Measuring institutions

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Measuring institutions

• Data sources

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Problems

• Multidimensional concept that is difficult to
  measure
• social norms and traditions
• legal rules
• governance
• Measurement errors and biases
• errors
• differences in perceptions (expert opinions)

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Most comprehensive dataset as of today

• Worldwide governance indicators 1996-2006
  Source World Bank, www.govindicators.org
• Sample 213 countries and territories 1996,
  1998, 2000, 2002-2006 years
• Kaufmann, Daniel, Kraay, Aart and Mastruzzi,
  Massimo, "Governance Matters VI Governance
  Indicators for 1996-2006" (July, 2007). Available
  at SSRN http//ssrn.com/abstract999979

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Dimensions of governance

• 1. Voice and accountability (VA), the extent to
  which a countrys citizens are able to
  participate in selecting their government, as
  well as freedom of expression, freedom of
  association, and free media
• 2. Political stability and absence of violence
  (PV), perceptions of the likelihood that the
  government will be destabilized or overthrown by
  unconstitutional or violent means, including
  political violence and terrorism
• 3. Government effectiveness (GE), the quality of
  public services, the quality of the civil service
  and the degree of its independence from political
  pressures, the quality of policy formulation and
  implementation, and the credibility of the
  governments commitment to such policies
• 4. Regulatory quality (RQ), the ability of the
  government to formulate and implement sound
  policies and regulations that permit and promote
  private sector development
• 5. Rule of law (RL), the extent to which agents
  have confidence in and abide by the rules of
  society, and in particular the quality of
  contract enforcement, the police, and the courts,
  as well as the likelihood of crime and violence
• 6. Control of corruption (CC), the extent to
  which public power is exercised for private gain,
  including both petty and grand forms of
  corruption, as well as capture of the state by
  elites and private interests.

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Methodology (2006)

• 276 individual variables measuring different
  dimensions of governance.
• 31 different sources, produced by 25 different
  organizations.
• Aggregation into 6 categories using the principle
  component analysis
• Point estimates and standard errorsgtdistribution
  of the measure

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Database of political institutions

• World Bank, 1990-2004, 177 countries
• Variables
• Political system
• Executive controls
• Party variables
• Elective rules
• Federalism
• Beck, Thorsten, George Clarke, Alberto Groff,
  Philip Keefer and Patrick Walsh, (2001), "New
  tools in comparative political economy The
  Database of Political Institutions," 151,
  165-176 (September), World Bank Economic Review.

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Measuring corruption

• Transparency international (TI) at
  www.transparency.org
• Corruption perception index
• The CPI ranks more than 150 countries by their
  perceived levels of corruption, as determined by
  expert assessments and opinion surveys.
• Global corruption barometer
• public opinion survey, 59,661 respondents in 63
  countries.
• Bribe payers index 2006
• 30 leading exporting countries, responses of
  11,232 business executives from companies in 125
  countries

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Corruption perception index 2006
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CPI 2006 Eastern Europe and Former Soviet Union
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Global Corruption Barometer 2006 bribes
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Global Corruption Barometer 2006 corruption of
institutions in a sample of countries
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Correlation between CPI and global barometer
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Bribe payers index
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Transition countries

• EBRD Transition report http//www.ebrd.com/countr
  y/sector/econo/stats/index.htm
• The Business Environment and Enterprise
  Performance Survey (BEEPS) http//info.worldbank.
  org/governance/beeps/

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International trade, geography, and distances
(New Economic Geography will be offered in the
Mini Term III January-March 2008)

• CEPII (France)
• http//www.cepii.fr/anglaisgraph/news/accueilengl.
  htm
• World integrated trade solution
• http//wits.worldbank.org/witsweb/

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General economic indicators

• World development indicators (WDI)
• http//web.worldbank.org/WBSITE/EXTERNAL/DATASTATI
  STICS/0,,contentMDK20398986menuPK64133163pageP
  K64133150piPK64133175theSitePK239419,00.html
• United Nations
• http//unstats.un.org/unsd/databases.htm
• OECD
• http//www.oecd.org/statsportal/0,3352,en_2825_293
  564_1_1_1_1_1,00.html
• EuroStat
• http//epp.eurostat.ec.europa.eu/portal/page?_page
  id1090,30070682,1090_33076576_dadportal_schema
  PORTAL