Governance assessments are based on subjective indicators (or measures), objective indicators or a combination of the two, known as composite indicators. Composite indicators are the most popular and are used by international organisations, donors, investors and the media (Arndt, 2008). Of these the most popular seems to be the World Bank’s World Governance Indicators (WGIs). Transparency International’s Corruption Perceptions Index (CPI) and the World Bank/International Finance Corporation’s Doing Business Indicators are also in common use. The main use of governance indicators by international organisation and donors is to incentivise developing nations to improve their governance and to improve the allocation of aid.
There are numerous criticisms of the commonly employed measurements specific to types of assessments and assessments in general. There is debate over the sources used – whether sources are reliable, and how many and which sources provide the best measurements. A change in the mixture of sources used impacts conceptual and statistical precision. Another common criticism relates to the margin of error. This is often routinely ignored by those who use these measurements, such that cited differences between countries and between different times are, in fact, not statistically significant. Other criticisms are that measurements lack transparency, suffer from selection bias and do not help developing countries identify how to improve the quality of governance. At the same time there is a growing resistance by developing countries to indicators that are developed and used by ‘outsiders’. New forms of assessments are increasingly country-led, and in some cases continent-led such as the African Peer Review Mechanism (APRM).
