Tuesday, September 28, 2010

[EQ] The Worldwide Governance Indicators: Methodology and Analytical Issues

The Worldwide Governance Indicators: Methodology and Analytical Issues

Daniel Kaufmann, Brookings Institution
Aart Kraay and Massimo Mastruzzi,World Bank
September, 2010

Available online PDF [29p.] at http://bit.ly/aDDvoA

 

“……The Worldwide Governance Indicators (WGI) are a long standing research project to develop cross country indicators of governance.

 

The WGI consist of six composite indicators of broad dimensions of governance covering over 200 countries since 1996:

- Voice and Accountability,

- Political Stability and

- Absence of Violence/Terrorism,

- Government Effectiveness, 

- Regulatory Quality,

- Rule of Law, and

- Control of Corruption.



These indicators are based on several hundred variables obtained from 31 different data sources, capturing governance perceptions as reported by survey respondents, non governmental organizations, commercial business information providers, and public sector organizations worldwide.

 

This paper summarizes the methodology and key analytical issues relevant to the overall WGI project. The updated data for the six indicators, together with the underlying source data and the details of the 2010 update of the WGI, are not discussed in this paper but are available online at www.govindicators.org.

We also plan to release and document subsequent updates of the WGI purely online, with this paper serving as a guide to the overall methodological issues relevant to the WGI project and future updates.

In the WGI we draw together data on perceptions of governance from a wide variety of sources, and organize them into six clusters corresponding to the six broad dimensions of governance listed above.


For each of these clusters we then use a statistical methodology known as an Unobserved Components Model to

(i) standardize the data from these very diverse sources into comparable units,

(ii) construct an aggregate indicator of governance as a weighted average of the underlying source variables, and

(iii) construct margins of error that reflect the unavoidable imprecision in measuring governance.

 

The rest of this paper is organized as follows.

In the next section we discuss the definition of governance that motivates the six broad indicators that we construct.

Section 3 describes the source data on governance perceptions on which the WGI project is based.

Section 4 provides details on the statistical methodology used to construct the aggregate indicators, and

Section 5 offers a guide to interpreting the data.

Section 6 contains a review of some of the main analytic issues in the construction and use of the WGI, and

Section 7 concludes………

 

RELATED CONTENT

Governance Matters 2010: Worldwide Governance Indicators Highlight Governance Successes, Reversals, and Failures

Daniel Kaufmann

Governance Matters 2009: Learning From Over a Decade of the Worldwide Governance Indicators

Daniel Kaufmann, Aart Kraay and Massimo Mastruzzi

Governance Matters VIII: Aggregate and Individual Governance Indicators, 1996-2008

Daniel Kaufmann, Aart Kraay and Massimo Mastruzzi


 

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