Daniel Kaufmann

Natural Resource Governance Institute (NRGI) · Also: Non-Resident Fellow, Global Economy, The Brookings Institution

The Arab Spring constitutes perhaps the most far-reaching political and economic transition since the end of communism in Europe. For too long, the economic aspirations of the people in the region, especially young people, have been ignored by leaders in Arab countries and abroad. Competing views as to how best to meet these aspirations are now bei...

Per capita incomes and the quality of governance are strongly positively correlated across countries. This can be seen in Figures 1A-C, which plot three measures of governance on the horizontal axis (control of corruption, the protection of property rights or rule of law, and voice and accountability) against real per capita GDP adjusted for differ...

The future is a chance you should take. It is a creation and everyone has his or her own vision. It will look the way we make it look. —Maja Sasek Over 5,000 children and students from Albania, Bosnia-Herzegovina, Bulgaria, FYR Macedonia, and Romania took part in art and essay contests on their vision of the future for themselves, their cities, and...

The authors use data from more than 6,000 World Bank projects evaluated between 1983 and 2009 to investigate macro and micro correlates of project outcomes. They find that country-level"macro"measures of the quality of policies and institutions are very strongly correlated with project outcomes, confirming the importance of country-level performanc...

We utilize survey data from over 11,000 firms operating in 125 countries and a profit-maximizing cost-benefit framework to study the determinants of procurement bribery. About one-third of firms bribe to secure public contracts, with an average bribe of 7.9% of the contract value. Econometric estimations suggest that the demand-side of good governa...

Thomas (2009) rejette les indicateurs mondiaux de gouvernance (IMG) en considérant qu′ils constituent une hypothèse élaborée mais non confirmée en raison de l′échec à démontrer la « validité de construit » de ces indicateurs. Nous soutenons que la « validité de construit » n′est pas un instrument utile pour évaluer les mérites des IMG et que, même...

This paper summarizes the methodology of the Worldwide Governance Indicators (WGI) project, and related analytical issues. The WGI cover over 200 countries and territories, measuring six dimensions of governance starting in 1996: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Qu...

This analysis of 'globalised' standard-setting processes draws together insights from law, political sciences, sociology and social anthropology to assess the authority and accountability of non-state actors and the legitimacy and effectiveness of the processes. The essays offer new understandings of current governance problems, including environme...

This paper reports on the 2009 update of the Worldwide Governance Indicators (WGI) research project, covering 212 countries and territories and measuring six dimensions of governance between 1996 and 2008: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and...

This paper reports on the latest update of the Worldwide Governance Indicators (WGI) research project, covering 212 countries and territories and measuring six dimensions of governance between 1996 and 2007: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, an...

The Asian financial crisis in the late 1990s not only highlighted the welfare consequences of transparency in the financial sector but also linked this relatively narrow problem to the broader context of transparency in governance. It has been observed that objections to transparency, often on flimsy pretexts, are common even in industrialized coun...

When seeking a public service, users may be required to pay in bribes more than the official price. Consequently, some users may be discouraged and choose not to seek a service due to the higher price imposed by the bribery"tax."This paper explores the price and quantity components of the relationship between governance and service delivery using m...

Scholars, policymakers, aid donors, and aid recipients acknowledge the importance of good governance for development. This understanding has spurred an intense interest in more refined, nuanced, and policy-relevant indicators of governance. In this paper we review progress to date in the area of measuring governance, using a simple framework of ana...

This paper reports on the latest update of the Worldwide Governance Indicators (WGI) research project, covering 212 countries and territories and measuring six dimensions of governance between 1996 and 2006: Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law, and Control...

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In this issue of the Journal of Politics, Marcus Kurtz and Andrew Shrank (hereafter KS) offer a sweeping critique of the exisiting literature on governance and growth. They argue that perceptions-based crosscountry measures of governance, and in particular those we have constructed in our ongoing work i , are fatally flawed. They also produce empir...

The Worldwide Governance Indicators, reporting estimates of six dimensions of governance for over 200 countries between 1996 and 2005, have become widely used among policymakers and academics. They have also attracted some explicit written criticisms. In this short paper the authors synthesize 11 critiques offered by four recent papers. They then r...

Over the past decade measuring corruption has become an ever-growing empirical field. Since the mid-nineties, we have undertaken various projects to measure corruption at the aggregate and disaggregated level. At the aggregate level, we have been constructing the Worldwide Governance Indicators that capture six dimensions of governance: Voice and A...

This paper proposes three principles for users and producers of governance indicators that both summarize the challenges in measurement and suggest ways forward: (1) all governance indicators have measurement error, (2) there are no silver bullets, and (3) the links from governance to development outcomes are complex. An overarching message is that...

The authors report on the latest version of the worldwide governance indicators, covering 213 countries and territories and measuring six dimensions of governance from 1996 until end-2005: voice and accountability, political stability and absence of violence, government effectiveness, regulatory quality, rule of law, and control of corruption. The...

This paper reports on the latest update of the worldwide governance indicators, covering 213 countries and territories and measuring six dimensions of governance: voice and accountability political stability and absence of violence, government effectiveness, regulatory quality, rule of law, and control of corruption.

A number of popular notions and outright myths on governance and corruption are addressed in this chapter. We distinguish clearly between governance and anti-corruption, while probing the links between both notions. In so doing we challenge the conventional definition of corruption as being too narrow, legalistic and unduly focused on the public se...

We challenge the conventional definition of corruption as the abuse of public office for private gain, making a distinction between legal and illegal forms of corruption, and paying more attention to corporate patterns of corruption (which also affect public corruption). We undertake to identify general determinants of the pattern of legal and ille...

Major conceptual contributions of a number of Nobel-laureates in putting forth a framework linking the citizenry's right to know and access to information with development, have already had a major influence in various fields. However, implementation of transparency-related reforms on the ground remains checkered around the globe. Further, in contr...

Is good governance and controlling corruption really so fundamental for development? The explosion of empirical research over the past decade, coupled with lessons from countries own experience, have given us a more solid basis for judging the effect of governance on development, and the effectiveness - or lack thereof - of strategies to improve it...

Major conceptual contributions of a number of Nobel-laureates in putting forth a framework linking the citizenry's right to know and access to information with development, have already had a major influence in various fields. However, implementation of transparency-related reforms on the ground remains checkered around the globe. Further, in contr...

Governance indicators are now widely used as tools for conducting development dialogue, allocating external assistance and influencing foreign direct investment. This paper argues that available governance indicators are not suitable for these purposes as they do not conceptualize governance and fail to capture how citizens perceive the governance...

This paper describes an ongoing project to measure governance using crosscountry perceptions data. The governance indicators measure six dimensions of governance and cover 209 countries and territories for 1996-2004. They are based on several hundred individual variables measuring perceptions of governance, drawn from 37 separate data sources const...

Traditionally, national governance and corruption challenges have been seen as: i) particularly daunting in the poorer countries, with the richer world viewed as exemplary; ii) anchored within a legalistic framework and focused on formal institutions, iii) a challenge within public sectors, and, iv) divorced from global governance or security issue...

Aid works best when it is directed to countries with relatively good institutions and policies. But how should good governance be measured, and how can aid allocation rules be designed in light of the strengths and weaknesses of existing measures? We address in brief a number of methodological and applied challenges, motivated by the U.S. governmen...

This paper is based on the governance chapter contribution to the 2003/04 Global Competitiveness Report (GCR). Building from the 2002/03 contribution to the GCR, it argues that governance continues to be at a crossroad, its underperformance being evident worldwide in most regions and across many countries. This ('governance policy gap') contrasts w...

This paper, a synthesis of salient findings of the authors’ book entitled “Investment Climate Around the World: Voices of the Firms from the World Business Environment Survey”, and based on a chapter in “Pathways Out of Poverty: Private Firms and Economic Mobility in Developing Countries”, by G. Fields and G. Pfeffermann, summarizes the salient fea...

We contribute to the field of urban governance and globalization through an empirically-based exploration of determinants of performance of cities. We construct a preliminary worldwide database for cities, containing variables and indicators of globalization (at the country and city level), city governance, city performance (access and quality of i...

Six dimensions of governance are estimated covering 199 countries and territories for four periods: 1996, 1998, 2000, and 2002. The indicators are based on several hundred individual variables measuring perceptions of governance drawn from 25 data sources constructed by 18 organizations. These individual measures are assigned to categories capturin...

There is now a substantial literature demonstrating the negative impact of inequality on economic growth and on a wide range of intermediate social and economic outcomes that affect growth.’ Linking these results to another well-established literature—the quality of institutions—Glaeser et al. (2002) have argued that inequality affects growth by su...

“Brought back from imprisonment. ” That is the longer, Latin-rooted dictionary definition of redux, 2 while another refers to the return from exile. More succinctly, the English definition refers to “brought back ” and cites “revived ” as its synonym. 3 Indeed, core aspects of governance were taboo for international financial institutions until not...

The authors present estimates of six dimensions of governance covering 199 countries and territories for four time periods: 1996, 1998, 2000, and 2002. These indicators are based on several hundred individual variables measuring perceptions of governance, drawn from 25 separate data sources constructed by 18 different organizations. The authors ass...

Recent studies have focussed on the characteristics and policies of the state to explain the extent and causes of corruption, with little attention paid to the role played by firms. Consequently, the links between corporate governance and national governance have been unexplored. This paper summarises the results of the Business Environment and Ent...

Based on the Business Environment and Enterprise Performance Survey (BEEPS) of firms in transition countries, which unbundles corruption to measure different types of corrupt transactions and provide detailed information on the characteristics and performance of firms, we find that: i) corruption reduces FDI inflows and attracts lower quality inves...

In this discussion draft, linking research findings with concrete operational challenges, we review key issues in worldwide governance, and present recent empirical evidence. Focusing on defining and unbundling key governance components, such as rule of law, voice and accountability, corruption control, and state capture, we then provide evidence w...

We are increasingly cognizant of the limits to large cross-country empirical studies in trying to understand in-depth a particular country reality, in ways useful for advice. At the same time, merely relying on a single country account at a particular point in time ignores the historical and comparative cross-country perspective. Worse, an in-depth...

We investigate the effect of financial liberalization on the probability of a banking crises in economies with poor transparency We construct a model with imperfect information where banks cannot distinguish between aggregate shocks on the one hand, and government’s policy and firms’ quality, on the other. Thus, a sequence of positive shocks or non...

The study of transparency is increasingly a more topical, broadly relevant, but also more under-researched enterprise. The Asian financial crisis has highlighted not only the welfare consequences of financial sector transparency, sparking a series of yet unresolved debates, but has also linked this relatively narrow problem to the broader context o...

This paper presents estimates of six dimensions of governance covering 199 countries and territories for four time periods: 1996, 1998, 2000, and 2002. These indicators are based on several hundred individual variables measuring perceptions of governance, drawn from 25 separate data sources constructed by 18 different organizations. We assign these...

this paper, we use data on economic rates of return (ERRs) from a set of 1,276 public and private investment projects to present new evidence on the importance of the policy environment for the productivity of investment projects. This unique data set has a number of advantages. It has a wide coverage across countries and over time; the indicator o...

This article argues that transparency is indispensable to the financial sector and describes its desirable characteristics: access, timeliness, relevance, and quality. The authors emphasize the need to weigh the costs and benefits of a more transparent regulatory policy, and they explore the connection between information imperfections, macroeconom...

This paper investigates whether resident enterprises' managers have an informational advantage about the countries where they work. We test this informational advantage hypothesis by using a unique dataset, the Global Competitiveness Survey. The findings suggest that local managers do have valuable information about the country where they reside. L...

Data from the 1999 Business Environment and Enterprise Performance Survey is used to examine state capture and influence in transition economies. We find that a capture economy has emerged in many transition countries, where rent-generating advantages are sold by public officials and politicians to private firms. While influence is a legacy of the...

This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection a...

Corruption in the public sector erodes tax compliance and leads to higher tax evasion. Moreover, corrupt public officials abuse their public power to extort bribes from the private agents. In both types of interaction with the public sector, the private agents are bound to face uncertainty with respect to their disposable incomes. To analyse effect...

Per capita incomes and the quality of governance are strongly positively correlated across countries. We propose an empirical strategy that allows us to separate this correlation into: i) a strong positive causal effect running from better governance to higher per capita incomes, and ii) a weak and even negative causal effect running in the opposit...

Durante los años noventa, en los países en desarrollo se produjo un notable crecimiento que no ha estado exento de altibajos y reveses. Un factor fundamental, tanto para el ritmo del crecimiento como para la calidad del mismo, es sin duda el desarrollo económico En La calidad del crecimiento, traducción al español de la publicación del Banco Mundia...

This paper-- a product of the Regional Mission in Kiev, Europe and Central Asia, Country Department IV-- was originally prepared as a background paper for World Development Report 1991. Copies of this paper are available free from the World Bank, 1818 H Street NW, Washington, DC 20433. Please contact Sylvia Torres, room H5-169, telephone 202-473-90...

This paper reports aggregate governance indicators for six dimensions of governance, covering 175 countries in 2000/01. We apply the methodology developed in Kaufmann, Kraay and Zoido-Lobatn (1999a,b) to newly-available data, to arrive at governance indicators comparable with those we constructed for 1997/98. The opinions expressed in this research...

The authors construct aggregate governance indicators for six dimensions of governance, covering 175 countries in 2000-01. They apply the methodology developed in Kaufmann, Kraay, and Zoido-Lobaton ("Aggregating Governance Indicators", Policy Research Working Paper 2195, and"Governance Matters", Policy Research Working Paper 2196, October 1999) to...

By recognizing the dynamics of state capture, we gain a much clearer understanding of the factors underlying the persistence of corruption in many transition countries. Although corruption has usually been seen as a symptom of weak state institutions, our analysis highlights the powerful forces that have a strong interest in fostering and maintaini...

One of the most remarkable aspects of the transition process in the former Soviet Union has been the extent to which the economy has effectively become demonetized in recent years. At the time of Russia's financial crisis of 1998 it was estimated that up to 70% of industrial output was being exchanged for barter. This book provides an accessible an...

The main challenge of the transition has been to redefine how the state interacts with firms, but little attention has been paid to the flip side of the relationship : how firms influence the state - especially how they exert influence on, and collude with public officials to extract advantages. Some firms in transition economies have been able to...

The authors investigate how transparency affects the probability of a financial crisis. They construct a model in which banks cannot distinguish between aggregate shocks and government policy, on the one hand, and firm'quality, on the other. Banks may therefore overestimate firms'returns and increase credit above the level that would be optimal giv...

Lack of transparency increases the probability of a banking crisis following financial liberalization. In a country where government policy is not transparent, banks may tend to increase credit above the optimal level. Mehrez and Kaufmann investigate how transparency affects the probability of a financial crisis. They construct a model in which ban...

Our survey of private manufacturing firms finds the size of hidden "unofficial" activity to be much larger in Russia and Ukraine than in Poland, Slovakia and Romania. A comparison of cross-country averages shows that managers in Russia and Ukraine face higher effective tax rates, worse official corruption, greater incidence of mafia protection, and...

The authors investigate whether resident enterprise managers have an informational advantage about the countries in which they work. They propose a method for extracting information available to resident managers but unknown to investors and forecasters. They rest their hypothesis of informational advantage using a unique data set, the Global Compe...

If bureaucratic burden and delay are exogenous, a firm may find bribes a helpful way to cut through red tape. According to the"efficient grease"hypothesis, corruption can improve economic efficiency, and,fighting bribery can be counterproductive. This need not be the case. In a general equilibrium in which regulatory burden and delay can be endogen...

Corruption has recently risen to the top of the development agenda, particularly in the transition economies. However, existing empirical research has been hampered by the lack of detailed and comparative data on the problem. We use the data from the ongoing Business Environment and Enterprise Performance Survey (BEEPS) to unbundle corruption into...

Recent studies have focused on the characteristics and policies of the state to explain the extent and causes of corruption, with little attention paid to the role played by firms. Consequently, the links between corporate governance and national governance have been unexplored. This paper summarises the results of the Business Environment and Ente...

I only want to draw your attention straightaway to the fact that you have yourselves formed this very state, to a large extent through political and quasi-political structures under your control, so perhaps what one should do least of all is blame the mirror." Vladimir Putin's to Russia's business leaders in their meeting in late July, reported in...

The transition process that started in the Balkans some twenty years ago, and the European association process to which it has been inexorably connected, has led to a radical transformation of the Balkan economic space across local, regional, national and trans-national levels. Amongst the other effects that this have had, was the emergence of new...

In recent years the growing interest of academics and policymakers in governance has been reflected in the proliferation of cross-country indices measuring various aspects of governance. The authors explain how a simple variant of an unobserved components model can be used to combine the information from these different sources into aggregate gover...

In a cross-section of more than 150 countries, the authors provide new empirical evidence of a strong causal relationship from better governance to better development outcomes. They base their analysis on a new database containing more than 300 governance indicators compiled from a variety of sources. They provide a detailed description of each of...

Is it true that bribery can alleviate red tape for enterprises? Not if bureaucrats can choose the regulatory burden and the red tape delay to extract bribes. The authors' empirical test finds that firms using bribes waste more management time dealing with bureaucrats. The business community can benefit from laws and collective initiatives strengthe...

Across 69 countries, higher tax rates are associated with less unofficial activity as a percent of GDP but corruption is associated with more unofficial activity. Entrepreneurs go underground not to avoid official taxes but to reduce the burden of bureaucracy and corruption. Dodging the "Grabbing Hand" in this way reduces tax revenues as a percent...

The authors found that, in post-communist economies, the unofficial economy's share of GDP is determined by the extent of control rights held by bureaucrats and politicians. Exploring in detail the role of taxation and bribery, and using data from an expanded data set of 49 Latin American, OECD, and transition economies, the authors find that the u...

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