2. Governance: concepts and measurements
The term of governance appears in the French language at the
beginning of the 1 3th century as equivalent to the term of
government1. Since the beginning of the 1990is, the
governance has been a fashionable word. It is a term carrying several meanings
and in constant evolution. This word has more than one meaning: first it refers
to companies' governance or "corporate governance", the second to the global
governance, the third to the national governance and finally the fourth to the
local governance. It is the national governance which specifically interests us
in this work.
The concept of national governance and the expression
«good governance" appear at the beginning of the 1 990s, in the
vocabulary used by the vast international institutions and more particularly
the World Bank In 1992, the latter defines governance as the way in which the
power is exerted to manage the economic and social resources of a country. For
the World Bank good governance is a sign of a healthily managed development
(World Bank, 1992).Today this concept has been adopted by development agencies
and the various international or regional organizations. Each has developed its
own definition of governance.
In the continuation of our work, we mean by governance «
the traditions and institutions by which authority in a country is exercised.
This includes (1) the process by which governments are selected, monitored and
replaced, (2) the capability of the government to effectively formulate and
implement sound policies, and (3) the respect of citizens and the state for the
institutions that govern economic and social interactions among them"
(Kaufmann, Kraay & Zoido-Lobaton 1999; p. 1). They then construct six
1 The Robert, Historic Dictionary of the French
Language, Paris 1992, opt quoted Campbell.
aggregate indicators corresponding to six basic governance
concepts: voice and accountability, political instability and
violence, government effectiveness, regulatory burden, rule of law, and graft.
We preferred this definition to the one provided by the World Bank because it
takes into account the nature of the political régimes.
In spite of its importance, the governance remains an evasive
concept without any clear consensus regarding the subject of what it consists
of. The question of the governance takes us then to that of the institutions
and the study of the first one must necessarily pass by the study of the
question of the ability of institutions to support the growth. Indeed, no clear
distinction can be made between the concept of governance and institutional
factor. Institutions generally correspond to a broader concept which includes
the formal and informal constraints, rules and laws which are associated not
only with the state's functioning but also with that of the private
entities.2
The recent interest for governance and its economic
consequences accompanied the need to evaluate its various dimensions. Today
measuring the governance is as important well from the point of view of the
national policy, as it is from of the international economic relations point of
view or from the point of view of research in economic and political
sciences.
There are different types of indicators: data resulting from
investigations, those from experts' surveys and aggregate indicators. Data
resulting from investigations are indicators related to the national averages
of the answers to the questions raised in connection with the governance. An
example of these investigations is World Business Environment Survey 2000
(WBES). We also point out to the data resulting from experts' surveys
which consist of classifications generally produced by rating agencies,
nongovernmental organizations (NGO) or international organizations. They are
made in a consensual way starting from the judgments of individuals who know
relatively well the reality of the country which they evaluate. A private
agency of risk notation, The Political Risk Service Group (PRSG), produces
database entitled research data set. It contains
02 World Economic Survey, chapter V: « Diverging
Growth and Development », Development Policy and Analysis Division.
annual evaluations on the quality of governance over the
period 1984-2006.Those are built starting from monthly data of the
International Country Risk Guide (ICRG), one of the products of the PRSG.
This database offers measurements of the various aspects of
governance like political stability, ethnic tensions or internal conflicts. In
this article, we are going to use five indicators of this database: corruption
(COR), Law and Order (LO), democratic accountability (DA), bureaucratic quality
(BQ) and Government Stability (GS). The first three indicators go from 0 to 6,
the fourth from 0 to 4 and the last one goes from 0 to 12. In all the cases,
the highest values reflect better notes, i.e. less corruption, a more effective
legal system, a better democratic accountability, a better bureaucracy, and low
government instability.
The corruption indicator measures the abuse of the public
power when it is exercised for private gain. Low scores indicate that senior
officials are very corruptible and that corruption is generalized in the whole
administration. The quality indicator of the legal system reflects the power
and the impartiality of the legal system as well as the observance of the law.
The indicator of the democratic accountability reflects the capacity of the
government to install a democratic society. The indicator of the bureaucracy
quality measures at the same time the independence and the autonomy of the
administration with respect to the political power and the changesb of the
executive power, as well as the incentives which the civil servants have to
work through mechanisms of recruitment and promotion. Lastly, the indicator of
political stability reflects political violence and instability in the
country.
Composite indicators are generally those of the World Bank and
Transparency International. Since 1995, Transparency
International has annually produced a Corruption Perceptions Index (CPI).
The World Bank provides a database named World Wide Governance Research
Indicators, also called by the name of its authors Kauffman, Kraay and
Mastruzzi (2006). This database consists of six indicators of governance,
obtained for 213 autonomous countries and territories, at six different dates:
1996, 1998, 2000, 2002, 2004 and 2005. The Indicators diversity is explained by
the complexity and
multidimensional character of the governance. These six
indicators which will be used in our work are the following:
1- Control of Corruption (CC) - measuring 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 interest;
2- Government Effectiveness (GE) - measuring the
quality of public services, the quality of the civil service and the degree of
its independence from political pressures, the quality of policy formulation
and implementation, and the credibility of the government's commitment to such
policies;
3- Political Stability (PS) - measuring perceptions
of the likelihood that the government will be destabilized or overthrown by
unconstitutional or violent means, including domestic violence and
terrorism;
4- Rule of Law (RL) - measuring the extent to which
agents have confidence in and abide by the rules of society, and in particular
the quality of contract enforcement, the police, and the courts, as well as the
likelihood of crime and violence;
5- Regulatory Quality (RQ) - measuring the ability
of the government to formulate and implement sound policies and regulations
that permit and promote private sector development;
6- Voice and Accountability (VA) - measuring 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.
These indicators are qualified as composites or aggregate ones
because they are elaborate starting from the results of investigations and
rating of experts relating to corruption and other aspects of governance.
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