In a cross-section of more than 150 countries, the authors provide new empirical evidence of a strong causal relationship from better governance to better development outcomes. They base their analysis on a new database containing more than 300 governance indicators compiled from a variety of...

In this theoretical analysis, the"principal"can be the head of the tax collection agency (or"government"or even citizens), the"supervisor"can be the tax collector, and the"agent"can be the taxpayer. The principal, interested in controlling an agent's socially costly activity ("cheating"), hires...

Over the past few years, many studies have looked at the macroeconomic, cultural, and institutional determinants of corruption. This study complements these cross-country studies by focusing on microeconomic factors that affect bribes paid in a single sector of the economy. Using...

The authors construct aggregate governance indicators for six dimensions of governance, covering 175 countries in 2000-01. They apply the methodology developed in Kaufmann, Kraay, and Zoido-Lobaton ("Aggregating Governance Indicators", Policy Research Working Paper 2195, and"Governance Matters",...

Governments determine how well, or how poorly, markets function. This simple truth explains the current concern with"governance"as the world shifts toward an overwhelming endorsement of markets as the base of economic activity. If governments are assumed to be neutral, and committed to serving...

It is well known that there is a strong positive correlation between per capita incomes and the quality of governance across countries. the authors propose an empirical strategy that allows separation of this correlation into (1) a strong positive causal effect running from better governance to...

The author exploits a unique data set on corruption containing information about estimated bribe payments by Ugandan firms. To guide the empirical analysis, he develops a simple rent-extortion model, which yields predictions on both the incidence of bribery, and the amount paid. Both predictions...

The author presents measures with which to map institution building during the transition from centrally planned to market economies. Data collection and indicators are measured in terms of five institutional dimensions of governance: a) accountability; b) quality of the bureaucracy; c) rule of...

Recent empirical research has focused on the role ofinstitutions in overall economic performance. This paper examines the impact of institutions on the relative performance of the service sector. Through cross-country level and growth regressions it establishes the following stylized fact:...

How does the lack of legitimacy of property rights affect the dynamics of the creation of the rule of law? The authors investigate the demand for the rule of law in post-communist economies after privatization under the assumption that theft is possible, that those who have"stolen"assets cannot...