Governance Matters: P R W P 2 196

POLICY RESEARCH WORKING PAPER 2 196
Governance Matters Six new aggregate measures

capturing various
dimensions of governance
Daniel Kaufmann provide new evidence of a
Aart Kraay strong causal relationship
Pablo Zoido-Lobatón from better governance to
better development
outcomes.
The World Bank

Development Research Group
Macroeconomics and Growth
and
World Bank Institute
Governance, Regulation and Finance
October 1999
P O L I C Y R E S E A R C H W O R K I N G P A P E R 2196
Summary findings
In a cross-section of more than 150 countries, the companion paper by Kaufmann, Kraay, and Zoido-
Kaufmann, Kraay, and Zoido-Lobatón provide new Lobatón, “Aggregating Governance Indicators,” Policy
empirical evidence of a strong causal relationship from Research Working Paper 2195), they then contruct six
better governance to better development outcomes. aggregate indicators corresponding to six basic
They base their analysis on a new database containing governance concepts: voice and accountability, political
more than 300 governance indicators compiled from a instability and violence, government effectiveness,
variety of sources. They provide a detailed description regulatory burden, rule of law, and graft. As measured
of each of these indicators and sources. Using an by these indicators, governance matters for
unobserved components methodology (described in development outcomes.
This paper—a joint product of Macroeconomics and Growth, Development Research Group; and Governance, Regulation,
and Finance, World Bank Institute—is part of a larger effort in the Bank to study the causes and consequences of governance
for development. Copies of this paper are available free from the World Bank, 1818 H Street, N.W., Washington, DC 20433.
Please contact Diane Bouvet, Room J3-273, telephone 202-473-5818, fax 202-334-8350, email dbouvet@worldbank.org. This
paper is also available on the Web at http://www.worldbank.org/wbi/governance/working_papers.htm. The authors may be
contacted at dkaufmann@worldbank.org, akraay@worldbank.org, or pzoidolobaton@worldbank.org. October 1999. (60 pages)
The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development
issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the
names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely
those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent.
Produced by the Policy Research Dissemination Center

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Governance Matters: P R W P 2 196

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POLICY RESEARCH WORKING PAPER 2 196

Governance Matters Six new aggregate measures

The World Bank

Produced by the Policy Research Dissemination Center

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