The Worldwide Governance Indicators: Methodology and Analytical Issues

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, and Control of Corruption. The latest aggregate indicators are based on hundreds of specific and disaggregated individual variables measuring various dimensions of governance, taken from 35 data sources provided by 32 different organizations. The data reflect the views on governance of public sector, private sector and NGO experts, as well as thousands of citizen and firm survey respondents worldwide. The authors also explicitly report the margins of error accompanying each country estimate. These reflect the inherent difficulties in measuring governance using any kind of data. The authors also briefly describe the evolution of the WGI since its inception, and show that the margins of error on the aggregate governance indicators have declined over the years, even though they still remain non-trivial. The authors find that even after taking margins of error into account, the WGI permit meaningful cross-country comparisons as well as monitoring progress over time. In less than a decade, a substantial number of countries exhibit statistically significant improvements in at least one dimension of governance, while other countries exhibit deterioration in some dimensions. These aggregate indicators, spanning more than a decade, together with the disaggregated individual indicators, are available at www.govindicators.org.

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 Control of Corruption. These aggregate indicators are based on hundreds of specific and disaggregated individual variables measuring various dimensions of governance, taken from 35 data sources provided by 33 different organizations. The data reflect the views on governance of public sector, private sector and NGO experts, as well as thousands of citizen and firm survey respondents worldwide. The authors also explicitly report the margins of error accompanying each country estimate. These reflect the inherent difficulties in measuring governance using any kind of data. They find that even after taking margins of error into account, the WGI permit meaningful cross-country comparisons as well as monitoring progress over time. The aggregate indicators, together with the disaggregated underlying indicators, are available at www.govindicators.org.

PurposeThe question of public debt management for both developed and developing economies has created an enormous amount of political as well as academic interest. The purpose of this paper is to examine how governance affects public debt accumulation in the Arabian Gulf countries during the period between 1996 and 2015 period. The six Worldwide Governance indicators (WGI) (voice and accountability (VAA), political stability and the absence of violence/terrorism, government effectiveness (GEFF), regulatory quality (RQ), rule of law (RL) and control of corruption) were used to measure the quality of governance in these countries. The results show that an increase in every governance indicator except control of corruption leads to a decrease in public debt.Design/methodology/approachThe authors estimate a dynamic specification of debt to GDP ratio to study how governance affects public debt accumulation in the Arabian Gulf countries during the 1996–2015 period. The dependent variable in this study is the ratio of public debt to GDP. This study relies on the six measures of institution’s quality given by the WGI. These variables are the VAA, political stability and absence of violence (PSAV)/terrorism, GEFF, RQ, RL and control of corruption. Additional control variables are also incorporated to account for the omitted variables bias. These include the rate of inflation (Al-Marhubi, 2000) and the independent variable lagged one period. The study of the statistical relationship between institutional quality and public debt allows us to quantify the direct effect of governance on public debt, which is the effect that goes through an increase in spending or a reduction in fiscal revenues and not through a decrease in GDP growth. The econometric estimation is carried out using panel fixed effects and GLS random effects.FindingsThe estimation results confirm the core hypothesis, which considers that the poor governance in a country the higher is the ratio of public debt to GDP, ceteris paribus. Indeed, five of the worldwide Governance Index are negatively correlated with public debt ratio. These indices are GEFF, VAA, PSAV, RQ and RL. Empirical findings for other independent variables are consistent with those of empirical studies in the literature. The coefficient on the independent variable per capita income has the theoretically expected negative sign and it is highly statistically significant, implying that the higher the per capita income in a country, the lower the ratio of public debt. The independent variable government expenditure has the theoretically expected positive sign suggesting that the higher the government expenditure, the higher the ratio of public debt. The education variable has negative but not statistically significant coefficients. The independent variables (inflation, unemployment rate and lag debt ratio) have the expected signs and are highly statistically significant, implying that the higher their value in a country, the higher the ratio of public debt to GDP. Having the theoretically expected effect, the GDP growth variable is negatively correlated with public debt ratio but its coefficients are not statistically significant.Originality/valueAlthough the literature on the damaging effects of poor governance on growth is abundant (Tanzi and Davoodi, 2002; Mauro, 1996; Mo, 2001; Mauro, 1996; Brunetti et al., 1997; Campos et al., 1999; Al-Marhubi, 2000; Depken and Lafountain, 2006; Mauro, 1998), only very recently the relationship between institutional quality and public debt accumulation has been addressed. By reviewing the research on political and institutional determinants of public debt, it was found that there are few studies, which have examined regional differences, and even fewer ones have focused on the countries of the Gulf Cooperation Council (GCC). Therefore, this paper aims to fill the gap by focusing on this economic region. Furthermore, when studying the relationship between the quality of institutions and the accumulation of public debt, existing studies focus only on corruption index and neglect other determinants of governance. Thus, a second contribution of the study is to investigate how institution quality, through the six WGI, affects public debt accumulation. Furthermore, given the recent rise in public debt in GCC countries, an increasingly important question is what policy actions do these countries need to take to ensure that their debt will be sustainable and will not overwhelm their financial system? we can add: while there has been much attention given to the political and economic explanations of public debt accumulation in developing and developed countries on a global scale, scholars so far have not focused on this debate in high income oil producers.

Employing Toda-Yamamoto Granger causality technique, this study examined the relationship between public governance and corruption in Nigeria during the period, 1996-2022. In line with ex-post facto research design, secondary data (on yearly basis) on governance and corruption were obtained from Worldwide Governance Indicators and Transparency International respectively. The six governance indicators examined are control of corruption, government effectiveness, political stability/absence of violence, voice and accountability, rule of law, and regulatory quality, while corruption was measured using corruption perception index. Empirically, this study found that the existence of a unidirectional causality running from control of corruption-to-corruption perception index in Nigeria. This implies that good governance through the instrumentality of control of corruption is germane to stemming the tide of corruption. Likewise, there is a unidirectional causality flow from political stability to corruption perception index in Nigeria which suggests that political stability/absence of violence is instrumental to stemming the tide of corruption. Further evidence from causality test reveals that political stability had a one-way causality to control of corruption in Nigeria, which implies that to reinforce control of corruption as a governance instrument for stemming the tide of corruption; political stability is key. Moreover, voice and accountability, regulatory quality, and rule of law had a unidirectional causality with corruption perception index in Nigeria, thus suggesting the reinforcing role of regulatory quality, rule of law; and voice and accountability in promoting political stability. The study concludes that political stability/absence violence, and control of corruption are vital public governance measures for stemming the tide of corruption in Nigeria, thus indicating the ‘calm-down’ effect of good governance on corruption. It is therefore recommended that Nigerian government should intensify the tools of public governance in terms of control of corruption, and political stability, as well as voice and accountability, regulatory quality, and rule of law, in stemming the tide of corruption in Nigeria.

Worldwide governance indicators: Cross country data set 2012–2022

Good governance is generally believed to improve country’s economic performance. This paper studies the relationship between the World Bank’s Worldwide Governance Indicators (Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law, Control of Corruption) and economic growth in terms of GDP per capita in Kazakhstan. The findings of the research indicate that there is a significant positive relationship between good governance and economic performance of Kazakhstan. Specifically, results show that the Control of Corruption has the strongest impact on GDP per capita.

Impact of institutional environment quality on tax evasion: A comparative investigation of old versus new EU members

Governance is a tradition and institution that has the authority to control activities within a country, state or localities as the case may be, whereas, good governance shows different ways in which power and authority relations are structured in a given society. The aim of this paper is to measure the quality of governance at local level, and particularly to assess effectiveness of governance in Bida Township using Worldwide Governance Indicator (WGI) Framework. The objectives of the research are to identify different stakeholders involved in governance at the local government level and to examine the performance of good governance in Bida Township using WGI. The research was conducted using two stage sampling technique: the first stage divided Bida Township into 4 clusters while the second stage used random sampling technique to select respondents in the selected clusters. The research employed the use of questionnaire administration and in-depth interview to obtain responses from residents and the Local Government officials. The sample size for the research in the four neighborhoods was 350. Data obtained were analysed using the Worldwide Governance Indicators (WGI) to understand governance effectiveness in Bida Township. The result indicated that the performance of governance by all the stakeholders is low (Voice and Accountability 2.27; Political Stability 2.32; Government Effectiveness 1.22; Rule of Law 2.78; Control of Corruption 2.61 and Regulatory Quality 2.44). The performance shows that all the variables fall below standard of 3.50 on the scale of WGI. Therefore, the study recommends that more stakeholders who will employ Governance Framework for effectiveness in executing meaningful project for developmental purpose should be invited into the township and the Local Government Council should have a framework for Good Governance effectiveness and efficiency in order to boost the economy, be accountable and transparent so as to improve Governance performance in the study area.

Effects of governance quality on exports in Sub-Saharan Africa

Governance as a multidimensional concept provides a framework for evaluating the effectiveness of utilization of human, material and even natural resources, including innovations in a country. Therefore, in exploring the nexus between governance quality and green innovation in Nigeria, Pearson correlation and Toda-Yamamoto causality techniques were applied to the annual time series data obtained from the World Bank’s Worldwide Governance Indicators and World Development Indicators during the period, 1996-2023. Empirical evidence from Pearson correlation test indicates that, except rule of law, and voice and accountability which are negatively correlated with green innovation, the other four indicators of governance quality (control of corruption, government effectiveness, regulatory quality, and political stability) are positively correlated with green innovation in Nigeria. Furthermore, Toda-Yamamoto causality analysis reveals the existence of a unidirectional causality flow from regulatory quality to green innovation in Nigeria. However, causality runs from green innovation to control of corruption in Nigeria. The study concludes that regulatory quality is a driver of green innovation in Nigeria. There is therefore the need to improve regulatory quality in order to stimulate the level of green innovation in the country. Also, control of corruption as a governance quality could also be enhanced when there is a higher level of green innovations in Nigeria.

Despite substantial foreign aid inflows over the past decades, governance outcomes in many developing countries remain mixed and not well understood. Nepal, a major aid recipient undergoing significant political transitions, provides a useful case to examine this paradox. This study examines the relationship between foreign aid and governance performance in Nepal from 2003 to 2023, focusing on six key indicators: government effectiveness, control of corruption, rule of law, Political Stability & Absence of Violence/Terrorism, Regulatory Quality and Voice and Accountability. Using the Worldwide Governance Indicators (WGI) dataset prepared by World Bank, the study employs time series analysis and Pearson correlation analysis alongside descriptive trend examination to quantify relationships between aid and governance indicators. The findings reveal a moderate negative correlation between aid and rule of law (r = -0.45, p < 0.05), while government effectiveness and control of corruption show no significant positive relationships with aid inflows. Time series decomposition further confirms that despite increased aid, Nepal’s governance scores experienced little or no sustained improvement, especially during periods of high aid inflows (2010–2015). This challenges assumptions about the transformative potential of aid and highlights constraints caused by weak institutional capacity and unsettled political situations. This study’s use of WGI helps address previous methodological gaps in Nepal-focused governance research, though it also recognizes limitations due to the perception-based and aggregated nature of the data. These insights have important implications for donors and policymakers, emphasizing the need for aid strategies that are politically informed and aligned with local institutional realities. The paper recommends future research on subnational governance and varied aid approaches during Nepal’s ongoing federal transition.

Aggregate indexes of the quality of governance, covering large samples of countries, are widely used in research and in aid policy. Few studies examine the validity of these indexes, however. This paper partially fills this gap by examining empirically the dimensionality of the Worldwide Governance Indicators. The six indexes purportedly measure distinct concepts of control of corruption, rule of law, government effectiveness, regulatory quality, political stability, and voice and accountability. Using standard statistical techniques for testing measurement validity, the analysis concludes that the six indexes do not discriminate usefully among different aspects of governance. Rather, each of the indexes merely reflects perceptions of the quality of governance more broadly. An implication of the findings is that the Worldwide Governance Indicator indexes are frequently misused in research and policy applications, where it is commonly assumed that the indexes provide distinct measures of different aspects of the quality of governance. A further implication is that Transparency International's even more widely-known aggregate index similarly reflects perceptions not only of corruption, as intended, but of the quality of governance more broadly.

Corruption is a complex social, political and economic problem and occurs in every country with different levels. Corruption will complicate democracy and governance of a country. To overcome the problem of corruption, the government must implement good governance. This study aims to provide empirical evidence regarding the effect of elements of good governance on the level of corruption in Southeast Asia. Good governance variables are presented by six variables: voice and accountability, political stability and absence of violence / terrorism, government effectiveness, regulatory quality, rule of law and control of corruption. 
 Meanwhile, the level of corruption is measured using the Corruption Perceptions Index (CPI). The research sample was selected using the purposive sampling method and produced a sample of 8 countries and the observation period was carried out in 2009-2018 or as many as 10 years, so the number of samples in this study were 80 samples. Corruption level data used in this study uses the Corruption Perceptions Index (Transparency International), while the good governance data used in this study uses the Worldwide Governance Indicators (World Bank). The research methodology used in this study is multiple linear regression analysis with the IBM SPSS Statistics 24 program. The results showed that the variable voice and accountability, political stability and absence of violence / terrorism, and rule of law had no effect on the level of corruption, whereas the government variable effectiveness, regulatory quality, and control of corruption affect the level of corruption.

<p>This study aims to search for the determinants of long-term interest rates in the Eurozone. Panel data analysis is employed for 14 Eurozone countries for the period of 2002-2014 to analyze the determinants of long-term interest rates. This study is carried out to find out whether the Worldwide Governance Indicators (WGI), Taylor (1993) rule and also the Eurozone crisis, as a control variable, have an impact on long-term interest rates. As WGI, Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law and Control of Corruption are used. The first finding of the empirical study is that inflation gap has an impact on long-term interest rates. Another finding of the study is that Political Stability and Absence of Violence/Terrorism, Government Effectiveness and Regulatory Quality effects long-term interest rates in 14 panel cross-sections. Besides, the analysis shows that the financial crisis in Eurozone as control variable affected long-term interest rates, as would be expected.</p>

The paper investigates the determinants of taxes collected net of public services for a sample of 104 countries from all over the world over 1996-2016 period. Starting from the assumption that what really matters for the taxpayer is the tax money that actually return to the society, after paying the cost of government, we introduce the concept of taxes collected net of public services as the difference between taxes to GDP ratio and general public services expenditures to the GDP ratio and investigates its determinants from governance perspective. The main determinants looked upon were worldwide governance indicators (WGI): control of corruption, government effectiveness, political stability, regulatory quality, rule of law and voice and accountability, taken from World Bank surveys. As control variable we used GDP per capita annual growth rate. We include year fixed effects in order to control for global economic crisis, and also country fixed effects to control for unobservable country-level factors that are constant over the sample period. The analysis follows the World Bank country classification on level of development: low income, lower middle-, higher middle income and high-income countries. The results show that the rule of law governance characteristic affected the taxes net of public services the most, both in terms of economic effect and of countries coverage, while the control of corruption and regulatory quality were found significant only for lower-middle income countries and low-income countries respectively. Policy recommendations were made accordingly.