Association for Public Policy Analysis & Management

The Ease of Doing Business Index, Transparency International’s Corruption Perception Index, and the Worldwide Governance Indicators. What do all of these performance measures have in common? Outside of their origin in international aid organizations, all of them are the byproduct of the “good governance” agenda - a growing list of reforms that developing countries should adopt to improve government effectiveness and alleviate poverty.

In the management sciences, scholars have questioned the validity of performance measurement systems implemented in public agencies. Far less is known, however, about the design and dynamics created by international rankings, comparing public sector performance across countries. In principle, they can be useful to identify where changes are needed and if progress is being made in a given area of governance. In practice, many analysts have advised against using them without cross-checking with other sources of information. This warning seems to have been largely ignored as their use has become widespread among empirical researchers, the media, international aid organizations, investors and public officials.

This observation leads me to explore whether international indices of good governance provide accurate information on the quality of countries’ public sectors. I investigate two questions: is the methodology used to construct them valid? Also, do they help countries identify gaps in performance and take active measures to close them? I investigate these questions by conducting a systematic review of the emerging literature on governance indicators used in international development. A total of 80 articles, from 2000 to 2015, have been identified. Much of the research came from the political science, economics and public administration literature. Articles evaluated both the methodological and theoretical issues associated with these indices.

The current evidence suggests that these international rankings can be a useful entry point to start a dialogue on public sector reform between international aid agencies and recipient countries. Yet, unlike performance measures used at the agency-level, which focus on narrow and observable targets, they are conceptually too abstract to be useful to policy-makers. Many are not based on empirical evidence, but rather, reflect the values of the institutions designing them. What is more, they suffer from significant methodological flaws, leading several researchers to question if they should be used at all.