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World Bank Releases New Governance Indicators

Good governance can deliver noteworthy improvements in living standards for people in the developing countries. Government reformers, citizens, domestic enterprises and foreign investors see governance as the main ingredient for sustainable growth and a sound investment climate, and around the world demand data and analysis to monitor the quality of governance over time. Aid donors, too, know that aid flows are most efficient in countries with good institutional quality. 
The World Bank is helping such countries, and their development allies in civil society and the donor community, by giving a set of governance indicators which can help depoliticize efforts to track the quality of institutions, support capacity building, enhance governance and address corruption.

In a new research report issued, Daniel Kaufmann, Director of Global Governance at the World Bank Institute, and Aart Kraay, Lead Economist in the Bank's Research Group, unveiled an expanded and updated set of worldwide governance indicators that cover 209 countries between 1996 to 2004. Starting in the late nineties, they start to develop and analyze measures for six components of good governance namely (A) Voice and Accountability, (B) Political Instability and Violence, (C) Government Effectiveness,  (D) Regulatory Burden,  (E) Rule of Law  and (F) Control of Corruption.

Enhanced governance leads to higher standards of living and poverty alleviation. The research finds out that improved standards of living are in fact the result of improved governance. Enhancing governance in poor countries, such as in Sub-Saharan Africa, for illustration, would yield important results. Yet good governance is not a luxury that only wealthy countries can afford. exs comprise the cases of Botswana, Chile, Slovenia and the Baltics, for instance-emerging economies which have already attained high quality governance.

These improvements in governance are realistic. For illustration, for improvements in the rule of law, a one standard deviation difference would comprise the realistic enhancement from the low levels of  a country such as Somalia to that of Laos, or from the level of Laos to Lebanon, or from that of Lebanon to Italy, or from Italy to Canada. For Voice and Accountability it would constitute the enhancement in the levels of a country such as Myanmar to that of Kazakhstan or from the level of Kazakhstan to that of Georgia, or from the level of Georgia to that of Botswana, while for Control of Corruption it is the enhancement from the levels of Equatorial Guinea to those of Cuba, Honduras or Uganda, or from such of Uganda to those of Lithuania or Mauritius, or from those of Mauritius to those of Portugal, or from those of Portugal to the stellar standards of Finland, Iceland or New Zealand.

Yet the global reality is sobering: limited progress on average. Despite of enhancements in some countries, there have been at least as most of the countries where deterioration has taken place in most of the dimensions of governance, and many more where no important change is apparent yet. Therefore, on average the quality of governance around the world has remained stagnant, highlighting the urgent requirement for more determined progress in this area in order to accelerate the poverty reduction.

"In spite of a number of shining illustrations, the fact is that, on average, neither the rich nor the poor worlds have enhanced in their standards on governance over the past eight years. This sobering reality ought to motivate collective action in the next phase," says Kaufmann.

problem 1: describe the role of World Bank with regard to the global economic governance.

problem 2: Give detailed description on the six components of good governance emphasized through the World Bank.

problem 3: With reference to this statement in the case study above:  “On average the quality of governance around the world has remained stagnant, highlighting the urgent need for more determined progress in this area  in order to accelerate poverty reduction.”

describe in detail three issues to be addressed in the social policy for poverty alleviation in an emerging economy like Mauritius.

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M96424

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