Can access to information and transparency reforms improve governance and development outcomes? How can transparency reforms be empirically measured and effectively implemented? This World Bank paper reviews existing literature and develops and applies a new transparency index for 194 countries. While causality remains difficult to determine, transparency is associated with better socio-economic and human development indicators, and with higher competitiveness and lower corruption. Where there is political will for transparency reform, much progress can be made without excessive resource requirements.
There have been many conceptual advances in linking government transparency with development, but less progress in empirical measurement and analysis of transparency reforms and in their implementation. Definitions of transparency generally make reference to both the amount of information institutions should release as well as its scope, accuracy and timeliness. Transparency is also related to accountability, and the information provided needs to account for institutions’ performance.
Transparency is important not only because it increases efficiency in the allocation of resources, but also because it may help in ensuring that the benefits of growth are redistributed and not captured by the elite. The social contract by which citizens grant power to the executive and demand accountability in return lies at the core of the development process. Transparency can guard against mismanagement and corruption and can increase faith in government and social cohesion. To be effective, however, the provision of information needs to be selective and targeted at groups who can analyse and act on it.
The authors develop a transparency index with two components: (1) economic and institutional transparency; and (2) political transparency. Application of this index to data on 194 countries finds that:
- Levels of transparency vary considerably between different countries, but there are transparency challenges in all regions and income categories.
- Political transparency shows much greater variability than economic and institutional transparency. Political transparency is highly significant in influencing the degree of economic and institutional transparency.
- Transparency varies systematically with income, and countries ranking higher in wealth are also more transparent.
- A more transparent institutional environment can help to increase the rate of return on investments in many ways. Transparency in the public sector can promote competition, reduce corruption and increase government effectiveness.
- Transparency is correlated with indicators of better economic and human development. However, more work needs to be done to disentangle the causal relationship between transparency and development.
Many advances in transparency require political will but not significant resources. Donors should support countries which have shown political will by undertaking some transparency reforms but which need assistance to implement more challenging reforms. Further policy implications include:
- The obstacles to building state capacity are at least as political as they are technical and therefore more attention should be paid to the demand side. Increased transparency can provide incentives for politicians to serve a broader range of groups.
- As transparency reforms are effective in mobilising social support and are not necessarily intensive in resource requirements, they can provide entry points to other institutional reforms.
- While some progress has been made in many countries in economic transparency, this is not the case in political transparency. Top-down oversight strategies need to be complemented with bottom-up mechanisms to improve accountability.
- Transparency reforms are not as costly as other institutional reforms, and once the efficiency savings they create are factored in, they are likely to be huge net savers of resources.
- Such reforms can also be substitutes for the common tendency in governance or institutional reforms to over-regulate, and are less coercive and more politically feasible.