The Measurement of Governance in Arab Countries in Transitions
HUMAN CAPITAL FORMATION IN THE PUBLIC SECTOR AND THECHALLENGE OF BUILDING THE STATE IN TIMES OF CRISIS
The 5th Annual Conference of the GIFT-MENA NetworkKuwait, 28-30 January 2014
Tarik Alami, DirectorEmerging and Conflict Related Issues Division (ECRI)
Objectives and outlineOutline
i. The challenges of measuring governance & Specificities of the transition context
ii. Existing governance indicators
iii. Dividend of Good Governance
iv. Governance Indicators in the Arab Region
v. Measuring Governance in Arab Countries in Transition (ACTs): A Proposal
vi. Details of the methodology for the Arab Governance Indicators (AGIs)
vii. Outputs and uses of the indicator
I. Challenges of measuring governance & specificities of Transition Context
• Governance is a complex idea to conceptualise, no universally established definition
• It depends on traditions & domestic procedures & institutions, so it is highly context specific
difficult to define a unified governance system
• Concept with multiple dimensions, measurement requires considering many variables
• Difficult to establish a link with policy recommendations No actionability
• Transitions carry very specific issues that are not applicable elsewhere, so broad indicators may miss the point
• Transition is a very volatile process, constantly in flux, so that the requirement for updated information is important
II. Existing governance indicators§ Over the last few years, many governance-related sources of data have appeared
§ These can be classified into three types
1. Governance in general: WGIs, IIAG
2. One specific aspect of governance: CPI, OBI
3. Indirectly related to governance (but that can be decomposed into elements relevant for governance): IPD, BTI, CRHRD, GCI, EPI
§ These data sources differ in terms of specific definition used, assumptions, statistical properties, updates, geographic coverage
II. Existing governance indicators
§ Some deliberately use a broad, vague concept so it becomes difficult to know what exactly they measure
§ They mix different aspects of the governance: inputs, processes and outcomes
§ Not all of them can be used as a diagnosis tool à no actionability
§ Even with this amount of information, there are important gaps in data (human rights, security sector performance, transitional justice,...)
§ There is no indicator specific for the Arab countries undergoing a process of political transition
Nexus Governance-Development• Over the past 3 decades the region has suffered from slow & volatile growth, and
youth unemployment
• Governance Level of Income
• Governance Economic Growth
• Econ. Governance gap in MENA is estimated to cost 1-2% GDP per year
• Gov. gap affects small businesses (drivers of growth) disproportionally
• Governance enhances resilience against shocks:
• Countries with better governance escape unempl. spells more quickly
Governance
Business environment + quality of public investment
Economic Growth
III. Dividends of Good Governance: Nexus Governance-Development
• '
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III. Dividends of Good Governance: Governance and Under 5 Mortality
‘ R² = 0.157
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R² = 0.3442
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GHI
R² = 0.0963
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R² = 0.1974
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R² = 0.1997
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GHI
R² = 0.0966
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III. Dividends of Good Governance: Governance and Food insecurity
Warning: Governance and Statistical Capacity
• There is a positive association between a country’s statistical capacity index and commonly used governance indicators, although the causality is bi-directional, i.e. better production of data is likely to contribute to better governance in the same way that better governance is likely to foster data production and dissemination
9
50
55
60
65
70
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
AverageDevelopingAverageMENA
-2.50
-2.00
-1.50
-1.00
-0.50
0.00
0.50
1.00
1996
1998
2000
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
ALGERIA
EGYPT, ARAB REP.
IRAQ
JORDAN
LEBANON
LIBYA
MOROCCO
SYRIAN ARAB REPUBLIC
TUNISIA
WEST BANK AND GAZA
YEMEN, REP.
average
Source: WGI, 2013
IV. Snapshot of Governance Performance in selected MENA Countries: 1) Regulatory Quality
-2.50
-2.00
-1.50
-1.00
-0.50
0.00
0.50
1.00
1996 1998 2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
ALGERIA
EGYPT, ARAB REP.
IRAQ
JORDAN
LEBANON
LIBYA
MOROCCO
SYRIAN ARABREPUBLICTUNISIA
WEST BANK AND GAZA
YEMEN, REP.
Source: WGI, 2013
IV. Snapshot of Governance Performance in selected MENA Countries : 2) Government Effectiveness
2) The Public Sector in the Arab Region…
Source: An-Nahar Newspaper, January 2010
Appointments in the Public Administration: group/network affiliations vis-à-vis merit
IV. Snapshot of Governance Performance in selected MENA Countries: 3) Public Sector
‘
Source: Gallup and World Bank, 2012
IV. Snapshot of Governance Performance: 4) Mixed and Costly Performance for Social Protection
Source: World Bank, 2010
IV. Snapshot of Governance Performance: 5) PEFA and PFM Results in the Region
15
Arab Region less GCC
Source: Doing Business, 2012.
Source: WGI and IMF.
IV. Snapshot of Governance Performance: 6) Governance Deficit in the Region
V.1 Measuring Governance in Arab Countries in Transition (ACTs)
§ In light of the evidence provided in the data, a closer look at the governance deficit does help in addressing inclusive development challenges
§ To support countries in transition, ESCWA has in the pipeline An Arab Governance Report and a proposal to measure governance trend
§ The notion of governance in a transition context is conceptualised through seven pillars
V.1 Measuring Governance: Pillars (P)
Institutional effectiveness
Democratic transformation
Economic mgmt
Humanrights
Women’s status
Provision of public services
Spillover effect
V.1 Measuring Governance: P à Categories (C)
Institutional effectivenessConstitution
Rule of law
Accountability and transparency
Government effectiveness
Functioning of economic institutions
Corruption
Informal networks
Institutional effectiveness
Democratic transformation
Economic mgmt
Humanrights
Women’s status
Provision of public services
Spillover effect
V.1 Measuring Governance: P à C àSubcategories (S)
Institutional effectivenessConstitution
Rule of law
Accountability and transparency
Government effectiveness
Functioning of economic institutions
Corruption
Informal networks
Institutional effectiveness
Democratic transformation
Economic mgmt
Humanrights
Women’s status
Provision of public services
Spillover effect
Accountability and transparency
Checks and balances (C&B): executive authorities
C&B: legislative authorities
C&B: judicial authorities
Decentralisation
Transparency in public institutions
V.1 Measuring Governance: P à C à S àIndividual variables
Institutional effectivenessConstitution
Rule of law
Accountability and transparency
Government effectiveness
Functioning of economic institutions
Corruption
Informal networks
Institutional effectiveness
Democratic transformation
Economic mgmt
Humanrights
Women’s status
Provision of public services
Spillover effect
Accountability and transparencyChecks and Balances (C&B): executive authorities
C&B: legislative authorities
C&B: judicial authorities
Decentralisation
Transparency in public institutions
Transparency in public institutionsIndividual variable 1Individual variable 2Individual variable 3…
What ESCWA Has in the PipelineV.1 Measuring Governance in Arab Countries in Transition
Pillars Categories Sub-categories
I. Institutional effectiveness
1. Constitution Democratic guaranteesBill of rights
2. Rule of law
Clear and consistent legal frameworkJudicial effectivenessJudicial independencePhysical and intellectual property rights
3. Accountability and transparency
DecentralisationChecks and balances: executive authoritiesChecks and balances: legislative authoritiesChecks and balances: judicial authoritiesTransparency in public institutions
4. Government effectiveness
Policy implementationQuality of public policiesPublic administrationCapacity of tax administrationPublic perception of government effectiveness
5. Economic institutions Central bankStatistical institution
6. Corruption
Anticorruption legal frameworkCorruption in the public sectorCorruption in the defence and security sectorCorruption and private sector activityPublic perception of corruption
7. Informal networks Role of informal networksPublic perception of importance of network
II. Women status 1. Women’s rights and freedoms
General legal guaranteesPolitical rights (empirical)Economic rights (empirical)Social rights (empirical)
III. Human rights1. Rights and freedoms
Fundamental rightsOther civil and political rightsEconomic, social and cultural rights
2. Rights of marginalised groups Minority rightsChildren rights
…IV. Regional spillovers 1. Neighboring effects Neighboring effect
2. Security Sector - Army Inter-state violence and conflictsSecurity sector
V. Transition Process
1. Violence and instability
Intra-state organised violence and conflictsPopulation displacement (IDP)State strengthViolent demonstrations
2. Security sector reform
Negative practicesDegree of militarisationOversight and public scrutiniyFinance and budgetPersonnelPublic trust
3. Justice and reconciliationRestitution of victimsRecovery of stolen assetsReconciliation
4. Legitimacy
Constitution-building processElectoral process and pluralismLegislative inclusivenessPolitical participationCivil society strengthConsensus-buildingSocial cohesion
VI. Economic management
1. Economic policy
Fiscal policy, public finances and debt managementMonetary and foreign exchange policiesExternal accounts and resilience to external shocksLabour market
2. Development of the private sector
Competitive environmentInvestment and business climateRed tape and regulationsFinancial sectorForeign investment
3. Equal economies opportunities
Social and economic inclusionDevelopment of the rural sectorSustainability and natural resources management
VII. Provision of public goods and services
1. Infrastructure and utilities
Public and public-private investmentTransport infrastructureCommunication infrastructureEnergyWater and sanitationEducation
VI. Methodology: 1) level of aggregation
The AGIs look for a balance in the level of aggregation:
• enough aggregation so data can be summarised and interpreted• moderate aggregation so the composite remains meaningful
Instead of one indicator, a number of composite indicators that cover the entire spectrum of governance
This will preserve the multidimensionality of the concept and allow studying interactions between different elements
Pillar à Category à Subcategory à Individual variables
aggr aggr aggr aggr
VI. Methodology: 1) level of aggregation
Institutional effectivenessConstitution
Rule of law
Accountability and transparency
Government effectiveness
Functioning of economic institutions
Corruption
Informal networks
Institutional effectiveness
Democratic transformation
Economic mgmt
Humanrights
Women’s status
Provision of public services
Spillover effect
Accountability and transparencyChecks and Balances (C&B): executive authorities
C&B: legislative authorities
C&B: judicial authorities
Decentralisation
Transparency in public institutions
Transparency in public institutionsIndividual variable 1Individual variable 2Individual variable 3…
Governance↓Institutional effectiveness (P)↓Accountability and transparency (C)↓Transparency in public institutions (S)
û
û
ü
ü
VI. Methodology: 2) data sources
The AGIs will take advantage of the wealth of governance-related information available in the literature
Arab Democracy Index Education Database UNESCO
Global Water Intelligence Statistics
Quality of Government Expert Survey
Arab Opinion Index Environmental Performance Index
Institutional Profiles Database
Resource Governance Index
Bertelsmann Transformation Index Failed State Index Institutions and Elections
Project Rule of Law Index
Cingranelli-Richards Human Rights Dataset Freedom in the World International Property
Rights IndexSocial Institutions and
Gender Index
Conflict Data Program Gallup World Poll Linaburg-MaduellTransparency Index
State of the World’s Children
Corruption Perceptions Index GenderStats Open Budget Index Sustainable Governance
Indicators
Database of Political Institutions
Global Competitiveness Index PEFA
Trends in International Mathematics and
Science Study
Ease of Doing Business Index Global Peace Index Press Freedom Index World Energy Outlook
VI. Methodology: 2) data sources
Criteria used to select variables from external sources
1. Relevancy 2. Methodologically sound3. Variety of sources & topics4. Limited bias and/or normative assumptions5. Coverage of the ACTs6. Updated information
VI. Methodology: 2) data sources
§ This will be complemented with new variables constructed specifically for the AGIs
– Calculations using existing data sources– Desktop research– Expert assessment for specific areas à ownership of the
indicator construction by national partners
§ Instead of measuring processes, rules and institutions per se, or concentrating only on outcomes, the variables will be selected/constructed to target efficiency, fairness, representativeness, social justice and cost of delivering quality development
VI. Methodology: 3) aggregation
The individual variables are combined into a composite indicator (at the subcategory and category level) following two steps:
1. Standardisation2. Aggregation using a specific weighting scheme
VI. Methodology: 3) aggregationàstandardization
§ Standardisation is performed so that variables with different characteristics can be combined together
Several options available: minmax transformation, distance from a fixed value, z-scores
Given that it homogenises the centre and dispersion of the distribution, z-scores is the option selected
§ To avoid imposing extraneous assumptions on the data and keep the methodology clear and straightforward, exogenous weighting is selected. An initial approach will be equal weighting
Subsequently, a panel of experts or another exogenous method could determine the relative importance of each variable inside a subcategory, or each subcategory inside a category
VI. Methodology: 4) benchmark
§ Restricting the number of countries under study to the ATCs allows us to:
a) Concentrate the analysis on the specific aspects of governance shared by these countries
b) Analyse in detail the individual challenges they face
§ However, limiting the statistical analysis to such a small sample brings about some problems:
a) Standardisation require sample estimates of mean and standard deviation and this becomes troublesome under small samples
b) The results would lack a context and this would limit the analysis
§ This calls for the expansion of the sample through a “benchmark” of countries
VI. Methodology: 4) benchmark
§ The benchmark was selected according to two criteria:
1. Countries with a similar stages of developmentà High, middle and low human development (UNDP)
2. Ideal cases of successful democratic transitionsà Start with all cases of recent political transitions and select
those that have reached such a level of progress in political areas that they can be considered consolidated democracies
Result: 27 countries (6 CEE, 2 FSR, 11 LAC, 3 SEA, 5 SSA)
VI. Methodology: 5) illustration
Pillar: Provision of public goods and servicesCategory: Social policy (1/2)Subcategory: Education (1/3)Variable name Source Last update WGI 2013
Quality of the education system Global Competitiveness Index 2013 -
Quality of public services: education Institutional Profiles Database 2012 -
Quality of primary education Global Competitiveness Index 2013 GE
Quality of math and science education Global Competitiveness Index 2013 -
Gender parity in tertiary education GenderStats 2011 -
Gender ratio of university graduates Arab Reform Index 2011 -
Education policy Bertelsmann Transformation Index 2012 -
Coverage of public services: education Institutional Profiles Database 2012 GE
Satisfaction with the educational system Gallup World Poll 2012 GE
Education system and labour market Institutional Profiles Database 2012 -
Inadequately educated workforce as a major business constraint Enterprise Surveys Various -
Building human resources Country Policy and Institutional Assessments 2012 -
Efficiency of expenditure on education Desktop research 2011 -
VI. Methodology: 5) illustration
EducationCountry Indicator QuintileEgypt -1.37 VJordan 1.46 ILibya -0.76 VMorocco -0.52 IVSyria 0.67 IITunisia 0.79 IIYemen -2.13 V
-2.13 -0.74 -0.39 0.31 0.79 2.39
V IV III II I
LYYE SYMA TN JOEG
VII. Output of the governance indicators
§ Instead of presenting a “global” indicator of gov. , the AGIs will be delivered as a set of measurements associated with different dimensions of governance (subcategory and category level)
§ This will shed light on the specificities of the governance system of each country with special emphasis on efficiency, social justice & cost of delivering quality development
§ They will purposely identify current challenges and pressuring elements of the ACTs and will emphasize the interconnections and correlations among the different elements
Institutional effectiveness
Democratic transformation
Economic mgmt
Humanrights
Women’s status
Provision of public services
Accountability & transp: XXC&B: executive authorities: xxC&B: legislative authorities: xx…
Government effectiveness: XXPolicy implementation: xxPublic administration: xx…
…
Rights & freedoms:XXFundamental: xxPolitical rights: xx…
Marginalised grps: XXMinorities: xxChildren: xx…
…
Infrastructure and utilities: XXCommunication infrastr: xxWater and sanitation: xx…
Social policy: XXEducation: xxHealth: xx…
…
Security sector reform: XXDegree of militarisation: xxOversight, public scrutiny: xx…
Justice and reconciliation: XXRecovery of stolen assets: xxRestitution of victims: xx…
…
Economic policy: XXFiscal and debt: xxLabour market: xx…
Eq economic opp: XXInclusion: xxSustainability: xx…
…
Economic rights: xxPolitical rights: xxSocial rights: xx…
Spillover effect
Neighbouring effs: XXPopn displacement: xxNeighbor conflicts: xx…
Security sector: XXInter-state conflicts: xxSS involvement: xx…
VII. Output of the governance indicators
VII. Output of the governance indicators 1) Correlations at the C and S levels
Institutional effectiveness
Democratic transformation
Economic mgmt
Humanrights
Women’s status
Provision of public services
Accountability and transparency Civil society strength
Spillover effect
Institutional effectiveness
Democratic transformation
Economic mgmt
Humanrights
Women’s status
Provision of public services
Constitution (de jure)
Rights and freedoms (de facto)
Spillover effect
VII. Output of the governance indicators 1) Correlations at the C and S levels
Institutional effectiveness
Democratic transformation
Economic mgmt
Humanrights
Women’s status
Provision of public services
Efficiency of tax administration
Fiscal policy
Spillover effect
VII. Output of the governance indicators 1) Correlations at the C and S levels
Institutional effectiveness
Democratic transformation
Economic mgmt
Humanrights
Women’s status
Provision of public services
Corruption in the security sector
Fundamental rights (de facto)
SecuritySecurity sector reform
Spillover effect
VII. Output of the governance indicators 1) Correlations at the C and S levels
Institutional effectiveness
Democratic transformation
Economic mgmt
Humanrights
Women’s status
Provision of public services
Social policyLegitimacy
Social cohesion
Social and economic inclusion
Spillover effect
VII. Output of the governance indicators 1) Correlations at the C and S levels
§ The proposed AGIs will allow:1. a comparison between countries and to monitor trends &
identify bottlenecks2. Data for analysis & informing policy advice and not for ranking
§ The use of countries with the same level of development that underwent successful transitions will put the results of the ACTs into context & measure progress towards “ideal” outcome
§ Identify priorities and suggest new, evidence-based policy options to improve governance
VII. Output of the governance indicators: 2) Uses of the Indicators
§ The proposed AGIs can help governments & development agencies to design programs and measure their impact through specific, measurable indicators
§ Openly available and transparent methodology
§ different countries will follow different paths, partly because their initial governance and institutional conditions are rather different so the proposed methodology will permit Self assessment that allows adaptation of policy tolls to specific national context for reform and monitoring 42
VII. Output of the governance indicators: 2) Uses of the Indicators
