What is the Governance Coefficient?
Governance Coefficient
The Governance Coefficient assesses the quality of governance of African countries in a similar way to the Gini Coefficient. The latter is calculated with reference to the Lorenz Curve as a measure of the level of inequality within a society on a scale from 0 to 1 where 1 represents the highest level of income inequality and 0 represents the most equal distribution of income.
The combination of the qualitative methods employed in the Governance Barometer with the quantitative method of the Governance Coefficient presents a more holistic perspective of the governance context of African countries. It presents an innovative approach that opens the ‘black box’ of governance to understand the relationship between different governance variables that are typically lumped together in composite indices.
The overarching idea is to lend quantitative rigour to the theoretical idea advanced by economists Acemoglu and Robinson in The Narrow Corridor[1]. Based on over two decades’ worth of research, they argue that positive long-run development is ultimately determined by the relationship between state effectiveness on the one hand, and citizen strength, on the other. These two arms should evolve in a ‘red queen’ kind of way – running to stand still. The one acts as a bulwark against the other, producing a corridor in which economic dynamism can flourish and reinforce the relationship between these key governance variables. Some states are very effective, but citizens have no voice, which invariably bodes poorly for their long-term development prospects. China is a case in point. Others might exhibit strong citizen voice but have a relatively ineffective state.
Inspired by this theory, we built our ‘Governance Coefficient’ to provide some quantitative rigour to the narrow corridor concept. We locate countries in relation to ‘government effectiveness’ and ‘citizen voice and accountability’ and show how this relationship changes over time. Countries are depicted by colour in terms of GDP per capita size. Technically, improvements in the two governance variable scores should correlate with an increased GDP per capita. Some exceptions prove the rule, especially in oil-wealthy developing countries, where GDP per capita is high but the rents accrue only to members of the ruling elite.
[1] The Narrow Corridor: States, Societies, and the Fate of Liberty.
