Growth and Governance: Models, Measures, and Mechanisms

The regnant scholarly consensus linking good governance—the quality of public administration—to economic development has undergone surprisingly little empirical scrutiny. We examine the relationship by asking two questions: How confident are we in our cross-national measures of good governance? How solid are the empirical foundations of the growth-governance causal linkage? Our results suggest that the dominant measures of governance are problematic, suffering from perceptual biases, adverse selection in sampling, and conceptual conflation with economic policy choices. Within the limits of somewhat problematic measures, the evidence suggests that there is far more reason to believe that growth and development spur improvements in governance than vice versa. The policy implications are profound, for international organizations and governments are beginning to condition developmental aid on problematic measures of administrative performance. Most analysts agree that political corruption and malgovernance are among the principal barriers to economic development and social betterment in the Third World (see, e.g., Castañeda 2003; Wolf 2005). Conversely, the belief that good governance—the quality of public