A number of criteria have been developed to measure countries’ degree of “good government”; these can include the capacity to receive aid, manage foreign direct investment or initiate trade agreements. Many of these criteria have a fixed model of what constitutes “good” and “bad” government, and the judgments that follow can have real-world consequences.

A 2010 study by the Harvard Kennedy School of Government published in the journal Governance, “Good Government Means Different Things in Different Countries,” looked at the practices of countries within the Organisation for Economic Co-operation and Development (OECD) as well as those not part of the group. The study focuses primarily on four indicators: fiscal rules; performance measurements; modern financial practices; and budget transparency.

The study’s findings include:

• Many of the conventional indicators of good governance only measure existing success and do not account for the varying processes used to achieve this success.
• Among nine OECD countries that are considered effective, some, such as the United States and Australia, have no explicit fiscal rules, and there is a wide mix of types of fiscal rules, expenditure rules and budget limits.
• The good governance picture suggests the importance of limited government, yet government revenue and spending as a percentage of GDP ranged in OECD governments from about 35% to about 55% in 2004.
• The 10 countries scoring lowest on the government effectiveness indicator developed by the World Bank have the highest rates of fiscal rule adoption measure average (2.2 out of 4).
• Few good-governance indicators were positively correlated with actual behavior in OECD countries at a statistically significant level.

The author concludes that “implying that there is one underlying model for success when there plainly is not” is bad advice to give developing countries or to enforce through constraining aid and development investment.

Tags: economy, law

By John Wihbey | May 17, 2011