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What does the quality of governance imply for urban prosperity?
Habitat International 45 (2015) 64e69
Contents lists available at ScienceDirect
Habitat International journal homepage: www.elsevier.com/locate/habitatint
What does the quality of governance imply for urban prosperity? Dominic Stead Faculty of Architecture and the Built Environment, Delft University of Technology, Delft, The Netherlands
a r t i c l e i n f o
a b s t r a c t
Article history: Available online 18 July 2014
The quality of governance is often closely linked to the prosperity of nations, regions or cities. Whether better governance is the product of greater prosperity or whether higher levels of prosperity lead to better governance is not entirely clear. Nevertheless, close attention to governance, and the quality of governance, is recommended when considering how urban prosperity can be compared and improved. The paper identifies clusters of countries according to the quality of their governance which are suggested as a means of identifying sets of broadly similar countries in which policy lessons may be more similar and more transferable. © 2014 Elsevier Ltd. All rights reserved.
Keywords: Quality of governance Urban prosperity Indicators Policy transfer
Introduction Various studies suggest that the quality of governance is linked to the national well-being of citizens (Holmberg, Rothstein, & Nasiritousi, 2009). It therefore follows that the quality of governance is related to the prosperity of nations, regions and cities, particularly when prosperity is defined in a broader sense than monetary wealth alone, as it frequently is (for example, in the UN-Habitat's Prosperity of Cities report e see Fig. 11). Consequently, close attention to governance, and the quality of governance, is necessary when considering how urban prosperity (when defined in a broad sense) can be improved. To be clear, the quality of governance does not refer to the physical size or financial resources of government but instead refers to the quality of public policy-making and delivery (by both governmental and nongovernmental bodies), and the extent to which decision-making and policy implementation is conducted in a transparent, efficient and impartial way (Rothstein & Teorell, 2008). The importance of governance has become increasingly recognised not only by academics but also by international organisations, such as World Bank, United Nations, European Commission, who have underlined the value of good governance and sound institutions for growth and development for more than a decade (Arndt & Oman, 2006; Holmberg et al., 2009). For example, the United Nations Millennium Declaration, adopted in 2000, states
E-mail address: [email protected]. The UN-Habitat's Prosperity of Cities report considers prosperity in terms of five dimensions: (1) productivity; (2) infrastructure development; (3) quality of life; (4) equity and social inclusion; and (5) environmental sustainability (UN-Habitat, 2012). 1
http://dx.doi.org/10.1016/j.habitatint.2014.06.014 0197-3975/© 2014 Elsevier Ltd. All rights reserved.
that success in meeting its poverty reduction and development goals is closely linked to the good governance of nations (United Nations, 2000: para 13). The importance of governance is also reflected in the UN-Habitat's Prosperity of Cities report (UN-Habitat, 2012) in which governance (expressed in terms of government institutions, laws and urban planning) occupies a central position in the ‘wheel of urban prosperity’ e at the hub where it exercises control over the individual spokes of urban prosperity Closer attention to good governance has in turn given rise to increased interest in measuring different aspects related to the quality of governance, particularly the more quantifiable dimensions such as the lack/control of corruption, the strength of the rule of law, and bureaucratic quality or ‘government effectiveness’ (European Commission, 2012). Many comparative studies of governance have found that the welfare of citizens is generally better in countries where quality of governance scores are higher (for a review, see Holmberg et al., 2009). More specifically, the quality of governance is reported to be linked to economic performance (Mauro, 1995; Mo, 2001), environmental degradation (Morse, 2006; Welsch, 2004), income n, 2000; Gupta, equality and poverty levels (Chong & Caldero Davoodi, & Alonso-Terme, 1998), education and health (Gupta et al., 1998; Mauro, 1998) and happiness (Frey & Stutzer, 2000; Ott, 2011). It should be noted however that the nature and strength of these relationships are contested: some critics have claimed for example that the benefits of good governance are overstated or that there is no clear cause and effect relationship between good governance and welfare improvement (Holmberg et al., 2009). Other authors have argued against indicators and analyses based on quality of ‘inputs’ (that is, governance processes) and argued instead for indicators of societal outputs or outcomes
D. Stead / Habitat International 45 (2015) 64e69
65
Fig. 1. The wheel of urban prosperity. Source: UN-Habitat (2012). State of the World's Cities Report 2012/2013: Prosperity of Cities, United Nations Human Settlements Programme (UN-HABITAT), Nairobi © (copyright 2012) United Nations. Reprinted with the permission of the United Nations.
(See Rotberg, 2014). Notwithstanding these criticisms, there is a strong case for addressing good governance in order to monitor and promote prosperity at the national, regional and urban scales. Much research related to the quality of governance has focused on the national level, which makes sense since local and regional governance are heavily influenced by national conditions. Nevertheless, it needs to be recognised that there can be significant variations in the quality of governance at the sub-national level: these are likely to have links with regional and urban prosperity. Recent research carried out for the European Commission confirms that there is substantial variation in the quality of governance within individual countries in Europe (European Commission, 2012). For example, the quality of governance in some regions in Italy, Spain, France, Belgium and Portugal is higher than the European average but below the European average in other parts of the same countries (Fig. 2a). This paper considers the significance of good governance in monitoring and improving urban and regional prosperity across the globe, specifically in relation to the UN-Habitat's Prosperity of Cities report (UN-Habitat, 2012).2 It begins by briefly considering the regional level governance indicators in Europe and examines how the quality of governance varies across its regions and the extent to which it coincides with variations in other indicators of prosperity. The paper then looks beyond Europe to examine the links between City Prosperity Indices and the quality of governance across the world.
2 The paper focuses specifically on the UN-Habitat's Prosperity of Cities report since it was originally commissioned to reflect on this report.
Links between governance and prosperity Within Europe's regions, comparisons between the quality of governance and indicators of regional innovation, competitiveness and life expectancy (three indicators closely related to some of the key dimensions in the UN-Habitat's Prosperity of Cities report) reveal some strong similarities (Fig. 2aed): high scores in much of Scandinavia, Germany, Austria, Netherlands, the United Kingdom and Ireland; low scores in much of Italy, Greece and central and eastern Europe. Of course, not all indicators of prosperity are perfectly aligned with the quality of governance scores: there are invariably some exceptions. For example, low levels of competitiveness can sometimes be found in regions where the quality of governance is higher than average (e.g. South Tyrol in Italy e see Fig. 2c), and low levels of life expectancy can occasionally be encountered in regions where the quality of governance is relatively high (e.g. Saarland in Germany e see Fig. 2d). Nevertheless, there is sufficient association in general between the quality of regional governance and various indicators of regional prosperity to suggest that governance (and its quality) is an important issue to consider when monitoring and promoting prosperity. Equally, there is a case for examining the quality of governance in any comparative assessment of prosperity, such as the UN-Habitat's City Prosperity Index. At the global level, there are various sources of comparable governance data that help to measure and compare the quality of national governance (see also Arndt & Oman, 2006) but very few sources for systematically and comprehensively comparing the
66
D. Stead / Habitat International 45 (2015) 64e69
Fig. 2. Quality of governance across Europe's regions compared against indicators of regional innovation, competitiveness and life expectancy. Sources: European Commission, 2010, 2011, 2012.
D. Stead / Habitat International 45 (2015) 64e69
67
Fig. 3. Quality of governance across the world. Source: analysis of data from the Worldwide Governance Indicators project (figure created using customizable map from aneki.com).
quality of urban or even regional governance. Sources of national governance data include the Worldwide Governance Indicators project3 (developed for the World Bank), Government at a Glance4 (prepared by the OECD) and the DataGov governance indicators database5 (maintained by the Inter-American Development Bank). In addition, the AGI data portal6 (maintained by the World Bank) provides access to a range of governance indicators collected by other organisations. The Worldwide Governance Indicators are a particularly useful source of comparable, quantitative data since they cover almost all countries in the world and are updated annually (most other data sources are more limited in terms of global coverage). These indicators are based on aggregated data from 30 individual information sources, including a variety of survey institutes, think tanks, non-governmental organizations, international organizations and private sector firms (Kaufmann et al., 2010). For each country, the Worldwide Governance Indicators project contains aggregate indicators for the following six dimensions of governance: 1. voice and accountability e the extent to which a country's citizens are able to participate in selecting their government, as well as freedom of expression, freedom of association, and a free media; 2. political stability and absence of violence e the likelihood that the government will be destabilized or overthrown by unconstitutional or violent means, including politically-motivated violence and terrorism; 3. government effectiveness e the quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government's commitment to such policies; 4. regulatory quality e the ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development; 5. rule of law e the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, property rights, the police, and the courts, as well as the likelihood of crime and violence; and
3 4 5 6
www.govindicators.org. www.oecd.org/gov/govataglance.htm. www.iadb.org/datagob/index.html. www.agidata.org.
6. control of corruption e the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as ‘capture’ of the state by elites and private interests. One of the advantages of using this quantitative data (although arguably subjective in nature7) is that direct cross-country comparisons and analyses are possible. Fig. 3 presents a preliminary clustering of the governance scores from the Worldwide Governance Indicators project (using data for 2011). The grouping of countries in Fig. 3 is based on the results of hierarchical cluster analysis (using Ward's method and squared Euclidian distancing) for the six dimensions of governance listed above. Although it is possible that the use of data for other years may potentially give rise to different clusters of countries, the national indicator scores do not generally experience substantial swings from one year to the next. It is therefore quite unlikely that substantially different clusters of countries will emerge if data for other years were analysed. Comparing the grouping of countries presented in Fig. 3 with the City Prosperity Indices (CPIs) contained in the UN-Habitat's Prosperity of Cities (UN-Habitat, 2012: Statistical Annex) report reveals some similarities between CPI and national quality of governance scores (Table 1). In countries where national quality of governance scores are high, the CPI is also often high. However, it is not the case that low quality of governance scores are always ^te coincident with low CPIs. For example, the city of Abidjan (Co d'Ivoire) has a higher CPI than several other African cities (Table 1) ^te d'Ivoire is while the national quality of governance score for Co lower than many other African countries, according to the Worldwide Governance Indicators. Moreover, it is not always the case that cities within the same country have similar CPIs. There is, for example, a large difference in the CPIs of Cape Town and Johannesburg (South Africa), which score 0.59 and 0.48 respectively, and between Guadalajara and Mexico City (Mexico), which score 0.80 and 0.71 respectively (Table 1). On the other hand, the difference in CPIs for Beijing and Shanghai (China), Mumbai and New Delhi (India), and Bogot a and Medellín (Colombia) are relatively small. The differences in CPI scores between Cape Town and Johannesburg or Guadalajara and Mexico City may be due to variations in the quality of governance in the two cities and/or a high level of decentralisation of decision-making in these countries compared to
7
See for example Holmberg et al. 2009.
68
D. Stead / Habitat International 45 (2015) 64e69
Table 1 City Prosperity Index and national WGI scores (source: UN-Habitat, 2012 and Worldwide Governance Indicators projecta).
a WGI data is derived from www.govindicators.org (for 2011). The national WGI scores have been calculated by taking an average of the six dimensions of governance for each country (voice and accountability; political stability and absence of violence; government effectiveness; regulatory quality; rule of law; and control of corruption).
others where there is less difference in CPIs between cities (e.g. China and India). The clustering presented in Fig. 3 may provide not only an indication of national prosperity, but it may also present a useful starting point for considering the potential transferability of policies and practices for promoting prosperity that are employed elsewhere. There are after all constraints to policy transfer due to a wide range of context-dependent factors (OECD, 2001), which means that ‘best practice’ policies are not certainly equally applicable and effective in other settings (Stead, 2012). As an OECD report from 2001 recognises, transferring best practices is complex and challenging because “the possibilities of what can be achieved by policy may vary between different areas and different times” and because there is “no single model of how to implement local development or of what strategies or actions to adopt” (OECD, 2001: 29). This seems to be recognised in the UN-Habitat's Prosperity of Cities report (2012) which states that fostering prosperity “has become the main thrust behind urban development. In this endeavour, every city will inevitably find itself on its own specific and unique historic course” (UN-Habitat, 2012: v). The clustering of the quality of governance might provide one way of identifying sets of broadly similar countries in which policy lessons are more similar and transferable. Conclusions The quality of governance can clearly have important implications for the prosperity of nations, regions and cities. There is evidence to suggest some close similarities between the quality of governance and various indicators of prosperity such as regional
innovation, competitiveness and life expectancy. What is unclear however is whether there is a causal link between governance and prosperity and, if so, the direction of the link. In other words, it is not known whether greater prosperity is a consequence of better governance, or whether better governance is a result of higher levels of prosperity (see also Arndt & Oman, 2006). It is improbable that there is a straightforward sequential logic between quality of governance and development (Holmberg et al., 2009). In other words, it is very unlikely that a country, region or city can greatly improve governance overnight (metaphorically speaking) and then watch development ensue as a result. Regardless of uncertainties about the nature of these interrelationships, close attention to governance and the quality of governance is recommended when considering how urban prosperity can be improved. The collection of data on the quality of governance at the regional and local levels would be a useful addition to the current set of indicators currently included in the UN-Habitat's Prosperity of Cities report. Compiling these data is certainly not an easy or straightforward task. Nevertheless, their collection and publication may improve understanding about the links between governance and prosperity, and may assist in the development of more targeted tools or techniques for improving the quality of governance. Attempts to collect this type of data have been made in the past (for example, UN-Habitat's Urban Governance Index) although not on a very comprehensive or regular basis, and few results have been reported. Despite a multitude of studies that have illustrated links between good governance and economic, social and environmental benefits, much research still needs to be done to establish what good governance practically entails, what specific institutional
D. Stead / Habitat International 45 (2015) 64e69
structures are required to deliver it, and how change from low to high quality of governance can be achieved. Similar conclusions are made by Holmberg et al. (2009). Moreover, the importance of different interventions (policies and practices) in delivering better quality of governance is not well understood. Research examining the relative contribution of different measures and reforms to the quality of governance is needed. Because there are substantial social, economic and institutional differences between counties, it may be useful to differentiate policy options for increasing prosperity according to the governance context. Classifying countries into different groups based on indicators of governance might provide one way of identifying sets of broadly similar countries in which policy lessons are more similar and more transferable. Although a potentially helpful exercise, it does not of course provide any guarantee for successful policy transfer. References Arndt, C., & Oman, C. (2006). The uses and abuses of governance indicators. development centre studies. Paris: OECD. n, C. (2000). Institutional quality and poverty measures in a Chong, A., & Caldero cross-section of countries. Economics of Governance, 1(2), 123e135. European Commission. (2010). Fifth report on economic, social and territorial cohesion. European Commission Directorate-General for Regional Policy. Luxembourg: Publications Office of the European Union. European Commission. (2011). The European regional human development and human poverty indices. Regional focus n 02/2011. Brussels: European Commission Directorate-General for Regional Policy. European Commission. (2012). Regional government matters: A study on regional variation in quality of government within the EU. Working paper 01/2012. Brussels: European Commission Directorate-General for Regional Policy.
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Frey, B. S., & Stutzer, A. (2000). Happiness, economy and institutions. The Economic Journal, 110(466), 918e938. Gupta, S., Davoodi, H. R., & Alonso-Terme, R. (1998). Does corruption affect income inequality and poverty? IMF working paper No. 98/76. Fiscal affairs department. Washington DC: International Monetary Fund. Holmberg, S., Rothstein, B., & Nasiritousi, N. (2009). Quality of government: what you get. Annual Review of Political Science, 12, 135e161. Kaufmann, D., Kraay, A., & Mastruzzi, M. (2010). The worldwide governance indicators: Methodology and analytical issues. World bank policy research working paper 5430. Washington DC: World Bank. Mauro, P. (1995). Corruption and growth. Quarterly Journal of Economics, 110(3), 681e712. Mauro, P. (1998). Corruption and composition of government expenditure. Journal of Public Economics, 69(2), 263e279. Mo, P. H. (2001). Corruption and economic growth. Journal of Comparative Economics, 29(1), 66e79. Morse, S. (2006). Is corruption bad for environmental sustainability? A crossnational analysis. Ecology and Society, 11(1), 1e22. OECD. (2001). Best practices in local development. Paris: OECD. Ott, J. C. (2011). Government and happiness in 130 nations: good governance fosters higher level and more equality of happiness. Social Indicators Research, 102(1), 3e22. Rotberg, R. I. (2014). Research note. Good governance means performance and results. Governance, 27(3), 511e518. Rothstein, B., & Teorell, J. (2008). What is quality of government? A theory of impartial government institutions. Governance, 21(2), 165e190. Stead, D. (2012). Best practices and policy transfer in spatial planning. Planning Practice and Research, 27(1), 103e116. UN-Habitat. (2012). State of the world's cities report 2012/2013: Prosperity of cities. Nairobi: United Nations Human Settlements Programme (UN-HABITAT). United Nations. (2000). United Nations millennium declaration. Resolution adopted by the general assembly at the 55th session. Agenda item 60(b), document A/RES/55/2. New York: United Nations. Welsch, H. (2004). Corruption, growth, and the environment: a cross-country analysis. Environment and Development Economics, 9(5), 663e693.
Contents lists available at ScienceDirect
Habitat International journal homepage: www.elsevier.com/locate/habitatint
What does the quality of governance imply for urban prosperity? Dominic Stead Faculty of Architecture and the Built Environment, Delft University of Technology, Delft, The Netherlands
a r t i c l e i n f o
a b s t r a c t
Article history: Available online 18 July 2014
The quality of governance is often closely linked to the prosperity of nations, regions or cities. Whether better governance is the product of greater prosperity or whether higher levels of prosperity lead to better governance is not entirely clear. Nevertheless, close attention to governance, and the quality of governance, is recommended when considering how urban prosperity can be compared and improved. The paper identifies clusters of countries according to the quality of their governance which are suggested as a means of identifying sets of broadly similar countries in which policy lessons may be more similar and more transferable. © 2014 Elsevier Ltd. All rights reserved.
Keywords: Quality of governance Urban prosperity Indicators Policy transfer
Introduction Various studies suggest that the quality of governance is linked to the national well-being of citizens (Holmberg, Rothstein, & Nasiritousi, 2009). It therefore follows that the quality of governance is related to the prosperity of nations, regions and cities, particularly when prosperity is defined in a broader sense than monetary wealth alone, as it frequently is (for example, in the UN-Habitat's Prosperity of Cities report e see Fig. 11). Consequently, close attention to governance, and the quality of governance, is necessary when considering how urban prosperity (when defined in a broad sense) can be improved. To be clear, the quality of governance does not refer to the physical size or financial resources of government but instead refers to the quality of public policy-making and delivery (by both governmental and nongovernmental bodies), and the extent to which decision-making and policy implementation is conducted in a transparent, efficient and impartial way (Rothstein & Teorell, 2008). The importance of governance has become increasingly recognised not only by academics but also by international organisations, such as World Bank, United Nations, European Commission, who have underlined the value of good governance and sound institutions for growth and development for more than a decade (Arndt & Oman, 2006; Holmberg et al., 2009). For example, the United Nations Millennium Declaration, adopted in 2000, states
E-mail address: [email protected]. The UN-Habitat's Prosperity of Cities report considers prosperity in terms of five dimensions: (1) productivity; (2) infrastructure development; (3) quality of life; (4) equity and social inclusion; and (5) environmental sustainability (UN-Habitat, 2012). 1
http://dx.doi.org/10.1016/j.habitatint.2014.06.014 0197-3975/© 2014 Elsevier Ltd. All rights reserved.
that success in meeting its poverty reduction and development goals is closely linked to the good governance of nations (United Nations, 2000: para 13). The importance of governance is also reflected in the UN-Habitat's Prosperity of Cities report (UN-Habitat, 2012) in which governance (expressed in terms of government institutions, laws and urban planning) occupies a central position in the ‘wheel of urban prosperity’ e at the hub where it exercises control over the individual spokes of urban prosperity Closer attention to good governance has in turn given rise to increased interest in measuring different aspects related to the quality of governance, particularly the more quantifiable dimensions such as the lack/control of corruption, the strength of the rule of law, and bureaucratic quality or ‘government effectiveness’ (European Commission, 2012). Many comparative studies of governance have found that the welfare of citizens is generally better in countries where quality of governance scores are higher (for a review, see Holmberg et al., 2009). More specifically, the quality of governance is reported to be linked to economic performance (Mauro, 1995; Mo, 2001), environmental degradation (Morse, 2006; Welsch, 2004), income n, 2000; Gupta, equality and poverty levels (Chong & Caldero Davoodi, & Alonso-Terme, 1998), education and health (Gupta et al., 1998; Mauro, 1998) and happiness (Frey & Stutzer, 2000; Ott, 2011). It should be noted however that the nature and strength of these relationships are contested: some critics have claimed for example that the benefits of good governance are overstated or that there is no clear cause and effect relationship between good governance and welfare improvement (Holmberg et al., 2009). Other authors have argued against indicators and analyses based on quality of ‘inputs’ (that is, governance processes) and argued instead for indicators of societal outputs or outcomes
D. Stead / Habitat International 45 (2015) 64e69
65
Fig. 1. The wheel of urban prosperity. Source: UN-Habitat (2012). State of the World's Cities Report 2012/2013: Prosperity of Cities, United Nations Human Settlements Programme (UN-HABITAT), Nairobi © (copyright 2012) United Nations. Reprinted with the permission of the United Nations.
(See Rotberg, 2014). Notwithstanding these criticisms, there is a strong case for addressing good governance in order to monitor and promote prosperity at the national, regional and urban scales. Much research related to the quality of governance has focused on the national level, which makes sense since local and regional governance are heavily influenced by national conditions. Nevertheless, it needs to be recognised that there can be significant variations in the quality of governance at the sub-national level: these are likely to have links with regional and urban prosperity. Recent research carried out for the European Commission confirms that there is substantial variation in the quality of governance within individual countries in Europe (European Commission, 2012). For example, the quality of governance in some regions in Italy, Spain, France, Belgium and Portugal is higher than the European average but below the European average in other parts of the same countries (Fig. 2a). This paper considers the significance of good governance in monitoring and improving urban and regional prosperity across the globe, specifically in relation to the UN-Habitat's Prosperity of Cities report (UN-Habitat, 2012).2 It begins by briefly considering the regional level governance indicators in Europe and examines how the quality of governance varies across its regions and the extent to which it coincides with variations in other indicators of prosperity. The paper then looks beyond Europe to examine the links between City Prosperity Indices and the quality of governance across the world.
2 The paper focuses specifically on the UN-Habitat's Prosperity of Cities report since it was originally commissioned to reflect on this report.
Links between governance and prosperity Within Europe's regions, comparisons between the quality of governance and indicators of regional innovation, competitiveness and life expectancy (three indicators closely related to some of the key dimensions in the UN-Habitat's Prosperity of Cities report) reveal some strong similarities (Fig. 2aed): high scores in much of Scandinavia, Germany, Austria, Netherlands, the United Kingdom and Ireland; low scores in much of Italy, Greece and central and eastern Europe. Of course, not all indicators of prosperity are perfectly aligned with the quality of governance scores: there are invariably some exceptions. For example, low levels of competitiveness can sometimes be found in regions where the quality of governance is higher than average (e.g. South Tyrol in Italy e see Fig. 2c), and low levels of life expectancy can occasionally be encountered in regions where the quality of governance is relatively high (e.g. Saarland in Germany e see Fig. 2d). Nevertheless, there is sufficient association in general between the quality of regional governance and various indicators of regional prosperity to suggest that governance (and its quality) is an important issue to consider when monitoring and promoting prosperity. Equally, there is a case for examining the quality of governance in any comparative assessment of prosperity, such as the UN-Habitat's City Prosperity Index. At the global level, there are various sources of comparable governance data that help to measure and compare the quality of national governance (see also Arndt & Oman, 2006) but very few sources for systematically and comprehensively comparing the
66
D. Stead / Habitat International 45 (2015) 64e69
Fig. 2. Quality of governance across Europe's regions compared against indicators of regional innovation, competitiveness and life expectancy. Sources: European Commission, 2010, 2011, 2012.
D. Stead / Habitat International 45 (2015) 64e69
67
Fig. 3. Quality of governance across the world. Source: analysis of data from the Worldwide Governance Indicators project (figure created using customizable map from aneki.com).
quality of urban or even regional governance. Sources of national governance data include the Worldwide Governance Indicators project3 (developed for the World Bank), Government at a Glance4 (prepared by the OECD) and the DataGov governance indicators database5 (maintained by the Inter-American Development Bank). In addition, the AGI data portal6 (maintained by the World Bank) provides access to a range of governance indicators collected by other organisations. The Worldwide Governance Indicators are a particularly useful source of comparable, quantitative data since they cover almost all countries in the world and are updated annually (most other data sources are more limited in terms of global coverage). These indicators are based on aggregated data from 30 individual information sources, including a variety of survey institutes, think tanks, non-governmental organizations, international organizations and private sector firms (Kaufmann et al., 2010). For each country, the Worldwide Governance Indicators project contains aggregate indicators for the following six dimensions of governance: 1. voice and accountability e the extent to which a country's citizens are able to participate in selecting their government, as well as freedom of expression, freedom of association, and a free media; 2. political stability and absence of violence e the likelihood that the government will be destabilized or overthrown by unconstitutional or violent means, including politically-motivated violence and terrorism; 3. government effectiveness e the quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government's commitment to such policies; 4. regulatory quality e the ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development; 5. rule of law e the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, property rights, the police, and the courts, as well as the likelihood of crime and violence; and
3 4 5 6
www.govindicators.org. www.oecd.org/gov/govataglance.htm. www.iadb.org/datagob/index.html. www.agidata.org.
6. control of corruption e the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as ‘capture’ of the state by elites and private interests. One of the advantages of using this quantitative data (although arguably subjective in nature7) is that direct cross-country comparisons and analyses are possible. Fig. 3 presents a preliminary clustering of the governance scores from the Worldwide Governance Indicators project (using data for 2011). The grouping of countries in Fig. 3 is based on the results of hierarchical cluster analysis (using Ward's method and squared Euclidian distancing) for the six dimensions of governance listed above. Although it is possible that the use of data for other years may potentially give rise to different clusters of countries, the national indicator scores do not generally experience substantial swings from one year to the next. It is therefore quite unlikely that substantially different clusters of countries will emerge if data for other years were analysed. Comparing the grouping of countries presented in Fig. 3 with the City Prosperity Indices (CPIs) contained in the UN-Habitat's Prosperity of Cities (UN-Habitat, 2012: Statistical Annex) report reveals some similarities between CPI and national quality of governance scores (Table 1). In countries where national quality of governance scores are high, the CPI is also often high. However, it is not the case that low quality of governance scores are always ^te coincident with low CPIs. For example, the city of Abidjan (Co d'Ivoire) has a higher CPI than several other African cities (Table 1) ^te d'Ivoire is while the national quality of governance score for Co lower than many other African countries, according to the Worldwide Governance Indicators. Moreover, it is not always the case that cities within the same country have similar CPIs. There is, for example, a large difference in the CPIs of Cape Town and Johannesburg (South Africa), which score 0.59 and 0.48 respectively, and between Guadalajara and Mexico City (Mexico), which score 0.80 and 0.71 respectively (Table 1). On the other hand, the difference in CPIs for Beijing and Shanghai (China), Mumbai and New Delhi (India), and Bogot a and Medellín (Colombia) are relatively small. The differences in CPI scores between Cape Town and Johannesburg or Guadalajara and Mexico City may be due to variations in the quality of governance in the two cities and/or a high level of decentralisation of decision-making in these countries compared to
7
See for example Holmberg et al. 2009.
68
D. Stead / Habitat International 45 (2015) 64e69
Table 1 City Prosperity Index and national WGI scores (source: UN-Habitat, 2012 and Worldwide Governance Indicators projecta).
a WGI data is derived from www.govindicators.org (for 2011). The national WGI scores have been calculated by taking an average of the six dimensions of governance for each country (voice and accountability; political stability and absence of violence; government effectiveness; regulatory quality; rule of law; and control of corruption).
others where there is less difference in CPIs between cities (e.g. China and India). The clustering presented in Fig. 3 may provide not only an indication of national prosperity, but it may also present a useful starting point for considering the potential transferability of policies and practices for promoting prosperity that are employed elsewhere. There are after all constraints to policy transfer due to a wide range of context-dependent factors (OECD, 2001), which means that ‘best practice’ policies are not certainly equally applicable and effective in other settings (Stead, 2012). As an OECD report from 2001 recognises, transferring best practices is complex and challenging because “the possibilities of what can be achieved by policy may vary between different areas and different times” and because there is “no single model of how to implement local development or of what strategies or actions to adopt” (OECD, 2001: 29). This seems to be recognised in the UN-Habitat's Prosperity of Cities report (2012) which states that fostering prosperity “has become the main thrust behind urban development. In this endeavour, every city will inevitably find itself on its own specific and unique historic course” (UN-Habitat, 2012: v). The clustering of the quality of governance might provide one way of identifying sets of broadly similar countries in which policy lessons are more similar and transferable. Conclusions The quality of governance can clearly have important implications for the prosperity of nations, regions and cities. There is evidence to suggest some close similarities between the quality of governance and various indicators of prosperity such as regional
innovation, competitiveness and life expectancy. What is unclear however is whether there is a causal link between governance and prosperity and, if so, the direction of the link. In other words, it is not known whether greater prosperity is a consequence of better governance, or whether better governance is a result of higher levels of prosperity (see also Arndt & Oman, 2006). It is improbable that there is a straightforward sequential logic between quality of governance and development (Holmberg et al., 2009). In other words, it is very unlikely that a country, region or city can greatly improve governance overnight (metaphorically speaking) and then watch development ensue as a result. Regardless of uncertainties about the nature of these interrelationships, close attention to governance and the quality of governance is recommended when considering how urban prosperity can be improved. The collection of data on the quality of governance at the regional and local levels would be a useful addition to the current set of indicators currently included in the UN-Habitat's Prosperity of Cities report. Compiling these data is certainly not an easy or straightforward task. Nevertheless, their collection and publication may improve understanding about the links between governance and prosperity, and may assist in the development of more targeted tools or techniques for improving the quality of governance. Attempts to collect this type of data have been made in the past (for example, UN-Habitat's Urban Governance Index) although not on a very comprehensive or regular basis, and few results have been reported. Despite a multitude of studies that have illustrated links between good governance and economic, social and environmental benefits, much research still needs to be done to establish what good governance practically entails, what specific institutional
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structures are required to deliver it, and how change from low to high quality of governance can be achieved. Similar conclusions are made by Holmberg et al. (2009). Moreover, the importance of different interventions (policies and practices) in delivering better quality of governance is not well understood. Research examining the relative contribution of different measures and reforms to the quality of governance is needed. Because there are substantial social, economic and institutional differences between counties, it may be useful to differentiate policy options for increasing prosperity according to the governance context. Classifying countries into different groups based on indicators of governance might provide one way of identifying sets of broadly similar countries in which policy lessons are more similar and more transferable. Although a potentially helpful exercise, it does not of course provide any guarantee for successful policy transfer. References Arndt, C., & Oman, C. (2006). The uses and abuses of governance indicators. development centre studies. Paris: OECD. n, C. (2000). Institutional quality and poverty measures in a Chong, A., & Caldero cross-section of countries. Economics of Governance, 1(2), 123e135. European Commission. (2010). Fifth report on economic, social and territorial cohesion. European Commission Directorate-General for Regional Policy. Luxembourg: Publications Office of the European Union. European Commission. (2011). The European regional human development and human poverty indices. Regional focus n 02/2011. Brussels: European Commission Directorate-General for Regional Policy. European Commission. (2012). Regional government matters: A study on regional variation in quality of government within the EU. Working paper 01/2012. Brussels: European Commission Directorate-General for Regional Policy.
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