Second-Generation Governance Indicators
| Author | Mark Kugler,Stephen Knack,Nick Manning |
| Published date | 01 September 2003 |
| DOI | 10.1177/0020852303693004 |
| Date | 01 September 2003 |
| Subject Matter | Journal Article |
Second-generation governance indicators
Stephen Knack, Mark Kugler and Nick Manning
Abstract
This article summarizes progress made in a World Bank initiative funded by the UK
Department for International Development to test and develop policy-relevant,
politically acceptable, quantitative indicators of governance. There are two major
principles involved in the process of generating indicators that are useful for practical
reforms. Political acceptability is key in developing neutral quantitative benchmarks
of good governance that can be embraced by reformers. Measures should also be insti-
tutionally specific so that reformers know which institutions to reform and how to do
so. This article explores some of the most promising second-generation indicators of
good governance and elaborates on how they are being used in World Bank operations.
Introduction
Qualitative and case study analyses published in the late 1980s and early 1990s
began to focus attention on the importance of political institutions and governance
for economic and social development (e.g. World Bank, 1989; 1992; North,
1991). These studies generated a demand for complementary work based on
quantitative analysis.
To date, quantitative analyses linking governance to a variety of development
outcomes have relied heavily on subjective and broad indicators of corruption or
the rule of law (e.g. Knack and Keefer, 1995; Mauro, 1995; Ades and di Tella,
Nick Manning is Lead Public Sector Management Specialist in the Public Sector Group at
the World Bank with responsibility for knowledge management of the Bank’s work on
administrative and civil service reform. Stephen Knack is a Senior Research Economist in
the Development Research Group and the Public Sector Group at the World Bank. Mark
Kugler is a Research Analyst in the Public Sector Group at the World Bank. CDU:
65.012.3.
We are grateful to the UK Department for International Development, and Roger
Wilson, Head of Governance in particular, for their valuable collaboration on this project.
The staffs of many other development agencies have contributed significantly to the
discussion, including very particularly Nicolas Dubois of OECD/SIGMA. Many staff
within the World Bank have provided both ideas and energy and we particularly acknow-
ledge the contributions of Gary Reid, Sandra Bloemenkamp and Talib Esmail. Mick Moore
at the Institute of Development Studies, Sussex, made useful observations at a key plan-
ning stage and Brian Carey and Matthew Sudders of the OECD Development Assistance
Committee have offered every assistance to posting data on the OECD website for com-
ment and review. Finally, we thank the journal’s editors and reviewers for their insightful
comments and suggestions.
International Review of Administrative Sciences [0020–8523(200309)69:3]
Copyright © 2003 IIAS. SAGE Publications (London, Thousand Oaks, CA and New
Delhi), Vol.69 (2003), 345–364; 036083
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1996; Rodrik, 1997; Tanzi and Davoodi, 1997; Wei, 1997; Johnson et al., 1998;
Chong and Calderon, 1999; Hall and Jones, 1999; Kaufmann et al., 1999). This
work based on a ‘first generation’ of governance indicators was instrumental in
drawing further attention to the crucial role of governance in development.
However, these indicators, as discussed in more detail later, tend to be of limited
value in identifying high-payoff reforms and in building ownership for reform by
developing-country governments.
With the help of the United Kingdom Department for International Develop-
ment (DfID), the World Bank started work in the Fall of 2000 on the development
of institutionally specific and transparently generated governance and corruption
indicators. This article summarizes some modest but significant progress within
this project that seeks to lower the temperature on a key question in governance:
‘How can it be measured in a way that promotes constructive change?’
The work has been undertaken in collaboration with the Development Assist-
ance Committee (DAC) of the OECD. The DAC has been working to establish
indicators that measure movement towards the meeting of major UN conference
goals since the early 1990s. In ‘Shaping the 21st Century: The Contribution to
Development Cooperation’ (OECD, 1996), the DAC confirmed the goals and set
out the areas of democratic governance that it saw as essential for achieving these
goals. These areas are good governance (including public sector management,
rule of law, corruption and military expenditure); human rights; democratization
and participatory development. In 1996, the DAC ad hoc working group reported
that it had failed to forge a consensus around some core indicators for these issues.
Demand for measurement of progress increased significantly, particularly
from the development agencies, and a DAC proposal to a joint OECD/UN/World
Bank meeting on Agreed Indicators of Development Progress in February 1998
re-launched the process. However, at the Joint UN/OECD/World Bank/IMF
International Development Forum hosted by OECD/DAC in March 2000, there
was again a consensus that there was not yet a meaningful set of indicators of
participatory democracy and good governance that was politically acceptable to
governments. Nevertheless, there was strong sentiment that disciplined work on
identifying meaningful and acceptable indicators should continue, as it was
recognized that the alternative was the increasing use (at least outside DAC) of
indicators that were non-transparent and/or unacceptable to governments.
Table 1 provides details of the areas in which the DAC and others have facili-
tated consensus on measurable development goals and indicators of those goals.
These goals are referred to collectively as the Millennium Development Goals.
This project intended to help initiate a debate that might lead to consensus on
some governance indicators that potentially can be added to the existing UN indi-
cators contained in the Millennium Development Goals.
The political acceptability of governance indicators
The term ‘second-generation governance indicators’ has been introduced since
the launch of the project to convey the degree to which the project seeks to build
346 International Review of Administrative Sciences 69(3)
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