Government Effectiveness Indicator

Description

This indicator measures the quality of public services, the quality of the civil service and its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government’s commitment to its stated policies.

Countries are evaluated on the following factors:

• competence of civil service; effective implementation of government decisions; and public service vulnerability to political pressure;
• ability to manage political alternations without drastic policy changes or interruptions in government services;
• flexibility, learning, and innovation within the political leadership; ability to coordinate conflicting objectives into coherent policies;
• the efficiency of revenue mobilization and budget management;
• the quality of transportation infrastructure, telecommunications, electricity supply, public health care provision, and public schools; the availability of online government services;
• policy consistency; the extent to which government commitments are honored by new governments;
• prevalence of red tape; the degree to which bureaucratic delays hinder business activity;
• existence of a taxpayer service and information program, and an efficient and effective appeals mechanism;
• the extent to which:
  • effective coordination mechanisms ensure policy consistency across departmental boundaries, and administrative structures are organized along functional lines with little duplication;
  • the business processes of government agencies are regularly reviewed to ensure efficiency of decision making and implementation;
  • political leadership sets and maintains strategic priorities and the government effectively implements reforms;
  • hiring and promotion within the government is based on merit and performance, and ethical standards prevail;
  • the government wage bill is sustainable and does not crowd out spending required for public services; pay and benefit levels do not deter talented people from entering the public sector; flexibility (that is not abused) exists to pay more attractive wages in hard-to-fill positions;
  • government revenues are generated by low-distortion taxes; import tariffs are low and relatively uniform, export rebate or duty drawbacks are functional; the tax base is broad and free of arbitrary exemptions; tax administration is effective and rule-based; and tax administration and compliance costs are low;
  • policies and priorities are linked to the budget; multi-year expenditure projections are integrated into the budget formulation process, and reflect explicit costing of the implications of new policy initiatives; the budget is formulated through systematic consultations with spending ministries and the legislature, adhering to a fixed budget calendar; the budget classification system is comprehensive and consistent with international standards; and off-budget expenditures are kept to a minimum and handled transparently;
  • the budget is implemented as planned, and actual expenditures deviate only slightly from planned levels;
  • budget monitoring occurs throughout the year based on well-functioning management information systems; reconciliation of banking and fiscal records is practiced comprehensively, properly, and in a timely way;
  • in-year fiscal reports and public accounts are prepared promptly and regularly and provide full and accurate data; the extent to which accounts are audited in a timely, professional and comprehensive manner, and appropriate action is taken on budget reports and audit findings.

Relationship to Growth & Poverty Reduction

Countries with more effective governments tend to achieve higher levels of economic growth by obtaining better credit ratings and attracting more investment, offering higher quality public services and encouraging higher levels of human capital accumulation, putting foreign aid resources to better use, accelerating technological innovation, and increasing the productivity of government spending.1 Efficiency in the delivery of public services also has a direct impact on poverty.2 On average, countries with more effective governments have better educational systems and more efficient health care.3 There is evidence that countries with independent, meritocratic bureaucracies do a better job of vaccinating children, protecting the most vulnerable members of society, reducing child mortality, and curbing environmental degradation.4 Countries with a meritocratic civil service also tend to have lower levels of corruption.5

Methodology

Indicator Institution Methodology

The indicator is an index combining a subset of 17 different assessments and surveys, depending on availability, each of which receives a different weight, depending on its estimated precision and country coverage. The Government Effectiveness indicator draws on data, as applicable, from the Country Policy and Institutional Assessments of the World Bank, the African Development Bank, the Asian Development Bank, the Afrobarometer Survey, the World Bank’s Business Environment and Enterprise Performance Survey, the Bertelsmann Foundation’s Bertelsmann Transformation Index, Global Integrity’s African Integrity Index (previously known as the Global Integrity Index), the Economist Intelligence Unit’s Country Risk Service, The University of Gothenburg’s European Quality of Government Index, the World Economic Forum’s Global Competitiveness Report, the Gallup World Poll, the International Fund for Agricultural Development’s Rural Sector Performance Assessments, the Latinobarometro Survey, Political Risk Service’s International Country Risk Guide, the French Government’s Institutional Profiles Database, IHS Markit’s World Economic Service, and the Institute for Management and Development’s World Competitiveness Yearbook.

MCC Methodology

MCC Normalized Score = WGI Score – median score

For ease of interpretation, MCC has adjusted the median for each of the two scorecard income pools to zero for all of the Worldwide Governance Indicators. Country scores are calculated by taking the difference between actual scores and the median. For example, in FY23 the unadjusted median for the scorecard category of countries with a Gross National Income (GNI) per capita between $2,046 and $4,255 on Control of Corruption was -0.47 (note, in FY24, the GNI per capita range for this scorecard category is $2,146 to $4,465). In order to set the median at zero, MCC simply adds 0.47 to each country’s score (the same thing as subtracting a negative 0.47). Therefore, as an example, Algeria’s FY23 Control of Corruption score, which was originally -0.61, was adjusted to -0.14.

The FY24 scores come from the 2023 update of the Worldwide Governance Indicators dataset and largely reflect performance in calendar year 2022. Since the release of the 2006 update of the Worldwide Governance Indicators, the indicators are updated annually. Each year, the World Bank and Brookings Institution also make minor backward revisions to the historical data. Prior to 2006, the World Bank released data every two years (1996, 1998, 2000, 2002 and 2004). With the 2006 release, the World Bank moved to an annual reporting cycle and provided additional historical data for 2003 and 2005.

Source

• Worldwide Governance Indicators (WGI)

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