• Donor assessments

Donor assessments

Some international organisations, and most prominently the World Bank, play a leading role, both in the supply and use of cross-country governance ratings. This paper explains:

• the reasons for this role
• the problems associated with the most popular indicators produced by the World Bank; and
• the reasons for the popularity and widespread misuse of these indicators.

The author argues that while there will never be one perfect governance indicator, the production and use of more transparent governance indicators will better serve the needs of users and developing countries alike.

The author points out that the most popular governance indicators are perception-based composite indicators that summarize a large amount of data and are available for a large number of countries.

International Organisations devise and use composite cross-country comparable governance indicators. However, the limitations of the most-widely used indicators with respect to comparability over time, transparency and actionability and the increased resistance from developing countries puts into question the fulfilment of these high expectations.

The more users rely on the same indicators, the more they become “generally accepted internationally”, which spreads their use further. Another reason for the popularity of a few indicators and their widespread misuse is that decision-makers demand a summary measurement for cross-country and over-time comparisons and perceive that there is no alternative to the most popular indicators.

New, more specific and transparent initiatives have emerged in recent years. Some provide comparable data for a large number of countries and others are more context-specific. What they have in common is
that they do not claim to assess the quality of overall governance, but focus on specific and well-defined aspects of governance and, therefore, give guidance to developing countries on how to improve their rating.

The author concludes that until there is a theory of governance to guide the construction of meaningful indicators of the overall quality of governance, the development community should focus on such specific and well-defined indicators. As with all indicators, these new indicators have their limitations; however, since they are transparent, their limitations are also transparent, hence reducing the danger of misinterpretation and misuse.

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