbursement of originally planned amounts

In many cases, governments opt for imitation of governance reforms rather than introducing real, often politically-painful, reforms

15

Governance agenda in relations between donors and recipient countries (2)

Donors’ approaches to governance reforms are not without drawbacks:

- too much emphasis on imports of institutions

- insufficient understanding of informal rules and vested interests in recipient countries

- too much attention to reform outputs (e.g., establishing an institution), too little attention to outcomes/impact (what it is actually doing)

- no built-in M&E mechanisms16

Governance agenda in relations between donors and recipient countries (3)

In some cases donors are more interested in disbursements than in promoting good governance

Principal-agent problem: principals (societies in both donor and recipient countries) are interested in governance reforms, agents (recipient governments and donor agencies) may have a different incentive structure

The role for NDGOs both from donor and recipient countries – to fix the incentive structure for the agents

17

Conclusions

Good governance is a key for development

Governance is measurable, and different measures could be used for solving different problems

Governance agenda is very important in donor-recipient relationships

Non-governmental players have a crucial role in keeping governance issues really high on the development agenda

18

Thank you!

19

20

0

5

10

15

20

25

30

35

Top ten HDI HDI ranks 41 -50 (EU NMS)

HDI ranks 111 -120 (some FSU)

Bottom ten HDI

% G

DP

Median size of government expenses

Sources: HDR 2009, Worldwide Development Indicators

21

22

Voice and Accountability

The extent to which a country's citizens are able to participate in selecting their government, as well as freedom of expression, freedom of association, and a free media

23

Political Stability and Absence of Violence

Likelihood that the government will be destabilized or overthrown by unconstitutional or violent means

24

Government Effectiveness

Quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government's commitment to such policies

25

Regulatory Quality

Ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development

26

Rule of Law The extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, property rights, the police, and the courts, as well as the likelihood of crime and violence

27

Control of Corruption

The extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as "capture" of the state by elites and private interests

28

-2.5-2.0-1.5-1.0-0.50.00.51.01.52.02.5

Norway -the best

performer

Czech Republic

Hungary Slovak Republic

Poland Moldova Myanma - the worst performer

Voice and Accountability

-3.5-3.0-2.5-2.0-1.5-1.0-0.50.00.51.01.52.02.5

Luxemburg - the best

performer

Czech Republic

Slovak Republic

Poland Hungary Moldova Somalia - the worst

performer

Political Stability and Absence of Violence

-2.5-2.0-1.5-1.0-0.50.00.51.01.52.02.5

Singapore - the best

performer

Czech Republic

Slovak Republic

Hungary Poland Moldova Somalia - the worst performer

Government Effectiveness

-3.0-2.5-2.0-1.5-1.0-0.50.00.51.01.52.02.5

Hong Kong - the best

performer

Hungary Slovak Republic

Czech Republic

Poland Moldova Somalia - the worst performer

Regulatory Quality

-3.0-2.5-2.0-1.5-1.0-0.50.00.51.01.52.02.5

Norway -the best

performer

Czech Republic

Hungary Slovak Republic

Poland Moldova Somalia - the worst performer

Rule of Law

-2.5-2.0-1.5-1.0-0.50.00.51.01.52.02.5

Finland -the best

performer

Hungary Slovak Republic

Poland Czech Republic

Moldova Somalia - the worst performer

Control of Corruption

29

0.20

0.40

0.60

0.80

1.00

1.20

1996 1998 2000 2002 2004 2006 2008

Czech RepublicVoice and Accountability

Political Stability and Absence of Violence

Government Effectiveness

Regulatory Quality

Rule of Law

Control of Corruption 0.40

0.60

0.80

1.00

1.20

1.40

1996 1998 2000 2002 2004 2006 2008

HungaryVoice and Accountability

Political Stability and Absence of Violence

Government Effectiveness

Regulatory Quality

Rule of Law

Control of Corruption

-1.20

-1.00

-0.80

-0.60

-0.40

-0.20

0.00

0.20

1996 1998 2000 2002 2004 2006 2008

MoldovaVoice and Accountability

Political Stability and Absence of Violence

Government Effectiveness

Regulatory Quality

Rule of Law

Control of Corruption

0.20

0.40

0.60

0.80

1.00

1.20

1996 1998 2000 2002 2004 2006 2008

PolandVoice and Accountability

Political Stability and Absence of Violence

Government Effectiveness

Regulatory Quality

Rule of Law

Control of Corruption -0.20

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1996 1998 2000 2002 2004 2006 2008

Slovak RepublicVoice and Accountability

Political Stability and Absence of Violence

Government Effectiveness

Regulatory Quality

Rule of Law

Control of Corruption

30

31

36

72

108

144

180

Argentina Bulgaria Indonesia Kyrgyzstan Mongolia Namibia Palestine Peru Trinidad and Tobago

Uganda

WGA overall mean scores 2001 and 2006 by country

2001 2006