Does More Transparency Go Along With Better Governance?

This paper explores the link between information flows and governance. It develops a new indicator, the transparency index, which measures the frequency with which governments update economic data that they make available to the public. The paper also uses the existence of a Freedom of Information Act and the length of time for which it has been in existence as an indicator reflecting the overall legislative environment for transparency. Measures of the type developed in this paper have hitherto not been used in the cross‐country literature on governance and growth. Cross‐country regression estimation shows that countries with better information flows as measured by these indices also govern better.