1. Myth #1: Governance and anticorruption are the same

We define governance as the traditions and institutions by which authority in a country is exercised for the common good. This includes the process by which those in authority are selected, monitored, and replaced (the political dimension); the government’s capacity to effectively manage its resources and implement sound policies (the economic dimension), and the respect of citizens and the state for the country’s institutions (the institutional respect dimension). By contrast, corruption is defined more narrowly as the “abuse of public office for private gain.

  1. Myth #2: Governance and corruption cannot be measured

It is true that less than a dozen years ago, virtually no internationally comparable measures of governance or corruption existed. But in recent years, the World Bank and others have sought to remedy this. At the World Bank, we have constructed aggregate governance indicators that cover more than 200 countries, based on more than 350 variables obtained from dozens of institutions worldwide. Our indicators cover the following six governance dimensions: voice and accountability, political stability and the absence of significant violence and terror, government effectiveness, regulatory quality, the rule of law, and control of corruption. While the indicators represent a big step forward, there are measurement challenges. Margins of error are not trivial, and caution in interpreting the results is warranted—one should not precisely rank countries. But these margins of error have declined and are now substantially lower than for any measure of corruption, governance, or the investment climate. As a result, the World Bank’s governance indicators are used worldwide for monitoring performance, country assessments, and research.

  1. Myth #3: The importance of governance and anticorruption is overrated

The research shows that countries can derive a vast “development dividend” from better governance. The researcher estimate that a country that improves its governance from a relatively low level to an average level could almost triple the income per capita of its population in the long term and similarly reduce infant mortality and illiteracy. Such a relative improvement (by one standard deviation) would correspond, for instance, to a move up in our ranking for the “control of corruption” dimension in the database, taking Equatorial Guinea to the level of Uganda, Uganda to Lithuania, Lithuania to Portugal, and Portugal to Finland. Governance also matters for a country’s competitiveness and income distribution. In the case of corruption, research suggests it is equivalent to a significant tax on foreign investors. In many developing countries, corruption represents a “regressive tax” on the household sector as well: lower-income families pay a disproportionate share of their incomes in bribes to have access to public services (compared with higher income groups) and often end up with less access to such services because of corruption. A rough estimate of the extent of annual worldwide transactions tainted by corruption puts it close to $1 trillion.
To make matters worse, aid-funded projects tend to fail in corrupt settings. And corruption undermines fledgling democracies. Of course, governance is not the only thing that matters for development. Macroeconomic, trade, and sectoral policies are also important. But when governance is poor, policymaking in other areas is also compromised.

  1. Myth #4: Governance is a luxury that only wealthy countries can afford

Some claim that the link between governance and incomes does not mean that better governance boosts incomes, but the reverse—higher incomes automatically translate into better governance. However, this research does not support this claim. It is thus misleading to suggest that corruption is due to low incomes and invent a rationale for discounting lousy governance in developing countries. The evidence points to the causality being in the direction of better governance leading to higher economic growth. Several emerging economies, including the Baltics, Botswana, Chile, and Slovenia, have shown that it is possible to reach high governance standards without yet joining wealthy nations’ ranks.

  1. Myth #5: It takes generations for governance to improve

While it is true that institutions often change only gradually, in some countries, there has been a sharp improvement in the short term. This defies the view that while governance may deteriorate quickly, improvements are always slow and incremental. For instance, there has been a significant improvement since 1996 in the “voice and accountability” indicator in countries ranging from Bosnia, Croatia, and Ghana, to Indonesia, Serbia, and Sierra Leone. And the improvements some African countries exhibited in a short time challenge the “Afro-pessimists.” Even so, it is sobering that, on average, there has not been a worldwide improvement in overall governance during this period—and in several countries, including the Ivory Coast, Nepal, and Zimbabwe, there has been a sharp deterioration.


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  • Commission for Africa Report (2005). Our Common Interest: Report of the Commission for Africa (London) www.commissionforafrica.org
  • Kaufmann, D. (2005). Back to the Basics – 10 Myths About Governance and Corruption. The IMF Journal Finance and Development. 42(3).
  • Kaufmann, D., Aart K., and Massimo M., (2005). Governance Matters IV: Governance Indicators for 1996–2004. World Bank Policy Research Working Paper 3237 (Washington) www.worldbank.org/wbi/governance/pubs/govmatters4.html
  • Kaufmann, D. (2003). Rethinking Governance: Empirical Lessons Challenge Orthodoxy. Global Competitiveness Report 2002–03, World Economic Forum, Geneva www.worldbank.org/wbi/governance/pubs/rethink_gov.html
  • World Bank Institute. (2002). The Right to Tell: The Role of Mass Media in Economic Development (Washington).