Worldwide Governance Indicators Show Some Countries
Making Progress in Governance and in Fighting Corruption
Contacts
In Washington: Christopher Neal (202) 473-4029
cneal1@worldbank.org
Ekaterina Svirina (202) 458-1042
esvirina@worldbank.org

WASHINGTON, June 24, 2008 — This year’s updated version of the Worldwide Governance Indicators (WGI) compiled by World Bank researchers
shows many developing country governments making important gains in control of corruption, and some of them matching rich country performance in
overall governance measures.

“Some countries are making rapid progress in governance, including in Africa, showing that a measure of ‘Afro-optimism’ is called for”, said Daniel
Kaufmann, co-author of the report and Director of Governance at the World Bank Institute, while acknowledging that the data also shows large
variation in performance across countries, and even among neighbors within each continent. “Progress reflects reforms in those countries where political
leaders, policymakers, civil society and the private sector view good governance and corruption control as crucial for sustained and shared growth.”

Good governance can be found at all income levels, with some emerging economies matching the performance of rich countries on key
dimensions of governance. Over a dozen emerging countries, including Slovenia, Chile, Botswana, Estonia, Uruguay, Czech Republic, Hungary,
Latvia, Lithuania, Mauritius, and Costa Rica score higher on key dimensions of governance than industrialized countries such as Greece or Italy. And in
many cases these differences are statistically significant.

Over 2002-2007, the Indicators show sharp improvements in governance, along with reversals. Examples include strong improvements in Voice
and Accountability in countries such as Ukraine and Haiti; improvements in Political Stability and Absence of Violence/Terrorism in Argentina; and
improvements in Control of Corruption in Georgia and Tanzania.

But despite governance gains in some countries, overall quality of governance around the world has not improved much over the past
decade. Coinciding with countries that have done well, a similar number have experienced deteriorations in several governance dimensions, including
Zimbabwe, Cote D’Ivoire, Belarus, Eritrea and Venezuela. In many other countries, no significant change in either direction is yet apparent in recent
years.

The Indicators suggest that where there is commitment to reform, improvements in governance can and do occur. Over the past decade
from 1998-2007, countries in all regions have shown substantial improvements in governance, even if at times starting from a very low level. Examples
include:
·        Ghana, Indonesia, Liberia and Peru in Voice and Accountability;
·        Rwanda, Algeria and Angola in Political Stability and Absence of Violence/Terrorism;
·        Afghanistan, Serbia and Ethiopia in Government Effectiveness;
·        Georgia and the Democratic Republic of Congo in Regulatory Quality;
·        Tajikistan in Rule of Law; and
·        Liberia and Serbia in Control of Corruption.

"The WGI and other efforts to measure are useful in prompting public discussion of governance challenges and successes" said Aart Kraay, coauthor
of the WGI and lead economist in the Development Research Group of the World Bank. "But at the same time, discussions of governance
based on empirical measures need to be realistic about the limits of existing data. In this respect it is important that users take seriously the margins
of error reported in the WGI, which reflect the inherent difficulties in measuring governance using any kind of data."

This year’s study is the seventh update of the WGI, a decade-long effort by the researchers to build and update the most comprehensive cross-country
set of governance indicators currently available. The newly released set of the six updated aggregate indicators, as well as data from the underlying
sources, are at www.govindicators.org. The Indicators cover 212 countries and territories, drawing on 35 different data sources to capture the views of
tens of thousands of survey respondents worldwide, as well as thousands of experts in the private, NGO, and public sectors. The WGI are used by
policymakers and civil society groups worldwide as a tool to assess governance challenges and monitor reforms, and by scholars researching the
causes and consequences of good governance.

Better governance helps in the fight against poverty and improves living standards. Research over the past decade shows that improved governance
raises development, and not the other way around. When governance is improved by one standard deviation, infant mortality declines by two-thirds and
incomes rise about three-fold in the long run. Such an improvement in governance is within reach, since it is a fraction of the difference between the
worst and best performers. For example, in the dimension of Rule of Law, one standard deviation is all that separates the very low ratings of Somalia or
Afghanistan from countries such as Kenya and Bolivia; or what separates these countries from countries such as Ghana or Egypt; or in turn what
separates Ghana or Egypt from Portugal or Estonia; or what separates these from the best performers such as Denmark or Switzerland.

Good governance has also been found to significantly enhance the effectiveness of development assistance in general, and of World Bank-funded
projects in particular.

"Until the mid-nineties, I did not think that governance could be measured. The Worldwide Governance Indicators have shown me otherwise” says
Shlomo Yitzhaki, Director of Israel’s Central Bureau of Statistics and Professor of Economics at the Hebrew University. "It constitutes
the state of the art on how to build periodic governance indicators which can be a crucial tool for
policy analysts and decision-makers benchmarking their countries. Uniquely, it publicly discloses the aggregated and disaggregated data, as well as the
estimated margins of error for each country. It definitely sets a standard for transparency in data."

                                                                           ###
The full “Governance Matters VII” paper, the synthesis of the main findings, and the new WGI data update are available at: http://www.govindicators.org.
                               The WGI do not reflect the official views of the World Bank, its Executive Directors, or the
                            countries they represent. The WGI are not used by the World Bank Group to allocate resources.
                                                                        -####-
                                                                     BACKGROUND

                                                 THE WORLDWIDE GOVERNANCE INDICATORS 2008

       As consensus concerning the importance of good governance for development and aid effectiveness has grown, so too have efforts to measure
and monitor governance performance.

         The Worldwide Governance Indicators (WGI) project attempts to measure governance by synthesizing the views and reports of diverse sources,
including Economist Intelligence Unit, Latinobarometro, Afrobarometer, World Economic Forum, Freedom House, Gallup World Poll, Bertelsmann
Transformation Index, Institutional Profile Database by French Government Agencies, OECD Development Center African Economic Outlook, Global
Integrity Index, Political and Economic Risk Consultancy in Asia, and Reporters without Borders, among others.

         Governance is defined by the WGI authors as the traditions and institutions by which authority in a country is exercised. This includes the
process by which governments are selected, monitored and replaced; the capacity of the government to effectively formulate and implement sound
policies; and the respect of citizens and the state for the institutions that govern economic and social interactions among them.

        The WGI measure six broad definitions of governance capturing the key elements of this definition:

       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.
       Political Stability and Absence of Violence: the likelihood that the government will be destabilized by unconstitutional or violent means,
       including terrorism.
       Government Effectiveness: the quality of public services, the capacity of the civil service and its independence from political pressures; the
       quality of policy formulation
       Regulatory Quality: the ability of the government to provide sound policies and regulations that enable and promote private sector development
       Rule of Law: the extent to which agents have confidence in and abide by the rules of society, including the quality of contract enforcement,
       property rights, the police, and the courts, as well as the likelihood of crime and violence.
       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