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The Good Governance Indicators of the Millennium Challenge Account: How Many Dimensions are Really Being Measured?

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  • Knoll, Martin
  • Zloczysti, Petra

Abstract

This paper assesses the validity of the perception-based governance indicators used by the US Millennium Challenge Account (MCA) for aid allocation decisions. By conducting Explanatory and Confirmatory Factor Analysis of data from 1996 to 2009, we find that although the MCA purports to measure seven distinct dimensions of governance, only two discrete underlying dimensions, the perceived “participatory dimension of governance” and the perceived “overall quality of governance,” can be identified. Our results also show that some of the doubts that have been raised concerning the validity of perception-based governance indicators are less warranted when the indicators are applied exclusively to developing countries.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 40 (2012)
Issue (Month): 5 ()
Pages: 900-915

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Handle: RePEc:eee:wdevel:v:40:y:2012:i:5:p:900-915

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Web page: http://www.elsevier.com/locate/worlddev

Related research

Keywords: aid allocation; governance indicators; Factor Analysis; MCA; United States;

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  1. Henry Kaiser, 1974. "An index of factorial simplicity," Psychometrika, Springer, vol. 39(1), pages 31-36, March.
  2. Stanislav Kolenikov, 2009. "Confirmatory factor analysis using confa," Stata Journal, StataCorp LP, vol. 9(3), pages 329-373, September.
  3. Burnside, Craig & Dollar, David, 1997. "Aid, policies, and growth," Policy Research Working Paper Series 1777, The World Bank.
  4. N. Hermes & R. Lensink, 2001. "Changing the Conditions for Development Aid: A New Paradigm?," Journal of Development Studies, Taylor & Francis Journals, vol. 37(6), pages 1-16.
  5. Chhotray, Vasudha & Hulme, David, 2009. "Contrasting Visions for Aid and Governance in the 21st Century: The White House Millennium Challenge Account and DFID's Drivers of Change," World Development, Elsevier, vol. 37(1), pages 36-49, January.
  6. Michael A. Clemens & Steven Radelet, 2003. "The Millennium Challenge Account: How Much is Too Much, How Long is Long Enough?," Working Papers 23, Center for Global Development.
  7. Laura Langbein & Stephen Knack, 2010. "The Worldwide Governance Indicators: Six, One, or None?," Journal of Development Studies, Taylor & Francis Journals, vol. 46(2), pages 350-370.
  8. M A Thomas, 2010. "What Do the Worldwide Governance Indicators Measure?," The European Journal of Development Research, Palgrave Macmillan, vol. 22(1), pages 31-54, February.
  9. Michela Nardo & Michaela Saisana & Andrea Saltelli & Stefano Tarantola & Anders Hoffman & Enrico Giovannini, 2005. "Handbook on Constructing Composite Indicators: Methodology and User Guide," OECD Statistics Working Papers 2005/3, OECD Publishing.
  10. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2007. "The worldwide governance indicators project : answering the critics," Policy Research Working Paper Series 4149, The World Bank.
  11. Daniel Kaufmann & Aart Kraay & Massimo Mastruzzi, 2010. "Response to ‘What do the Worldwide Governance Indicators Measure?’," The European Journal of Development Research, Palgrave Macmillan, vol. 22(1), pages 55-58, February.
  12. Berthelemy, Jean-Claude & Tichit, Ariane, 2002. "Bilateral Donors' Aid Allocation Decisions: A Three-dimensional Panel Analysis," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  13. Kaufmann, Daniel & Kraay, Aart & Zoido-Lobaton, Pablo, 1999. "Aggregating governance indicators," Policy Research Working Paper Series 2195, The World Bank.
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Cited by:
  1. Knoll, Martin, 2013. "The heavily indebted poor countries and the multilateral debt relief initiative: A test case for the validity of the debt overhang hypothesis," Discussion Papers 2013/11, Free University Berlin, School of Business & Economics.

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