sources is representative of the world as a whole.<sup>7</sup> These two types of sources of governance data have their advantages and disadvantages. The main advantage of polls of experts is that they are explicitly designed for cross-country comparability, and considerable effort is placed in the benchmarking process that ensures this. The difficulties with such measures are also clear, however. They are typically based on the opinions of only a few experts per country, and the quality of the country ratings depends to a great extent on the knowledge of experts regarding the countries they are assessing. The ratings are particularly prone to two types of feedback: countries with good economic outcomes may be more likely to receive favorable ratings, and country rankings by other organizations are frequently included as an input into the rating process of each organization. Country ratings may also be affected by the political or ideological agenda of the organization producing the ratings. Despite these difficulties, there are at least two reasons to think that, on average, such sources provide valuable information on governance. First, the indicators produced by such organizations generally correlate strongly with measures based on surveys of residents and entrepreneurs. Second, the fact that commercial rating organizations are consistently able to sell their assessments to commercial subscribers for considerable fees suggests that these sources are producing useful information.

The main advantage of surveys is that they reflect the opinions of a larger number of respondents who are more closely connected with the countries they are assessing. Nevertheless, they suffer from two disadvantages. First, survey questions can be interpreted in context- or culture-specific ways. For example, a response regarding the prevalence of "improper practices" is colored by country-specific perceptions of what is improper. This will hinder the cross-country comparability of responses to otherwise identical questions. Second, cross-country surveys relating to governance are very costly to design and implement, and as a result they typically cover a much smaller set of countries than polls of experts.

Sources of governance data also vary with respect to the sample of countries they cover. A number of sources cover a very large sample of developed and developing countries, while in others the sample of countries is very narrowly focused. Furthermore, many of the poorest and smallest countries in the world are not covered by commercially oriented polls because they are relatively unattractive to foreign investors. Since there is a strong positive association across countries between governance and per capita income, this difference between sources makes it difficult to compare indicators from sources that 7. In the 1997-98 version of the governance database, our sources consisted of eight polls of experts and seven surveys, and five of our sources were classified as representative. In the 2000-01 version, we have added two new surveys-namely, the World Bank's Business Environment and Enterprise Performance Survey of firms in transition economies (BEEPS) and Latinobar6metro (LBO), a private survey conducted in seventeen Latin American countries-and two new polls of experts-the Columbia University State Capacity Study (CUD), covering 109 countries worldwide, and the PriceWaterhouseCoopers Opacity Index, covering thirty-five countries.

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