In their efforts to improve governance in client countries, donors have moved from an exclusive focus on the fiduciary and on reducing corruption to a much broader concern with institutional arrangements that encourage governments to pursue policies in the public interest.
Research has long examined governance through this broader lens, investigating the incentives and ability of governments to adopt policies in the broad interest of their citizens and not only their incentives to exploit rent-seeking opportunities. Two broad sets of results are gradually finding their way into donor policies: narrow steps designed to counter corruption may have little effect on country characteristics that undermine governance broadly, but policy measures to improve governance broadly may have significant advantages in the specific fight against corruption.
Donor attention to governance is related to copious research demonstrating the impact of governance on development outcomes at both the macro and micro levels. Researchers asking questions such as “What do cross-country comparisons tell us about the effects of government accountability on private investment?” or “What do within-country comparisons of schools tell us about the effects of parent associations on teacher absenteeism?” have led donors to examine not only the resource and capacity needs of client countries, but also the institutional arrangements through which public policies are made and implemented and resources are disbursed.
Researchers have also begun to investigate sources of good governance, again at the micro and macro levels: under what conditions do national governments pursue public policies in the public interest? Under what conditions do health facility administrators respond to patient needs? This work has begun to provide specific guidance to donors about issues such as selectivity (when will donor resources make a difference?); and institutional design (what institutional reforms will maximize the development impact of donor resources?). Finally, research continues to advance in the development of tools to measure and assess governance.
While we have learned a great deal on each of these agendas, researchers continue to address knowledge gaps that have long hobbled donor efforts to address the broader governance agenda. Under what conditions can citizens demand better performance from governments? What interventions can improve performance in weak governance environments? And how can progress be measured. For example, what indicators of governance are both actionable (under the control of policy makers) and meaningfully related to the fundamental governance challenges that countries confront?
What we know
Although the vast majority of research on governance never uses the word, as the summary below indicates, regardless of terminology, it has had direct applications for the donor governance agenda, whether related to assessing governance or to developing strategies for addressing governance.
Existing research has illuminated numerous ways in which different dimensions of governance significantly affect development.
Good governance accelerates economic growth
Both policy makers and the research community agree that governance is key to entrepreneurial decisions that underlie growth. Where entrepreneurs believe that future returns to investment and innovation are likely to be expropriated by government policy or by bureaucratic fiat, they adopt less efficient production technologies and invest and innovate less. Broad microeconomic evidence—from land reform and titling, natural resource management, and the management of collectively owned goods— has clearly shown that poor governance drives down investment. However, quantitative evidence of the hypothesis that governance is a systematic determinant of growth awaited the construction of broad governance indicators.
Tests using these indicators find strong evidence of the long-term growth effects of corruption, the rule of law, and the security of property rights. Very few disagree with these conclusions, but despite numerous technical efforts to solve the problem, there is debate about whether governance drives growth or whether some underlying, unidentified factor drives both governance and growth. Skeptics argue that this uncertainty undermines the rationale for improving governance to accelerate development. It is more likely, however, that these issues indicate that we still need to learn more about the underlying determinants of governance. These are likely to influence not only governance, but also myriad other government policies that researchers are unable to capture effectively. This generic issue affects all efforts to identify government-determined sources of growth, including trade, financial policy, and education.
Good governance improves the quality of public spending
Research has also looked at the effects of governance on the efficacy of government policies. Some survey evidence suggests that corruption disproportionately denies the poor access to education and health services. Broad governance also affects public investment. Public investment as a fraction of national income is substantially larger in countries with poor governance, reflecting the ability of less accountable governments to use public investment to divert resources to themselves or to substitute for private investment in weak governance environments. But governance failures are also associated with the mis-targeting of public investment: public investment has significantly lower growth effects in countries with weak governance.
Governments that spend resources more effectively should also benefit from a larger development impact from aid. In fact, though the findings are less robust, aid accelerates growth significantly more among recipients with good governance. Several confounding factors cloud this result: the small share of aid in the budgets of many recipient countries; the fact that donors often use governance as a consideration in aid decisions; and the possibility that donors might give aid to countries that are predisposed both to exhibit good governance and higher growth.
Still, taken altogether, the results on governance and government spending reinforce the importance of taking governance into account in decision making about aid. Consistent with this, donors have begun to work with client countries to take governance reforms beyond public sector management and to link them directly to reforms in sectors ranging from education and health to infrastructure. Knowledge gaps in two areas are obstacles to these efforts: (1) specific governance attributes that drive sectoral outcomes are still unclear, and countries are reluctant to be held accountable for governance outcomes when governance inputs are not clearly defined, and (2) it is still not clear whether within-sector governance reforms can change sector outcomes if the broader governance environment remains unchanged.
How to get good governance
What reforms can strengthen government incentives and capacity to credibly implement policies in the broad public interest? General agreement that increased government accountability to citizens should improve performance does not extend to the specific reforms that should be pursued to increase accountability. The development effects of macro reforms, such as the introduction of competitive elections, are highly contested. Evidence on micro-level interventions (e.g., parent associations in schools or public expenditure tracking surveys) is more compelling, but is usually insufficient to demonstrate whether good results would persist when interventions are scaled up or brought to less favorable governance environments.
Lacking conclusive guidance on this question, donors have continued to focus on public sector management, particularly financial management. While exerting greater pressure on countries to adhere to high fiduciary standards in spending donor resources, donors have relaxed efforts to pursue specific anti-corruption reforms as part of the development agenda. They have also begun to embrace such approaches as increased information, community-driven development, decentralization, and support to civil society organizations.
Research has provided ambiguous support for these new strategies. One reason for ambiguity is the increasingly well-documented role of political and socio-cultural factors on governance; these are likely to condition the effects of donor interventions. The importance of such factors suggests that effective and sustainable governance reforms, including anti-corruption efforts, are likely to extend beyond traditional public sector interventions.
Competitive elections and political checks and balances are only weakly associated with good governance
Political institutions are one key conditioning factor on which research has focused, and among these, guided by the experience of rich countries, research attention first turned to competitive elections and political checks and balances. The argument was persuasive: these are the central political institutions that limit the arbitrary exercise of power by government officials. However, any causal relationship between these institutions and governance and growth is weak. In simple correlations, democratic institutions are strongly associated with good governance, but the correlation drops dramatically after controlling for income per capita. More directly: poor democracies and poor non-democracies differ little with respect to governance. Most research on the determinants of governance therefore focuses, implicitly or explicitly, on various dimensions along which democracies and non-democracies differ and which could explain the weak relationship between democracy and governance.
Other institutional differences do have strong effects on governance
Elections and political checks and balances are not the only varieties of political institutions, of course. Among countries with competitive elections, some have presidential or parliamentary forms of government, or employ plural or proportional electoral rules; these variations can be expected to influence political incentives to serve the public interest. Presidential systems of government are associated with greater corruption, for example.
Still, despite the large amount of research devoted to understanding the effect of formal, constitutional arrangements on government responsiveness to public interests, the conditions under which these have significant effects on outcomes remains an important area of research. It is obviously the case, for example, that just as there are countries that lack competitive elections and still exhibit reasonable governance indicators, there are also presidential democracies with corruption levels significantly below average.
One aspect of a country’s institutional framework researchers is turning to explain the uneven impact of constitutional political institutions is political parties. Parties are the main vehicle through which politicians organize collectively. If parties are strong, the incentives of their representatives to serve broader public interests should increase, but if they are weak, many predictions about the behavior of political and electoral institutions no longer hold. New evidence from India demonstrates, in fact, that strong political parties limit politician incentives to provide constituency-specific projects.
Decentralization and community-driven development can, but do not necessarily, improve governance
One of the ways in which countries differ is the extent of decentralization. Decentralization, it is argued, makes governments more accountable by bringing them “closer” to citizens in two ways: (1) by bringing decision making down to smaller groups of citizens who are more alike in their views of what issues matter and what politicians should achieve, and (2) by increasing citizen information about what governments are doing.
Political actors can also use decentralization as a tool to fragment the electorate into smaller units that are easier to target with patronage spending at the expense of citizens at large. Cross-country evidence is sparse, but suggests that decentralization, particularly of both revenue-raising and expenditure responsibilities, is associated with lower corruption, though it has been difficult to control for the fact that countries able to decentralize successfully are likely to have unobserved characteristics that also improve governance.
Micro studies of community-driven development (CDD) yield more ambiguous results. CDD programs operate under the assumption that the phenomena that generate political dysfunction and poor governance at the national government level are moderated at the village level. Empirical tests yield ambiguous results: researchers sometimes find that local politics can be as or more dysfunctional (e.g., captured by local elites) than national politics. Experimental evaluations of a popular type of governance intervention to improve service delivery—encouraging community monitoring of public sector service providers—reflect this ambiguity. One, applied to health care in Uganda, improved services; another, applied to education in India, had no impact on public schools. It is likely that successful decentralization requires upper and lower level governments to impose checks on each other: when all levels are dysfunctional, these checks are too.
Political market imperfections—lack of citizen information, lack of political credibility, or social polarization—have a significant negative impact on governance
The same imperfections that interfere with economic markets, impeding investment and exchange, afflict political markets to an even greater degree. These include the inability of citizens to monitor government actions and their impact on citizens; the inability of citizens to impose a sufficiently high cost on politicians who renege on their promises; and polarization among citizens that leads them to value the identity of politicians more than their performance. This literature suggests, in other words, that the dynamics of political markets have a significant effect on governance.
Research on incomplete information is the most advanced. Significant empirical evidence reveals that greater media access is associated with less corruption and a greater likelihood of receiving different government transfers. Evidence from a famous intervention in Uganda showed that one unique type of government spending—capitation grants to schools—was far less likely to be siphoned off by government officials when newspapers publicized exactly how much money each school was expected to receive. Theory and observation, though no rigorous evidence, also suggest that when citizens are poorly informed, politicians bias their policies towards easily observed transfers rather than more cost-effective but also more complex public goods (e.g., high quality education).
Research on information does not demonstrate, however, what people need to know to hold governments accountable nor whether they receive this information through the media channels examined in the literature. More importantly, neither theory nor evidence tells us whether public good provision should rise when citizens are better informed. Little evidence links school quality and information, for example. There is similarly no evidence that Freedom of Information Acts, a frequent target of donors, have an effect on governance in otherwise low-information societies.
The second political market imperfection is lack of politician credibility. Where politicians suffer a small or no penalty for reneging on their promises to citizens, research shows that they will pursue policies counter to the broad public interest, offering large transfers to narrow groups of the population (those to whom they can make credible promises), under-provide public goods, and engage in more corruption. This research explains why young democracies are far less likely to pursue development-oriented policies than older democracies, and points to the importance of a new type of political institution—the programmatic political party—as being of key importance for governance. But research on the origins of political credibility and its effects on policy is still in its infancy.
Finally, a large literature has pointed to the difficulties that social polarization poses for governance. Polarization could exist because of historic animosity or outright racism; because fragmented societies find it more difficult to work collectively; or because of political efforts to use social identity for political advantage. In fact, the inability of politicians to make credible promises to voters gives them reason to rely on ethnic or religious appeals to voters—as a shortcut to credibility. In either case, persuasive evidence associates social polarization with lower public good provision and greater corruption.
Historical, cultural and social forces have a significant impact on governance
A growing literature points to other, even deeper, roots of good governance. Historical legacies, such as colonial institutions, are one such factor. These seem to have a significant impact on contemporary institutions and governance outcomes. Geography often underlies these legacies: settlement of countries in which natural resource rents or labor were abundant developed temporary institutions adapted to rapid extraction, in contrast to resource-poor or labor-scarce countries in which institutions conducive to investment and exchange were developed. The specific channels through which these historical legacies maintained their influence through to the present day remain under-examined.
One possible channel of influence is that of elite capture and inequality. In highly unequal societies—such as those where a few early settlers controlled access to vast natural resource rents—governance may be worse for two reasons. First, elites resist the adoption of institutions (such as, but not only, elections) that would offer non-elites security from elite expropriation. Second, even when these institutions are put into place, elites use their resources to manipulate them to their advantage.
More immediately relevant to donor work is a growing body of research that demonstrates the potential importance of cultural and social beliefs on governance. For example, individual corruption appears to have substantial spillover effects, encouraging corruption by others, creating a vicious circle.
Cultural beliefs also affect general incentives to demand accountability. In a series of experiments, researchers have found that when high and low caste Indian children competed with each other in a game, the performance of both declined when each knew that they were competing against each other compared to when they did not. Such studies provide rigorous validation for frequent observations that social legacies such as a caste system can create intrinsic barriers to accountability and good governance. These may be amenable to educational and similar interventions.
Natural resources undermine governance; foreign aid has a mixed impact
The literature on historical legacies points to a resource curse: countries with many natural resource rents exhibit poor governance. This finding has been made more directly: governments with large natural resources have fewer incentives to accept institutions that limit their discretion and force them to be more accountable. As a consequence, governance fails.
The dangers of a resource curse have been examined in the context of foreign aid. Given the widely known weaknesses of conditionality, it is easy to conceive of foreign aid as an inflow of rents to governments that might affect their incentives regarding governance. In fact, the evidence provides some indication that foreign aid is associated with lower levels of governance and the deterioration of the quality of tax administration.
This result may be more strongly associated with development transfers of the 1970s, 1980s and early 1990s, however, since other research has shown that donors have become more selective in the countries they target for aid. Put differently, just as Norway and Alaska have not seen a collapse in governance due to oil rents, donors may be sending their money to countries that already have better-established institutions of government accountability, above the threshold at which rents cause governance to decline.
Subjective measures of governance are informative and useful
Nearly all governance data that permit cross-country comparisons and over-time monitoring are necessarily based on subjective evaluations by experts or survey respondents of country risk, the investment climate or competitiveness. Other indicators that are also taken as measures of governance in policy circles—measures of voice, electoral competitiveness and political checks and balances—are regarded by most researchers as possible determinants of governance.
Country-level governance indicators were introduced into the academic literature in the mid-1990s. They have since acquired legitimacy among donors as useful measures of the broad governance environments in countries and have assumed a central role in donor policy making (e.g., the governance components of the World Bank’s CPIA ratings weigh heavily in IDA aid allocations). Controversy surrounds their use. Countries have disagreed with their rankings, both relative to other countries and their evolution over time. Officials have questioned the extent to which the indicators point to particular reform priorities. And countries—and some academics—have disputed the degree to which high scores on these indicators are necessary or sufficient for development to occur.
These criticisms have emerged in large part because donors and affected countries have asked more of these indicators than they can provide. Assessments of broad governance are usually based on expert judgments about the cumulative effects of all government decisions that reveal government incentives to make policies in the broad public interest. Direct indicators of governance are also necessarily noisy, since governance phenomena such as the security of property rights or corruption are not easily observed.
Researchers have issued substantial caveats regarding the precision of the broad and more subjective governance indicators now widely used in policy circles. While countries can be reliably located in the top, middle, or bottom thirds of country rankings with regard to most governance indicators, finer distinctions are usually not possible. These caveats are often ignored. Greater precision is clearly needed, and researchers are responding by investigating other strategies for measuring governance, which are reviewed below. These will be useful supplements to the broad, more subjective governance measures that are currently employed, but are unlikely to substitute for them.
A second reason for criticism of broad, direct measures of governance is policy maker concern about how to respond to diagnoses of poor governance. This has led to new emphasis on developing “actionable” indicators of governance. However, evidence does not yet demonstrate whether changes in such indicators—specific aspects of public sector management, for example—are associated with significant effects on broad governance and development.
Measurement difficulties also explain some of the criticism about the causal relationship between governance and development. In the view of most researchers, the fact that some countries with mediocre governance indicators have grown rapidly does not mean that governance does not matter (as skeptics argue). Instead, it means that governance problems were solved in unusual ways that current governance indicators have not captured.
Even if these criticisms are not entirely valid arguments against the use of existing broad measures of governance, they do point to important areas in which research on governance needs to move. In fact, efforts to respond to these criticisms motivate much of the ongoing and future research on governance.
Ongoing and future research
The foregoing hints at a broad range of issues on which research is ongoing or planned. These are reviewed here.
The effects of good governance
Two types of work dominate current research agendas examining the effects of governance. One relates to fragility and conflict. Although an early consensus linked civil war and state fragility to low national incomes, more recent work has begun to ask whether other factors might explain both low incomes and vulnerability to civil war. One of these factors is governance: governments with weak incentives to serve the public interest are both more vulnerable to insurgency and less able to build up a counter-insurgency capacity. One source of these weak incentives explored in current research is the inability of political leaders to make broadly credible commitments to improve the welfare of citizens.
The second branch of work is continuing efforts to sort out the causal effect of good governance on economic development. Much of this research focuses on new indicators that seek to identify both specific governance “inputs” that bear upon the policy making process (such as those related to budget procedures) and governance “outcomes” (such as survey-based data on firm or household experiences with poor governance). This work is challenging. Practitioners, for example, can point to more than 100 characteristics of budgeting institutions that they believe influence whether fiscal resources will be expended in the public interest. It is difficult to use such national level budgeting data to assess the contribution of each of these characteristics to development outcomes of interest. Of course, one can aggregate them, but aggregate indicators are less “actionable” and correspondingly less useful. Nevertheless, even at the aggregate level, these measures are useful complements to existing tools for governance monitoring and diagnosis.
How to get good governance
Researchers are most actively engaged in exploring the sources of good governance. This involves both a macro agenda: what sorts of political, cultural, social and historical conditions improve government responsiveness to public interests. And a micro agenda: what improvements in governance at the sectoral level are associated with more effective sector performance? Key topics in this wide range include the following:
- Governance and local government. Decentralization is not optional in many countries, particularly in large countries. Whether de facto or de jure, local politics will affect policy design and implementation at local levels. Researchers are therefore exploring the dynamics of local government, especially uniquely local governance institutions such as town-hall meetings. Early results, for example, suggest that they are not entirely dominated by local landlords; on the contrary, the low caste villagers have a notable impact on town-hall decision making.
- Information interventions. Most information interventions to improve government accountability are labor- and resource-intensive and difficult to scale up. At the same time, because research has pointed to the influence of mass media on government policy making, there is some hope that media interventions, with their substantial scale economies, could achieve useful results at lower cost. Ongoing research is examining whether people’s media access influences what they know about public policy and whether this knowledge changes their political behavior.
- Courts and governance. Although the courts are an important line of defense against opportunistic behavior by governments in developed countries, surprisingly little evidence exists to show an independent role for the courts in improving governance generally. However, a growing body of research is beginning to examine the role of the courts in enhancing government accountability. Recent research has shown, for example, that legal accountability for economic and social rights may, under some conditions, improve the allocation of public spending in a pro-poor direction. These conditions include the existence of mobilized legal demand, judicial autonomy, and the existence of a policy infrastructure that can respond to court-ordered demands to remedy violations of these rights.
- Social exclusion and accountability. Research continues on the ability of groups with a history of social exclusion to defend their interests. For example, informal social sanctions are a critical source of restraints on opportunistic behavior by individuals. Such sanctions rely on individuals’ willingness to sanction norm violations and are essential if groups are to avoid the free-riding that undermines collective action. New research indicates that members of groups that have experienced a long history of social exclusion are less likely to punish others for norm violations. This leaves such groups less able to enforce informal agreements, such as those needed to sustain the collective action that is needed to hold government accountable for its policies towards them.
- Political parties and governance. The need for collective action to enhance government accountability is also at the center of research on the role of political parties in development. This research extends from the construction of a new database of political party characteristics across in more than 80 countries to the development of new models of the political economy of non-democracies, in which institutionalized political parties play an essential role in attracting investment.
- Governance in education. Research continues to examine the effects of governance institutions in governance. Attention is turning to the effects on student learning, the ultimate outcome of concern, and to the interaction of management reforms (incentive payments based on measurable teacher performance) and local governance reforms (community involvement in school management, especially the hiring and firing of teachers).
- Governance in private sector regulation. Entry regulations are a frequent source of government abuse that discourages private investment and employment creation. Ongoing research is investigating whether easier and more transparent registration allows more firms to register and increases government revenues.
Results on governance reforms in sectors, decentralization, and information will have immediate application to the programs of all donors. Work on social and cultural factors will require subsequent rounds of research to identify how these obstacles to good governance can be changed. Work on some political market imperfections, like the sources of political credibility, will be more immediately useful to bilateral than to multilateral donors (for example, the former work directly with political parties). However, even this work will also provide guidance to multilateral efforts to boost the credibility of government promises, for example in creating support for economic reform.
Measurement research is pointed toward three new types of governance measures that are more objective indicators (more easily verifiable by third parties).
- The first are measures of narrow areas of government decision making (budget procedures, statistical capacity) that may be associated with specific governance outcomes (corruption, bureaucratic capacity).
- The second are indirect measures of broad governance, which capture the consequences of broad governance failures but do not measure them directly; an early examples of this is contract-intensive money (essentially, the fraction of the money supply that is in the banking system rather than in cash).
- A third class of indicators is based on survey evidence of actual household or firm experiences with government.
All of these are in early stages and progress is likely to be incremental rather than lead to a sea change in the way that governance is measured by donors. In particular, it is unlikely that these will displace the more subjective, broad measures of governance. Measures of budget procedures, for example, cover only one area of government decision making and do not capture governance outcomes. The validity of indirect measures of broad governance cannot be tested and depends on theoretical arguments. And surveys are expensive and also usually involve only slices of government decision making (for example, bribes in some government offices, but not all). They are also prone to survivor bias (firms that cannot manage a poor governance environment simply do not enter and are not surveyed). Nevertheless, more refined indicators will allow us to look at more “actionable” areas of governance reform and ask whether they are necessary or sufficient for governance to improve. If they are, both country monitoring and policy dialogue will benefit.
Contact: Philip Keefer, email@example.com, 202-458-2479
Most World Bank research documents cited in this summary are available through the World Bank’s research archives at http://econ.worldbank.org/docsearch or the Bankwide archives at http://www-wds.worldbank.org/.
1. See D. Acemoglu, S. Johnson, and J. Robinson. 2001. “The Colonial Origins of Comparative Development: An Empirical Investigation.” American Economic Review 91: 1369–1401.
D. Kaufmann and A. Kraay. 2002. “Growth Without Governance.” Economia 3.1 (Fall).
S. Knack and Philip Keefer. 1995. “Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Measures.” Economics and Politics 7(3, November): 207–28.
P. Mauro. 1995. “Corruption and Growth.” Quarterly Journal of Economics 110 (3, August): 681–712.
2. P. Keefer and S. Knack. 2007. “Boondoggles, Rent-seeking and Political Checks and Balances: Public Investment under Unaccountable Governments.” The Review of Economics and Statistics 89(3, August): 566–72.
A. Rajkumar and V. Swaroop. 2002. “Public Spending and Outcomes: Does Governance Matter?” Policy Research Working Paper 2840, World Bank, Washington, DC.
3. T. Persson and G. Tabellini. 2000. Political Economics: Explaining Economic Policy. Cambridge: MIT Press.
4. D. Lederman, N. V. Loayza, and R. R. Soares. 2005. “Accountability and Corruption: Political Institutions Matter.” Economics and Politics 17(3): 1–35.
5. P. Keefer and S. Khemani. 2009. “When do Legislators Pass on Pork? The Role of Political Parties in Determining Legislator Effort.” American Political Science Review 103(1, February): 99–112.
6. S. Khemani. Forthcoming. “Decentralization by Politicians: Creation of Grants-Financed Local Jurisdictions.” In Regional Fiscal Flows and the Stability of Federations, ed. Albert Sole-Olle and others. Edward Elgar.
7. R. Ray and R. Gatti. 2002. “Decentralization and Corruption: Evidence from US Federal Transfer Programs.” Public Choice 113(1-2): 25–35.
R. Fisman and R. Gatti. 2002. “Decentralization and Corruption: Evidence across Countries.” Journal of Public Economics 83(3): 325–45.
8. M. Bjorkmann and J. Svensson. Forthcoming. “Power to the People: Evidence from a Randomized Field Experiment of Community-Based Monitoring in Uganda.” Quarterly Journal of Economics.
A. V. Banerjee, R. Banerji, E. Duflo, R. Glennerster, and S. Khemani. Forthcoming). “Pitfalls of Participatory Programs: Evidence from a Randomized Evaluation in Education in India.” American Economic Journal: Economic Policy.
9. For a summary, see P. Keefer and S. Khemani. 2005. “Democracy, Public Expenditures, and the Poor: Understanding Political Incentives for Providing Public Services.” World Bank Research Observer 20(1): 1–28.
P. Keefer. 2007. “Beyond Elections: Politics, Development and the Poor Performance of Poor Democracies.” In Oxford Encyclopedia of Comparative Politics, ed. Carles Boix and Susan Stokes. Oxford University Press.
10. A. Adserà, C. Boix, and M. Payne. 2003. “Are You Being Served? Political Accountability and Governmental Performance.” Journal of Law, Economics and Organization 19 (October): 445–90.
T. Besley and R. Burgess. 2002. “The Political Economy of Government Responsiveness: Theory and Evidence from India.” Quarterly Journal of Economics 117(4, November): 1415–51.
D. Strömberg. 2004. “Radio’s Impact on Public Spending.” Quarterly Journal of Economics 119(1, February):189–221.
A. Mani and S. Mukand. 2006. “Democracy, Visibility and Public Good Provision.” Journal of Development Economics 83(2): 506–29.
R. Reinikka and J. Svensson. 2005. “Fighting Corruption to Improve Schooling: Evidence from a Newspaper Campaign in Uganda.” Journal of the European Economic Association 3(2-3): 259–67.
11. A. Banerjee, R. Banerji, E. Duflo, R. Glennerster, and S. Khemani. 2006. “Can Information Campaigns Spark Local Participation and Improve Outcomes?” Policy Research Working Paper 3967, World Bank, Washington, DC.
12. E. Miguel and M. K. Gugerty. 2005. “Ethnic Diversity, Social Sanctions, and Public Goods in Kenya.” Journal of Public Economics 90(11-12, December): 2325–68.
13. For a thorough review, see K. Hoff. 2003. “Paths of Institutional Development: A View from Economic History.” World Bank Research Observer 18(2): 2205–26.
P. Bardhan and D. Mookherjee. 2000. “Capture and Governance at the Local and National Levels.” AEA Papers and Proceedings 90 (2): 135–39.
F. Campante and F. H. G. Ferreira. 2007. “Inefficient Lobbying, Populism and Oligarchy.” Journal of Public Economics 91: 993–1021.
E. Galasso and M. Ravallion. 2005. “Decentralized Targeting of an Antipoverty Program.” Journal of Public Economics 89: 705–27.
14. R. Gatti, S. Paternostro, and J. Rigolini. 2003. “Individual Attitudes Towards Corruption: Do Social Effects Matter?” Policy Research Working Paper 3122, World Bank, Washington, DC.
15. K. Hoff and P. Pandey. 2006. “Discrimination, Social Identity, and Durable Inequalities.” American Economic Review Papers and Proceedings 96(2): 206–11.
K. Hoff and P. Pandey. 2004. “Belief Systems and Durable Inequalities: An Experimental Investigation of Indian Caste.” Policy Research Working Paper 3351, World Bank, Washington, DC.
16. S. Knack. 2001. “Aid Dependence and the Quality of Governance: Cross-Country Empirical Tests.” Southern Economic Journal 68(2): 310–29.
S. Knack. Forthcoming. “Sovereign Rents and Quality of Tax Policy and Administration.” Journal of Comparative Economics 37(3): 359–71. (Based on Policy Research Working Paper 4773, World Bank, Washington, DC).
17. The first published uses were in Knack and Keefer (1995) and Mauro (1995) (see note 1). For the latest developments in cross-country governance measurement, see:
D. Kaufmann, A. Kraay, and M. Mastruzzi. 2004. “Governance Matters III: Governance Indicators for 1996, 1998, 2000, and 2002.” World Bank Economic Review 18: 253–87.
D. Kaufmann, A. Kraay, and M. Mastruzzi. 2006. “Measuring Governance Using Perceptions Data.” In Handbook of Economic Corruption, ed. Susan Rose-Ackerman. Edward Elgar.
18. One early product of this agenda is P. Keefer. 2008. “Insurgency and Credible Commitment in Autocracies and Democracies.” World Bank Economic Review 22(1): 33-61.
19. V. Gauri and D. Brinks. 2008. Courting Social Justice: Judicial Enforcement of Social and Economic Rights in the Developing World. New York: Cambridge University Press.
20. K. Hoff, M. Kshetramade, and E. Fehr. 2009. “Caste and Punishment: The Legacy of Social Inequality on Norm Enforcement.” Policy Research Working Paper 5040, World Bank, Washington, DC.
21. C. Clague, P. Keefer, S. Knack, and M. Olson. 1999. “Contract-Intensive Money: Contract Enforcement, Property Rights and Economic Performance.” Journal of Economic Growth 4(2, June): 185–210.
22. D. Kaufmann and A. Kraay. 2007. “Governance Indicators: Where are We, and Where Should We Be Going?” Policy Research Working Paper 4370, World Bank, Washington, DC.