**_2.1 The effects of transparency related to good governance and institutional quality_**

**One potential benefit of transparency is the improved accountability of government** . The general public, civil society, media, and the legislature are better positioned to hold the executive to account when they have sufficient information on the allocation and use of public resources. Robinson (2006) reviewed the findings from six detailed case studies of independent budget work and noted “transparency can help to reduce the scope for corruption through the misallocation of expenditures or the diversion of public resources for private ends.” For example, in Mexico, Fundar’s efforts to increase the transparency of the budget policies first led to new federal legislation to ensure public access to information and then to the establishment of a new review and enforcement agency to “compel government departments to comply with the provisions of the legislation” (p.26).

**However, transparency alone does not guarantee greater accountability.** Joshi (2011, p.7) explored existing evidence of causal relationships between transparency and accountability and their impact and effectiveness in the service delivery arena and found that “many initiatives are focused at increasing transparency and amplifying voice, without examining their link with accountability and ultimately responsiveness.” Her review of several studies led to the conclusion that a key contextual factor is the “willingness from the public sector to support attempts to improve accountability” (p.19). The tenuousness of the connection between information accessibility and accountability is echoed in numerous other studies, underscoring the need for further investigation and analysis (McGee and Gaventa 2011; Bellver and Kaufmann 2005; Carlitz 2012).

**Overall, the evidence indicates that increased transparency can lead to better quality governance and reduced corruption under the right conditions.** Islam (2003) explored the links between information flows and institutional quality and concluded that countries with better information flows govern better. Her analysis focused in particular on the existence of freedom of information laws and a constructed “transparency” index that measured the frequency with which economic data are published in countries around the world. Other studies further confirm an association between greater budget transparency, reduced corruption, and improved governance (Kaufmann and Bellver 2005; Hameed 2005).

# **_Indicators_**

The measurements of transparency that were used to trace the effects related to **_good governance_** and **_institutional quality_** in the studies discussed above were generally based on a review of legislative records and/or the construction of a transparency index using available economic data:

- Robinson (2006) identified the _implementation of federal legislation_ to ensure public access to information (Y/N) and the creation of a _review and enforcement agency_ to compel governments to comply with the provisions of legislation to ensure public access to information (Y/N).

- Islam (2003) constructed a _transparency index_ using 11 representative variables from four sectors (real, fiscal, financial and external) for a total of 169 countries.

- Islam (2003) also used the passage of a _freedom of information act_ to confirm a country’s progress towards becoming more transparent.

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