Friday, July 13, 2007

The row over governance indicators

The press release related to the World Governance Indicators report had the following disclaimer;

The WGI do not reflect the official views of the World Bank, its Executive Directors, or the countries they represent. The WGI are not used by the World Bank Group to allocate resources or for any other official purpose

It seems some countries are not happy with their rankings;

Nine of the World Bank's 24 executive directors have written to its new president, Robert Zoellick, challenging its role in publishing controversial indicators that attempt to measure the quality of governance in its member countries.

The letter, signed by directors representing China, Russia, Mexico, Argentina and other predominantly developing countries, presents Mr Zoellick with the first serious test of his World Bank presidency less than two weeks after he succeeded PaulWolfowitz.

It follows the publication earlier this week of the annual Worldwide Governance Indicators report, which infuriated a number of governments. The report is not an official bank document but is produced by bank researchers and is highly influential in development circles.

Argentina complained about the finding that the quality of its governance had declined between 1998 and 2006, while China was deeply unhappy about its low rating on "voice and accountability" - one of six metrics evaluated by bank researchers.

People familiar with the letter said its tone was constructive and not intended to set up a confrontation with Mr Zoellick. The nine directors did not challenge the quality of the work done by the bank researchers.

But they said the bank should reconsider whether it should be in the business of producing this kind of analysis at all.

Some bank officials see the letter as the beginning of an attempt by developing countries, in particular those with authoritarian governments, to capitalise on the ousting of Mr Wolfowitz to roll back the bank's governance agenda. That agenda preceded Mr Wolfowitz but was championed by him.

Other bank officials play down these fears, noting that board concerns about the governance indicators are not new. In January, 10 directors wrote a letter to Mr Wolfowitz objecting to the inclusion of the indicators in the bank's official Development Indicators report.

Bank insiders say China has taken a prominent role in the latest controversy. Yang Yingming, the head of the Chinese finance ministry department that deals with the World Bank, said China had done "relatively well in some categories, such as government efficiency".

But he added "as for other ratings, they do not represent the World Bank's opinion" but only the views of individual authors. "The survey depends on a subjective questionnaire, making its objectivity open to question. Even we don't know when and how they conducted research in China," he said.

China is believed to have been annoyed by its score on accountability, which was skewed by the fact that it is not a representative democracy. Beijing also maintains that it has a strong record in fighting corruption, pointing to the tens of thousands of officials arrested each year for graft, something it believes was also not reflected fairly in the report's findings.

Some in Washington draw parallels between this controversy and China's unusually public opposition to the new surveillance regime at the bank's sister institution, the International Monetary Fund, seeing a pattern of greater assertiveness within these organisations.


I think the Bank needs to open up its methodology of developing those indicators to greater scrutiny- Bank insiders say that even within the Bank the actual econometrics of the procress is not very transparent or widely known. But it would be a pity if the Bank gave into demands of the countries the like of China.

No comments: