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Governance Redux: The Empirircal Challenge

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  • Daniel Kaufmann

    (World Bank Institute)

Abstract

This paper is based on the governance chapter contribution to the 2003/04 Global Competitiveness Report (GCR). Building from the 2002/03 contribution to the GCR, it argues that governance continues to be at a crossroad, its underperformance being evident worldwide in most regions and across many countries. This ('governance policy gap') contrasts with the strides that have been made in many countries in improving macro- economic policies for well over a decade. Based on a worldwide survey of enterprises carried out for the GCR, we find that firms from emerging economies single out corruption and excessive bureaucracy among the top constraints to their business operations, while excessive bureaucracy and the tax regime are identified as top constraints by the respondent firms from the OECD. Many countries currently have levels of governance that are insufficient to support their income levels and/or growth path, namely they experience a 'governance deficit', which can be quantified. We also carry out a simple empirical exploration challenging the validity of legal-historical origins in determining governance performance in emerging economies nowadays, and provide a brief synthesis of the empirical importance of inequality of influence (by vested interests), as well as of governance at the city level.

Suggested Citation

  • Daniel Kaufmann, 2004. "Governance Redux: The Empirircal Challenge," Law and Economics 0405001, EconWPA.
  • Handle: RePEc:wpa:wuwple:0405001
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    Cited by:

    1. Steven Globerman & Daniel Shapiro, 2005. "Assessing International Mergers and Acquisitions as a Mode of Foreign Direct Investment," Chapters,in: Governance, Multinationals and Growth, chapter 5 Edward Elgar Publishing.
    2. Gouranga Gopal Das & Soamiely Andriamananjara, 2006. "Hub-and-Spokes Free Trade Agreements in the Presence of Technology Spillovers: An Application to the Western Hemisphere," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(1), pages 33-66, April.
    3. M . G. Quibria, 2006. "Does Governance Matter? Yes, No or Maybe: Some Evidence from Developing Asia," Kyklos, Wiley Blackwell, vol. 59(1), pages 99-114, February.
    4. Berhanu Nega, 2011. "Short Changing the Value of Democracy for Economic Development in Africa," Forum for Social Economics, Taylor & Francis Journals, vol. 40(3), pages 313-334, January.
    5. Axel Dreher & Martin Gassebner & Lars-H.R. Siemers, 2007. "Does Terror Threaten Human Rights? Evidence from Panel Data," KOF Working papers 07-156, KOF Swiss Economic Institute, ETH Zurich.
    6. World Bank, 2004. "Honduras : Investment Climate Assessment, Volume 2. Main Report," World Bank Other Operational Studies 14556, The World Bank.
    7. Christophe LAVIALLE, 2009. "Arab Mediterranean Countries Facing the "Second Generation" of Reforms: A Political Economy Standpoint," LEO Working Papers / DR LEO 241, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    8. Haggard, Stephan & Tiede, Lydia, 2011. "The Rule of Law and Economic Growth: Where are We?," World Development, Elsevier, vol. 39(5), pages 673-685, May.
    9. Denyer Willis, Graham & Mota Prado, Mariana, 2014. "Process and Pattern in Institutional Reforms: A Case Study of the Police Pacifying Units (UPPs) in Brazil," World Development, Elsevier, vol. 64(C), pages 232-242.
    10. Andvig, Jens Chr., 2006. "Corruption and fast change," World Development, Elsevier, vol. 34(2), pages 328-340, February.

    More about this item

    Keywords

    Governance Competitiveness; Corruption; Business Survey; Influence;

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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