Transcript Institutional Change and Growth-Enabling Governance Capabilities

Institutional Change and
Growth-Enabling Governance
Capabilities
Nicolas Meisel
Strategy and Research Dept - French Development Agency (AFD)
Jacques Ould Aoudia
Treasury and Economic Policy Directorate - Ministry of the Economy
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First, What are we trying to
measure?
• 2 big ways of regulating a social system
– informal rules and interpersonal relationships (LAO)
– formal rules and de-personalised (or impersonal)
institutions (Open Access Order)
• 2 asymetric mechanisms.
– de-personalisation of social regulation systems.
– effort to formalise rules and detach institutional
functions from persons.
 Social Instability
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What do our data say? (1)
• An Original Database “Institutional Profiles”
– Survey completed in 2006 ; 85 countries (90% of the
world GDP and pop) ; 356 elementary variables
– 9 institutional functions: 1. political institutions ; 2.
safety and order ; 3. administration effectiveness; 4.
markets’ operating freedom ; 5. coordination of actors
and strategic vision ; 6. security of transactions and
contracts ; 7. regulation of competition and corporate
governance ; 8. openness ; 9. social cohesion
– Available at www.cepii.fr
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What do our data say? (2)
• An original Statistical Tool: Exploratory
Data Analysis (EDA)
– Why this tool?
• multi-criteria analysis tool. 1st need.
• “let the data speak for themselves”. 2nd need.
– Exploratory Data Analysis: refined descriptive
statistics
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What do our data say? (3)
• Results
(i) What is “Good governance”?...
...nothing else than the arrival point of the long
process of rules formalisation.
(ii) “Good Governance” is highly correlated
with Income Levels...
(iii) ... but not with Income Growth
 What’s the missing factor, what are the
“other governance capabilities” explaining
these growth differentials?
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(i) What is « Good Governance »?...
Nord-Ouest : paternalisme-autoritaire
autoritarian-paternalism
Nord-Est : libéralisme tempéré
mild liberalism
Etat - sécurité / State - security
CUB
7
IRN
VNM
CHN
TUN
5
SGP
UZB
SAU
3
MYS
THA
RUS
EGY
ZWE
TAI
DZA
NOR
BWA
KOR
ETH
JPN
ISR
1
KWT
VEN
KAZ
-9
IDN
ROM
-4
MOZ
YEM
MRT
GAB
GHA
BGD
IND
LBN
MLI
NGA
ESP
POL
ZAF
JOR
-1
COL
GRC
LKA
CZE
BGR
UGA
PRT
GTM
-3
PHL
TCD
PER
BOL
11
CAN
HUN
NZL
USA
CHL
MDG
KHM
SWE
EST
LTU
DOM
MAR
CIV
ARG
6
SEN
PAK
BFA
TUR
FRA
ITA
BRA
1
MEX
KEN
CMR
DEU
MUS
UKR
HKG
GBR
IRL
sociétés où les règles sont fondées sur le droit /
law-based societies
sociétés où les règles sont fondées sur le lien /
community-based societies
SYR
NER
BEN
Sud-Ouest : informel
informal
-5
libertés / freedom
Sud-Est : libéralisme pur
pure liberalism 6
(ii) « Good governance » is linked to the level of income...
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y = 0,2651x + 7,9346
R2 = 0,7072
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NOR
USA
JPN
ITA
Niveau de développement (PIB par tête en log)
KWT
SGP
FRA
HKG
ESP
10
TAI
SAU
PRT
NZL
GRC
IRL
SWE
CAN
DEU
ISR
KOR
MEX
GBR
CZE
HUN
9
LBN
MUS
VEN
RUS
PER
KAZ
DZA
EGY
GTM
MAR
DOM
IDN
CMR
PAK
UZB
MLI
ZWE
VNM
BGD
NGA
ARG
ZAF BRA
PHL
LKA
IND
KEN
6
GHA
BEN
BFA
EST
CHL
COL
7
SEN
LTU
BGR
BOL
CIV
YEM
ROM
8
CUB
JOR
CHN
UKR
MRT
BWA
TUN THA
POL
MYS
TUR
IRN
SYR
GAB
MDG
KHM
UGA
MOZ
TCD
NER
5
ETH
"bonne gouvernance"
4
-9
-4
1
Niveau de formalisation des règles (coordonnées de l'axe 1 de l'ACP)
6
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(iii) … but NOT to the speed of income growth
y = 0,0009x + 0,0163
R2 = 0,061
performance économique
Performance économique (croissance du produit par travailleur)
CHN
7%
5%
3%
KAZ
RUS
HKG
VNM
IND
THA
SGP
MYS
MUS
BGD
KHM
KOR
UZB
ETH
MOZ
CMR
BEN
YEM
TCD
-9
IRN
SYR
TUN
GHA
PER
MAR
BOL
MEX
SAU
-4
CIV
LBN
-1%
MDG
NER
UGA
SEN
GTM
HUN
PRT
CUB
COL
PHL
ISR
GBR
CAN
ESP
GRC
NOR
FRA
ITA
DEU
SWE
JPN
ZAF
ARG
1
KEN
USA NZL
CHL
ROM
TUR
BGR
NGA
CZE
POL
DOM
PAK
EGY
IDN
UKR
BFA
MLI
MRT
IRL
LTU
LKA
1%
EST
TAI
BWA
6
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BRA
JOR
GAB
DZA
VEN
ZWE
KWT
"bonne gouvernance"
-3%
Niveau de formalisation des règles (coordonnées de l'axe 1 de l'ACP)
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 What explaining factor?
y = 0,0009x + 0,0163
R2 = 0,061
performance économique
Performance économique (croissance du produit par travailleur)
CHN
7%
5%
3%
2
RUS
TAI
BWA
VNM
IND
THA
MLI
KOR
UZB
1%
EGY
ETH
MOZ
CMR
BEN
IRN
TCD
-9
SYR
MAR
BOL
MEX
SAU
-4
CIV
LBN
-1%
MDG
NER
1
UGA
SEN
GTM
HUN
PRT
CUB
COL
PHL
GAB
DZA
ISR
GBR
CAN
ESP
GRC
NOR
FRA
ITA
DEU
SWE
JPN
?
6
BRA
JOR
NZL
ZAF
ARG
1
KEN
USA
CHL
ROM
TUR
TUN
GHA
PER
CZE
POL
BGR
NGA
YEM
IDN
DOM
PAK
3
SGP
MYS
MUS
UKR
BFA
IRL
HKG
BGD
KHM
EST
LTU
LKA
MRT
?
KAZ
11
VEN
ZWE
KWT
"bonne gouvernance"
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-3%
Niveau de formalisation des règles (coordonnées de l'axe 1 de l'ACP)
Discovering the Growth-enabling
“Governance Capabilities” (1)
• Group 1 (DV) vs Group 2 (CV) (p36)
– Coordination and strategic vision.
– Quality of basic public goods and security of agricultural
transactions and PR.
• Group 2 vs Group 3 (p37)
– Coordination and strategic vision of actors is not a
discriminating factor.
– The most discriminating variables = “good governance”
agenda = Security of transactions + control of corruption +
Administration efficiency + transparency.
• Group 1 vs Group 3 (developed)? (p38)
– In fact, almost everything.
– Yet, it is the standard good governance prescription.
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Discovering the Growth-enabling
“Governance Capabilities” (2)
• Why do these capacities generate higher
growth in group 2?
– make up for the destabilisation of the social order
– create cooperation-contingent rents targeting key
particular interest groups to align their interests
on desirable common goals
– curb uncertainty, thus reducing transaction costs,
stabilizing expectations of actors and lengthening
their horizons
– instrumental to high and sustained rates of
investment and growth
“Governance Focal Monopoly”
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Further Steps and Practical implications
 The good governance agenda has turned
around a unique dimension, a unidimensional set of measures and
prescriptions which say: “get formal rules,
get formal institutions”, as they function in
rich countries.
 Broaden the scope of “good governance”
with 2 new dimensions and sets of
measures:
• coordination and anticipation
• openess of social orders
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