How can the measurement of governance be enhanced? This World Bank paper highlights key issues for users and providers of governance indicators. It contends that: (1) all governance indicators have weaknesses; (2) there are no easy solutions in measuring governance; and that (3) the links from governance to development outcomes are complex. Policymakers should view the different types of indicators as complementary rather than competing.
A wide range of indicators – both across and within countries – are currently available to measure governance and the investment climate. However, any proxy for governance is by definition an imperfect measure of broader governance dimensions. The failure to disclose margins of error may lead to a false sense of accuracy or to an over-interpretation of small changes over time or across countries. Further, even ‘improved’ indicators (such as ‘second-generation’ and ‘actionable’ indicators) are insufficient in themselves. It is therefore important to move beyond false dichotomies (aggregative versus individual, objective versus subjective, ‘action-worthy’ versus outcome) and recognise the complementarity among different approaches to measuring governance.
The complex relationship between governance and development outcomes must be taken into account when measuring governance.
- Focusing on highly specific ‘actionable’ indicators is not necessarily useful. The areas of governance within policymakers’ control and therefore amenable to ‘actionable’ measurement may not be areas that impact significantly on development outcomes.
- Attention should be paid to ‘action-worthy’ indicators in order to ensure support for difficult reforms that are essential for impact.
- Outcome indicators are also important for measuring what is happening on the ground, taking account of the views of citizens, the private sector and experts.
Policymakers must recognise and fully exploit the synergies among different types of indicators (including aggregate and individual, objective and subjective, ‘action-worthy’ and outcome). Integrated governance tools such as the Kenya Governance Assessment illustrate the benefits of such an approach. Other recommendations include:
- Recognise the existence and impact of margins of error for all types of governance indicators.
- Fully disclose the margins of error, sources and methodology used in developing governance indicators. The importance of public access to governance indicators should also be emphasised to guarantee transparency and credibility.
- Make more effective use of existing governance indicators, while also supporting efforts to improve on them and to develop new indicators.
- Support the collection of data on “action-worthy” indicators, rather than focusing simply on “actionable” or overly-narrow indicators.
- Continue to use and refine outcome indicators as an essential part of the governance diagnostic process. This is particularly relevant due to the challenges in linking action with governance results on the ground.
- Avoid reliance on any one type of indicator to inform key policy or aid decisions.
