Thursday, February 7, 2013

Understanding inclusive growth: Role of good governance and institutions

Inclusive growth is one of the most talked about issues in developing countries, especially those in transition, these days. It has been pretty much widely accepted that growth alone is not sufficient; it has to be followed by wider access to economic opportunities and provision of social protection for those left out of the growth process.

ADB has come up with a framework for inclusive growth, which has three main components:  (i) High and sustainable growth; (ii) Access to economic and social development opportunities; and (iii) Stronger social protection. It also has a list of 35 indicators to quantify (either directly or via proxies) inclusive growth.

The policies for inclusive growth are supported by good governance and institutions, which are quantified by looking at two components of Worldwide Governance Indicators (voice and accountability, and government effectiveness) and the corruption perception index. The information and data in this blog come from ADB’s FIGI 2012 and the related dataset (Nepal only; for other countries, see this one).


GOOD GOVERNANCE AND INSTITUTIONS 1990 or Nearest Year 2010 or Latest Year
Voice and accountability −0.1 (1996) −0.5  
Government effectiveness −0.4 (1996) −0.8  
Corruption Perceptions Index 2.2 (2010) 2.2 (2011)

The first two components of WGI are presented in standard normal units of the governance indicator, ranging from –2.5 to 2.5 with higher values corresponding to better governance outcomes. In the CPI, scores relate to perceptions of the degree of corruption and ranges from 10 (very clean) to 0 (highly corrupt).