The Telegraph
Since 1st March, 1999
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- Quantifying governance is virtually impossible

Governance has now become a buzzword. Everyone uses it, without necessarily defining it. At one level, we have a concept of corporate governance, related to efficient management of corporations. That too has a link with economic development. However, when we normally link governance with economic development, we have in mind what should actually be called public governance, related to the act of governing. Every society has a framework for exercising government functions, through three main organs of state ' the legislature, the executive and the judiciary ' with divisions between the three enshrined in the Constitution, if there is one. In Francis Bacon's time, religion was also included in the framework of government. He wrote, 'So when any of the four pillars of government are mainly shaken or weakened (which are Religion, Justice, Counsel and Treasure), men had need to pray for fair weather.'

A distinction is also sometimes drawn between the state and the government, the former being more permanent, while the latter refers to the incumbent elected government. But clearly, governance is more than these formal institutions of government. It is also about decision-making processes and about interactions between civil society and these formal institutions. The focus thus, is on domestic public governance, because governance also has an international or global dimension. Good governance will be characterized by predictability, transparency and accountability, while bad governance will be the opposite. And these days, one seeks to improve the public governance function through electronic governance or e-governance.

Most poverty and deprivation can be interpreted as resulting from asymmetric access to information. Information technology can certainly be a powerful tool in reducing this asymmetric access to information. Within the e-governance framework, in the Indian context, one can refer to the examples of e-seva in Andhra Pradesh, bhoomi in Karnataka, gyandoot in Madhya Pradesh, SETU in Maharashtra and RajNIDHI in Rajasthan. There are also successful public-private partnerships.

Having said this, it is not easy to define governance. Three commonly-used definitions will illustrate the point. To the United Nations Development Programme, 'Governance is the system of values, policies and institutions by which a society manages its economic, political and social affairs through interactions within and among the state, civil society and private sector. It is the way a society organizes itself to make and implement decisions ' achieving mutual understanding, agreement and action. It comprises the mechanisms and processes for citizens and groups to articulate their interests, mediate their differences and exercise their legal rights and obligations. It is the rules, institutions and practices that set limits and provide incentives for individuals, organizations and firms. Governance, including its social, political and economic dimensions, operates at every level of human enterprise, be it the household, village, municipality, nation, region or globe.'

For the World Bank, 'We define governance as the traditions and institutions by which authority in a country is exercised for the common good. This includes (i) the process by which those in authority are selected, monitored and replaced, (ii) the capacity of the government to effectively manage its resources and implement sound policies, and (iii) the respect of citizens and the state for the institutions that govern economic and social interactions among them.'

Finally, for the European Commission, 'Governance concerns the state's ability to serve the citizens. It refers to the rules, processes, and behaviours by which interests are articulated, resources are managed, and power is exercised in society. The way public functions are carried out, public resources are managed and public regulatory powers are exercised is the major issue to be addressed in this context. In spite of its open and broad character, governance is a meaningful and practical concept relating to the very basic aspects of the functioning of any society and political and social systems. It can be described as a basic measure of stability and performance of a society. As the concepts of human rights, democratization and democracy, the rule of law, civil society, decentralized power sharing, and sound public administration, gain importance and relevance as a society develops into a more sophisticated political system, governance evolves into good governance.'

These definitions may complement one another and even overlap. But they are not identical. Indeed, any definition of governance is contingent on what role one expects the state to assume. Henry Thoreau said, 'That government is best which governs not at all.' A minimalist state role encompasses preservation of rule of law and property rights and some investments in physical and social infrastructure, apart from ensuring a facilitating environment for private entrepreneurship and growth. And in so far as public expenditure is concerned, there are issues of efficiency, transparency and accountability. These are the bread and butter of governance discussions today.

Defining governance may have been difficult, measuring and quantifying it is virtually impossible. Some of these problems are the following. First, some governance indicators depend on de jure international commitments made by countries, and these may have no relation with what actually obtains de facto. These are indicators based on ratification of standards, codes or treaties, but monitoring implementation is close to impossible. Second, governance measurement should be based on tangible improvements in outcome or performance. These are indeed the kinds of indicators one uses in measuring and quantifying economic development. However, governance is a process and quite apart from the problem of differing perceptions about what should be included and what should be excluded in governance, objective data are impossible to obtain.

Hence, one relies on subjective responses to questionnaires administered to respondents. Each such survey raises questions about sample designs, sample sizes and even the questions themselves, apart from the issue of inherent subjectivity and a perceptional problem. Third, while on these surveys, there is an issue of converting what is fundamentally an ordinal or ranking response to cardinal values. This is typically done through scores. Fourth, the normative assumptions in questions cannot be ignored. For example, voter turnouts are used as a proxy for democracy, the value judgment being that high voter turnouts are better. But in countries where voting is not compulsory, non-voting also represents a choice. Alternatively, questions may be asked about the period between detention and trial, the value judgment being that the shorter the period, the better. However, justice is also about a fair trial, not just a speedy trial.

Fifth, once one has obtained the scores, they must be aggregated to arrive at a composite figure and this requires choice of weighting and differing weights can lead to differing overall results. The point is not to denigrate the use of governance surveys. After all, one is trying to capture something that is difficult to measure. However, most governance surveys tend to gloss over these problems and suggest a robustness in governance estimation that simply does not exist. In one of the Sherlock Holmes stories, Arthur Conan Doyle had Holmes say, 'It is a capital mistake to theorize before one has data.' One usually remembers this sentence, for getting the one that follows, which says, 'Insensibly one begins to twist facts to suit theories, instead of theories to suit facts.' It is a current mistake to theorize with imperfect data. To compound matters, such surveys are used not only to track temporal changes in a country over time, but also to make cross-country comparisons. And there is also an attempt to link governance with economic development. This is a theme I will talk about in the next article.

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