Growth without Governance

By Daniel A. Kaufmann, Aart C. Kraay. 2002

821 citations recorded by the source corpus.

It is well known that there is a strong positive correlation between per capita incomes and the quality of governance across countries. Kaufmann and Kraay propose an empirical strategy that allows separation of this correlation into (1) a strong positive causal effect running from better governance to higher per capita incomes, and, perhaps surprisingly at first, (2) a weak and even negative causal effect running in the opposite direction from per capita incomes to governance. The first result confirms existing evidence on the importance of good governance for economic development. The second result is new and suggests the absence of a "virtuous circle" in which higher incomes lead to further improvements in governance. This motivates the authors' choice of title, "Growth Without Governance." They document this evidence using a newly updated set of worldwide governance-indicators covering 175 countries for the period 2000-01, and use the results to interpret the relationship between incomes and governance focusing on the Latin America and Caribbean regionwithin a worldwide empirical context. Finally, the authors speculate about the potential importance of elite influence and state capture in accounting for the surprising negative effects of per capita incomes on governance, present some evidence on such capture in some Latin American countries, and suggest priorities for actions to improve governance when such pernicious elite influence shapes public policy. This paper - a joint product of the World Bank Institute and the Development Research Group - is part of a larger effort in the Bank to generate and analyze worldwide governance indicators, assessing the manifestations and consequences of governance.

Subfields: Economics and Econometrics, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/76666417407c9db3d3c60b037f0125f0e09858b8

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Citations in the corpus

Corruption and Sustainable Development (2011, background): “The problem with respect to the TI and the WB index is that the underlying data sources are not the same from year to year, and this can account for as much as half the over-time variation (Kaufmann and Kraay, 2002, pp. 13-14).”
The influence of financial and legal institutions on firm size (2006, background): “Compare discussion in Kraay and Kaufman (2002). 17 Control of Corruption enters positively and significantly if we drop GDP per capita from the regression.”
Accountability and Corruption: Political Institutions Matter (2001, background): “Some important contributions are Tanzi (1998), La Porta et al. (1998), Treisman (2000), Fisman and Gatti (2000), Persson, Tabellini, and Trebbi (2001), and Kunicova and Rose-Ackerman (2002).”
THE DETERMINANTS OF CORRUPTION A Literature Survey and New Evidence (2006, background): “Kaufmann and Kraay (2002b) point out that the advantage of a survey among experts is that it is explicitly designed for cross-country comparability.”
Aid Effectiveness and Selectivity : Integrating Multiple Objectives into Aid Allocations (2003, background): “13 Kaufman and Kraay (2002), Kraay (2002), Birdsall et al. (2002b), DFID (2003) and IDA (2001), among many other sources, provide a range of additional indicators and discussions of their use.”
The institutional, economic and social determinants of local government transparency (2013, background): “For instance, Kaufmann and Kraay (2002) define transparency as the increased flow of timely and reliable economic, social, and political information, accessible to all relevant stakeholders.”
The Impact of Regulation on Economic Growth in Developing Countries: A Cross-Country Analysis (2007, methodology): “Kauffman and Kraay (2002) reinforce these findings, relating the quality of governance to economic outcomes using a data set covering 175 countries for the period 2000-01.”