Indicators

Over recent years the international development community has increasingly acknowledged the importance of 'good governance' for development. In this context estimates and anecdotes of governance functioning are inadequate.

There is increasing demand for measurement of what good governance is and how it relates to poverty reduction and development. Measuring governance is important for:

• understanding the determinants and impacts of good governance and its relationship with development
• tracking changes in governance over time within and between countries
• facilitating domestic debate as citizens of developing countries demand better, more transparent and accountable governance
• allowing donors to assess rationally governance capacities and performance in differing country contexts
• providing a basis for governance performance-based aid allocation, to design, monitor and assess the progress of development programmes and strategies.

Governance is a complex and multi-dimensional concept, and effective governance measurement raises a host of methodological and conceptual difficulties. A number of indicators for measuring governance have been produced and there is considerable debate about the merits of different approaches.

Page contents

Where is a good place to start?

These articles provide a good introduction to the central themes in the current debate on measuring governance. The articles take slightly different approaches to explain why it is important to measure governance, introduce key governance indicators and evaluate the main differences between them.

Besancon, M., 2003, 'Good Governance Rankings: The Art of Measurement', World Peace Foundation Report, No. 36, Cambridge, MA
Governance is the delivery of political goods. How can governance be measured? Why is it necessary to measure governance? Who would use the information? This paper, by the World Peace Foundation, represents an amalgamation of ideas and opinions from “The Conference on Measuring Governance” at the Kennedy School, Harvard University, in May 2003. Objectively measuring governance could lead prescriptively to improving the welfare of those in the developing world.
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Types of indicators

What governance indicators are there and how should they be used? This UNDP source guide provides concise and easily accessible information about an extensive array of indicators currently available online to measure governance. It is complemented by the user guide to governance indicators below.

United Nations Development Programme, Sources for Democratic Governance Indicators, 2004, UNDP, Oslo
Mapping by the United Nations Development Programme (UNDP) Oslo Governance Resource Centre in 2003 identified a wide range of governance indicators that have been developed and used by organisations. This guide brings some of them together to offer readers a user-friendly overview of indicators that are accessible on the internet.
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Sudders, M. and Nahem, J., 2004, 'Governance Indicators: A Users' Guide', UNDP, Oslo
Demand for ways to measure different aspects of democracy, human rights and governance is increasing. This has led to a rapid growth in the number of indicators to assess government performance, the quality of institutions and people’s perceptions. This guide, put together by the United Nations Development Programme and the European Commission, offers advice on where to find and how to use governance indicators.
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Methodological challenges

The measurement of governance requires sophisticated and well thought out methodology. The following articles consider different methodologies to be employed in monitoring and evaluating governance.

This article provides simple and general guidance about methods and tools for monitoring and evaluation:

World Bank Operations Evaluation Department, 2002, 'Monitoring & Evaluation: Some Tools, Methods and Approaches', The World Bank, Washington, D.C.
Monitoring and Evaluation (M&E) is an area of growing importance for the development community. It allows those involved in development activities to learn from experience, to achieve better results and to be more accountable. This report from the World Bank Operations Evaluation Department provides an overview of some of the M&E tools, methods and approaches on offer to development practitioners.
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This review analyses current methodologies used in the measurement of democracy, human rights and governance.

Landman, T. and Häusermann, J., 2003, 'Map Making and Analysis of the Main International Initiatives on Developing Indicators on Democracy and Good Governance', University of Essex, Human Rights Centre, Report for the Statistical Office of the Commission of the European Communities (EUROSTAT).
Democracy, human rights and good governance can be measured in many different ways, and this is reflected in the wide variety of initiatives that have developed such indicators. This project for the Statistical Office of the European Commission collates and evaluates existing initiatives. It also makes recommendations for the development of more efficient measurement tools.
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The following articles present methodologies used by two teams developing their own indicators, and an assessment of the challenges of accurate governance measurement: 

Court, J., Hyden, G. and Mease, K., 2002, 'Assessing Governance: Methodological Challenges', World Governance Discussion paper 2, United Nations University, Tokyo, Japan.
How can governance be assessed? What are the methodological challenges? Who is best placed to provide insights as to the quality of governance in a particular country? Without advances being made on these critical issues, it will not be possible to assess how governance varies across the world or what role governance plays in development. This discussion paper, produced by the United Nations University, contributes to the wider discussion on ways to address such challenges.
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Kaufmann, D., Kraay, A. and Zoido-Lobatón, P., 2003, 'Governance Matters III: Governance Indicators for 1996-2002', draft paper, World Bank, Washington, D.C.
What margins of error exist in governance indicators? What are the methodological issues surrounding the use of the data on governance indicators? This paper, produced by the World Bank, is an update and expansion of previous wok by the authors on governance indicators, initiated in 1998. Several new data sources have been obtained and existing data expanded.
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Conceptual challenges

Developing a usable set of indicators to capture the complex features that constitute governance raises conceptual difficulties as well as methodological ones. The two following articles are from teams working on measuring governance. They discuss challenges of defining what governance is and how it should be measured, and present the dimensions they have chosen for their indicators.

Kaufmann, D., Kraay, A. and Zoido-Lobatón, P., 2000, 'Governance Matters: From Measurement to Action', Finance and Development, 37(2)
Can a systematic approach to measuring governance be developed? How can data and rigorous analysis be used to support institutional reforms to curb corruption and improve governance? How can research methods move beyond anecdotal evidence to assess the quality of governance? This paper, written by World Bank researchers and appearing in the Finance and Development magazine of the International Monetary Fund, attempts to apply a systematic approach to measuring governance, its determinants and its consequences.
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Hyden, G., Court, J. and Mease, K., 2003, 'Making Sense of Governance: The Need for Involving Local Stakeholders', Development Dialogue
Few people dispute the notion that the quality of governance matters to development. But what does governance really mean? When, why and how does governance make a difference to the way a country develops? This research by the Overseas Development Institute suggests that governance is too important an issue to be left only to international donor agencies to define and determine. Local stakeholders must be brought in to provide a complementary and contrasting perspective.
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Second generation indicators

Aggregate indicators that provide a snapshot of governance cannot indicate exactly where and how change is necessary for better governance and poverty reduction. For this reason, amongst others, governance indicators may be rejected as unhelpful, especially by developing world governments. The following paper summarises work on ‘second generation’ indicators, which are designed to be more transparent, specific and accurate. 

Knack, S., Kugler, M. and Manning, N., 2002, 'Second Generation Resources', Report on a DFID funded World Bank Initiative, 2002
How can governance be measured to promote constructive change? This article from the World Bank summarises progress made in its initiative to test and develop policy-relevant, politically acceptable, quantitative indicators of governance. It suggests that if consensus is key to developing governance indicators that promote institutional change, then sensitivity to the often-justified concerns of governments is key to that consensus.
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Programme level evaluation

Monitoring and evaluation at the programme level is also essential to ensure real progress is made towards development goals. These two documents provide practical guidance for donor programme monitoring:

United Nations Development Programme Evaluation Office, 2002, 'Handbook on Monitoring and Evaluating for Results', UNDP, New York, NY.
Since 1999, the United Nations Development Programme (UNDP) has placed greater emphasis on results in its work to eliminate poverty. That shift has led to new demands on Monitoring and Evaluation (M&E) in country offices and programme units. This handbook outlines an M&E framework for use by UNDP staff and partners that promotes learning and performance measurement.
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Hyman, G. and Silver, R., 1998, 'Handbook of Democracy and Governance Program Indicators', USAID, Washington, D.C.
Recent shifts in donor practice have increasingly emphasised a results-oriented approach. Performance management is becoming a core facet of many donor-sponsored programmes. Such approaches pose considerable challenges in the realms of defining objectives, establishing benchmarks and assessing progress. This handbook from the United States Agency for International Development (USAID) offers an insight into the process of devising and applying performance-measurement indicators in the realms of monitoring democracy and governance. 
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This paper explores donor preference for 'participatory governance evaluation', and asks methodological, institutional and political questions that donors may have omitted to address:

Kapoor, I., 2004, 'Donor Participatory Governance Evaluation: Initial Trends, Implications, Opportunities, Constraints', Journal of International Development, 16 (2), 157-170
What are current trends in participatory approaches to governance evaluation (GE)? How do political, institutional and methodological issues impact? Which questions have donors failed to address? This article, from the Faculty of Environmental Studies at York University, Canada, appears in the Journal of International Development and is an updated version of the 1999 article, “Evaluating Governance Programs”.
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Impacts of measuring governance

Governance monitoring and evaluation can impact on the performance of development programmes, as illustrated by the document below:

World Bank Operations Evaluation Department, 2004, 'Influential Evaluations: Evaluations that Improved Performance and Impacts of Development Programs', World Bank, Washington, D.C.
Evaluations can be a cost-effective way of improving the performance and impact of development activities. However, they must be conducted at the right time, focus on key issues and present results in an accessible format. This report from the World Bank Operations Evaluation Department presents eight examples of evaluations that have had an important impact, and summarises lessons learned.
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Kaufmann, D., 2004, 'Governance Redux: The Empirical Challenge', World Bank, Washington, D.C.
Core aspects of governance have, until recently, been taboo for international financial institutions. Thanks to a change at agencies like the World Bank and the World Economic Forum, it is now possible to discuss openly the reality of governance worldwide. Has macroeconomic management deteriorated over the past decade? How have countries performed on key governance dimensions? This report from the World Bank Institute, also appears as a chapter in the World Economic Forum Global Competitiveness Report 2003-2004.
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The following two documents show that measuring governance can also advance understanding about what good governance is and how it relates to development:

Hyden, G., Court, J. and Mease, K., 2003, 'Conclusions: Governance in 16 Developing Countries', World Governance Survey discussion paper 10, Overseas Development Institute, London
Measuring governance is a complex task that has generated a wide range of different approaches. This paper from the Overseas Development Institute analyses the methods and conclusions of its own World Governance Survey (WGS). It is argued that the WGS differs from other indicators because it represents a first attempt to assess governance in an empirical and realistic context.
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Additional information resources

Research and perspectives on measuring governance are constantly developing. The following websites provide information about progress and new initiatives.

World Bank Institute - Governance and Anti-Corruption 
This site provides access to WBI research and resources on governance indicators including datasets.
Working papers and articles on measuring governance can be accessed directly at: http://www.worldbank.org/wbi/governance/wp-governance.html

ODI World Governance Assessment 
This web site provides full access to WGA publications and information about new developments. 

MandE news
This web site provides updates on monitoring and evaluation methods relevant to development work and links to a range of useful resources.

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