# **A Brief Primer on the Data and Transparency Literature**

Centuries ago, rulers acknowledged the need for systematic data collection. Historical data collection can be traced to the first recorded census undertaken by Babylonians around 3800 BC (Grajalez et al., 2013). Early data collection served rulers with the aim of accounting for wealth and power. Information was gathered for taxation purposes, counting of men for military recruitment and workforce, and ascertaining conquered populations and territories (World Bank 2021). Data was kept secret from the public and not meant to improve their lives but to help rulers pursue their agenda. This raised general distrust of data collection activities among the populace. In contrast, the enlightenment ideals in eighteenth century Europe emphasized objective scientific inquiry. The role of data evolved to a means of examining society and became more public. In the late eighteenth century, statistical agencies were set up in Europe and North America to publish official statistics and inform the public.

Data transparency is defined as the regular publication of credible statistics by the state. This includes the frequency and availability of micro-data, socio-economic indicators, and adherence of data to international standards. The literature has acknowledged the importance of statistics and the benefits of evidence-based policy in terms of generating reforms through experimentation (Rodrik, 2010). However, theoretical arguments have been made that better statistics may not necessarily lead to reforms. Binswanger and Oechslin (2020) theoretically show that under certain political conditions better statistics can inhibit reforms. For instance, with better statistics, voters are less inclined to give politicians the benefit of the doubt when confronted with disappointing economic data, thereby weakening politicians’ incentives to experiment and carry out reforms in the first place. Thus, the benefits of data transparency warrant empirical validation. However, recent research indicates that democracies are more likely to transform talk of reform during economic downturns into self-correcting reforms than less democratic societies (Arezki et al. 2020).

The role of transparency in facilitating good institutions by limiting corruption has been well debated. Press freedom and political institutions that increase accountability have been found to limit corruption across economies (Brunetti and Weder, 2003; Lederman et al., 2005; McMillan and Zoido, 2004). As noted by Djankov et al. (2003), two challenges in institutional design are the control of disorder and dictatorship, and transparent governments are better able to control disorder while incurring few social losses. Cordis and Warren (2014) find that strengthening the Freedom of Information Act (FOIA) in the United States reduces corruption and increases the likelihood that corrupt acts will be uncovered. In Mozambique, Armand et al. (2020) implemented a large-scale field experiment following the dissemination of information about a substantial natural gas discovery to test whether information can limit the political resource curse. The study finds that when information reaches citizens, it increases mobilization and reduces violence, but when information does not spread beyond local leaders, it has negative effects such as elite capture and increase in rent-seeking activities.

However, studies have also shown that transparency is not always desirable, or it is insufficient to limit corruption. Bac (2001) argues that transparency can have adverse effects by providing information to outsiders on who to bribe. Prat (2005) contends that complete transparency is not always beneficial and the type of information matters. This is part of the rationale of executive privilege - an agent may care more about appearances than engage in frank discussions in decision-making if it is understood that the internal discussions will be made public. Furthermore, information alone may not be sufficient to produce positive outcomes if there is little political engagement by citizens (Khemani et al., 2016). More importantly, information has to have a high signal-to-noise ratio to be impactful (Kosec and Wantchekon, 2020).

Studies have empirically explored elements of data transparency on governance, while not explicitly labeling it as such. For instance, Islam (2006) constructs a transparency index based on the frequency and availability of 11 indicators from four sectors (real, fiscal, financial, and external) and examines its effect 4