Introduction

This paper presents the latest update of the Worldwide Governance Indicators (WGI) research project. The indicators measure six dimensions of governance: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. They cover 212 countries and territories for 1996, 1998, 2000, and annually for 2002–2007. The indicators are based on several hundred individual variables measuring perceptions of governance, drawn from 35 separate data sources constructed by 32 different organisations from around the world. We assign these individual measures to categories capturing these six dimensions of governance, and use an unobserved components model to construct six aggregate governance indicators in each period.

As in the past, we complement our estimates of governance for each country with margins of error that indicate the unavoidable uncertainty associated with measuring governance across countries. These margins of error have declined over time with the addition of new data sources to our aggregate indicators, and are substantially smaller than for any of the individual sources. We continue to encourage users of the governance indicators to take these margins of error into account when making comparisons of governance across countries, and within countries over time. In particular, a useful rule of thumb is that when confidence intervals for governance based on our reported margins of error overlap in comparisons of two countries, or a single country over time, this suggests that the data do not reveal statistically (or for that matter practically) significant differences in governance.