TOWARDS A MULTIDIMENSIONAL MEASURE OF GOVERNANCE
SHABANA SINGHVANDERBILT UNIVERSITYAPRIL 2011
“Government is not reason; it is not eloquence; it is force! It is a dangerous servant and a terrible master.”
– George Washington, 1st President of USA.
What is governance?UNDP: "comprises the mechanism and process for citizens
and groups to articulates their interests, mediate their differences and exercise their legal rights and obligations.”
European Commission: "the way public functions are carried out, public resources are managed and public regulatory powers are exercised".
World Bank: "the state's institutional arrangements; the processes for formulating policy, decision making, and implementation; information flows within government; and the overall relationship between citizens and government."
INTRODUCTIONThe available indices:
Broad focus indices: Political Freedom Index (HDR, 1992) World Governance Indices by World Bank Mo Ibrahim’s Index of African Governance
Narrow focus indices: Corruption Perception Index by Transparency
International
INTRODUCTION
Political Freedom Index:• Personal Security • Rule of Law• Freedom of expression• Political Participation• Equality of Opportunity
Worldwide Governance Indicators• Voice and Accountability• Political Stability and Absence of Violence • Government Effectiveness • Regulatory Quality• Rule of Law• Control of Corruption
Mo Ibrahim’s Index of African Governance •Safety and Security•Rule of law, Transparency Corruption.•Participation and Human Rights •Human Development•Sustainable Economic Opportunity
Governance is a multidimensional phenomena
INTRODUCTIONBroad concerns about governance indicators:
What is governance and what indicators should be incorporated?
(Arndt and Oman 2006), (Thomas 2010)
Quality of data and cross-country comparisons (Kaufmann and Kraay 2007), (Julius Court and Mease 2002)
and (Knack, Kugler, and Manning 2003)
The sensitivity of the measures to the scaling of data
This issue is the main focus of this paper
MO IBRAHIM’S IAGThe data:
57 indicators of Governance for 48 countries in Africa Multiples sources for data, like Transparency International,
CIRI Human Rights Data 18 of the 57 indicators are ordinal variables
Three tier structure to the index. 57 indicators are divided into 15 sub-categories. 15 sub-categories are aggregated up to five dimension
indices.
Five dimensions of Governance are aggregated to get a single measure of Governance
MO IBRAHIM’S IAGGovernance
Safety and Security
National Security
Public Security
Rule of law, Transparenc
y Corruption.Ratificati
on of critical legal
normsExistence of
Independent and Efficient Judicial Systems
Corruption
Participation and Human
RightsParticipat
ion
Respect of
Human Rights
Absence of
discrimination
Sustainable Economic
OpportunityWealth
Creation
The Arteries
of Commer
ce
Environmental
Sensitivity
Human Developmen
tPoverty
and Inequality
Health
Education
MO IBRAHIM’S IAGSafety and Security
National Security
Government involvement in armed conflict
No. of battle deaths
No. of internally displaced persons
No. of civilian deaths due to one-sided violence
Ease of Access to Small Arms and Light Weapons
No. of refugees and asylum seekers from this nation
Public Security
Level of Violent Crime (Homicides Rates)
MO IBRAHIM’S IAGAggregation Methodology: Rescaling of raw data (both ordinal and cardinal)
Three methods used for choosing the min and max: 1st method allows for inter-temporal comparisons for each
country 2nd method allows for cross country comparisons for each year 3rd method : the “benchmark” case similar to the 2nd but uses
values from 2000 Scores can be below 0 and above 100
MAIN ISSUEThe IAG has 18 of its 57 indicators as ordinal variables. IAG imputes cardinal values to ordinal data
• Problematic: Choice of scale can affect the rankings of different nations
Example:4 nations and 4 dimensions. We use a simple average across the 4 dimensional values to arrive at an overall measure. Observations can take values on a scale of 0-10 in each dimension. Higher values indicate better performance.
EXAMPLE- ORDINAL DATA
Nation A has the lowest score and Nation D has the highest.Undertake the following exercise, with the data above:Rescale the data to a 0-100 scale. Square the value in each dimension to get the new rescaled values. Compute the composite index, as done previously (simple average of the scores in each dimension).
Dimension 1 Dimension 2 Dimension 3 Dimension 4Average
ScoreCountry A 10 10 0 0 5Country B 4.5 7.1 7.1 4.5 5.8Country C 4.5 4.5 8.9 4.5 5.6Country D 4.5 8.9 4.5 7.1 6.25
EXAMPLE- ORDINAL DATA
Nation A now has the highest score!
Note:The ranking of the nations in each specific dimension are preserved.The aggregation (simple average) results in a new scheme for the composite index.
Dimension 1 Dimension 2 Dimension 3 Dimension 4Average
ScoreCountry A 100 100 0 0 50Country B 20 50 50 20 35Country C 20 20 80 20 35Country D 20 80 20 50 42.5
REVISITING ALKIRE-FOSTER METHODOLOGY Identifcation stage: Dual cut-off
Deprivation cutoffs idenfity whether deprived in the that index Dimension cutoff: No. of indicators one has to be deprived in
to be considered poor Aggregation stage : FGT based measure:
For ordinal dimensions use the multidimensional adjusted headcount (M0)
For cardinal dimensions use the any of the class of measures
REVISIT: EXAMPLE
Dimension 1 Dimension 2 Dimension 3 Dimension 4 Av ScoreCountry A 10 10 0 0 5Country B 4.5 7.1 7.1 4.5 5.8Country C 4.5 4.5 8.9 4.5 5.6Country D 4.5 8.9 4.5 7.1 6.25
Dimension 1 Dimension 2 Dimension 3 Dimension 4 Av. ScoreCountry A 0 0 1 1 0.5Country B 1 1 0 1 0.75Country C 1 1 0 1 0.75Country D 1 0 0 0 0.25Cutoff 5 8 4 5
Using the AF methodology:
Note: Lower scores imply better performance
Original data: With a scale of 0-10
REVISIT: EXAMPLE Dimension 1 Dimension 2 Dimension 3 Dimension 4 Av ScoreCountry A 100 100 0 0 50Country B 20 50 50 20 35Country C 20 20 80 20 35Country D 20 80 20 50 42.5
Dimension 1 Dimension 2 Dimension 3 Dimension 4 Av ScoreCountry A 0 0 1 1 0.5Country B 1 1 0 1 0.75Country C 1 1 0 1 0.75Country D 1 0 0 0 0.25Cutoff 25 64 16 25
Rescaled data: Scale 0-100
Using AF Methodology on the new data:
Notice: No change in rankings!
A NEW GOVERNANCE INDEX Indicators are aggregated using AF to give dimension specific governance indicesAverage of these dimension specific indices gives overall level of governance for the nationDo not aggregate across nations. For the IAG the dimensions: Safety and Security, Rule of law, Transparency Corruption & Participation and Human Rights
Treat them as ordinal , use M0
For IAG dimensions: Human Development & Sustainable Economic Opportunity
Treat them as cardinal, use M1
A NEW GOVERNANCE INDEX For ordinal dimensions
For cardinal dimensions
Overall governance is
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MAIN RESULTS Country Governance index Rank IAG Rank Difference in RanksCape Verde 0.043 1 3 -2Mauritius 0.104 2 1 1Lesotho 0.131 3 12 -9Gabon 0.133 4 8 -4Ghana 0.148 5 7 -2Rwanda 0.303 17 18 -1Swaziland 0.312 18 34 -16Sierra Leone 0.317 19 37 -18Benin 0.318 20 13 7Burkina Faso 0.329 21 20 1Central African Republic 0.600 44 43 1Sudan 0.659 45 45 0Chad 0.693 46 46 0Congo, Democratic Rep. 0.723 47 47 0Somalia 0.842 48 48 0
RESULTS (STRICT LINES) Country Governance index Rank IAG Rank Difference in RanksCape Verde 0.128 1 3 -2Mauritius 0.269 4 1 3Lesotho 0.292 8 12 -4Ghana 0.370 10 7 3Gabon 0.398 11 8 3Rwanda 0.428 12 18 -6Benin 0.494 18 13 5Burkina Faso 0.514 24 20 4Swaziland 0.520 25 34 -9Sierra Leone 0.532 28 37 -9Central African Republic 0.679 43 43 0Sudan 0.726 45 45 0Chad 0.733 46 46 0Congo, Democratic Rep. 0.792 47 47 0Somalia 0.878 48 48 0
RESULTS (SOFTER LINES) Country Governance index Rank IAG Rank Difference in RanksCape Verde 0.020 1 3 -2Ghana 0.059 5 7 -2Mauritius 0.073 6 1 5Gabon 0.096 10 8 2Lesotho 0.107 11 12 -1Rwanda 0.131 15 18 -3Benin 0.155 19 13 6Burkina Faso 0.198 21 20 1Swaziland 0.205 23 34 -11Sierra Leone 0.233 28 37 -9Central African Republic 0.439 44 43 1Sudan 0.558 45 45 0Chad 0.579 46 46 0Congo, Democratic Rep. 0.669 47 47 0Somalia 0.784 48 48 0
COMPARISONIAG MethodologyScaling of all indicators is necessaryGives value interpretation to ordinal variablesRetain information on depth of deprivation within a dimension (indicator).
New MethodologyNo scaling required Can be used with ordinal variablesGain information on depth of deprivation in governance (in terms of k) across the indicatorsFocus on deprived nations and dimensions (with the indicator-specific cutoffs)
REPORT CARDSThe new index is a counting approach where zero implies not governance poor and one implies maximum deprivation. This allows a very convenient representation a nation’s performance.
• Governance Report CardReport card for Rwanda:
Rwanda Rank: 21Dimension Score Best ScoreSafety and Security 0.11 0Rule of Law 0.67 0Human Rights 0.11 0Sustainable Economic Development 0.41 0Human Development 0.22 0.12Overall Governance 0.30 0.03