Sören Holmberg, Bo Rothstein and Naghmeh Nasiritousi* For more than a decade, international organizations such as the World Bank and the United Nations have emphasized the importance of good governance and sound institutions from a development perspective. The theory behind this is that only with a high quality of government (henceforth QoG), can a country reap the benefits of economic growth and social development. In this chapter we present a review of this research together with a basic benchmark empirical analysis of the bivariate relationships between three widely used measures of QoG (the World Bank’s Government Effectiveness Index, its Rule of Law Index, and Transparency International’s Corruption Perceptions Index) and 22 different measures of important societal outcomes in five areas: health, environmental sustainability, economy, social policy and life satisfaction. In the empirical analysis, we employ data from The Quality of Government Institute Dataset (Teorell et al. 2008). Our central question is simple and straightforward: does QoG matter? The 2000 United Nations Millennium Declaration identifies good governance as a necessary requirement for countries to foster economic development and reduce poverty (United Nations 2000, para. 13). Similarly, the 2002 UN Human Development Report singles out democracy as a particularly important feature of good governance. It states: “For politics and political institutions to promote human development and safeguard the freedom and dignity of all people, democracy must widen and deepen” (UNDP 2002, p. 1). However, the report also warns: “The links between democracy and human development are not automatic: when a small...
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