metadata: authors: 0: author: Islam,Roumeen
docna: 0: docna: do more transparent government govern better?
docty: Policy Research Working Paper
subtopic: Economic Conditions and Volatility,Judicial System Reform,National Governance,Government Policies,Information Security & Privacy,Public Sector Administrative & Civil
            Service Reform,Youth and Governance,Governance Indicators,Democratic Government,Public Sector Administrative and Civil
            Service Reform,De Facto Governments
teratopic: Education
abstracts: cdata!: The author explores the link between
            information flows and governance or institutional quality.
            Economic theory expounds on the importance of information on
            economic outcomes either through its direct effect on prices
            and quantities or through its effect on other factors such
            as institutions and the quality of governance. She shows
            that countries with better information flows also govern
            better. Two kinds of indicators are used to assess better
            information flows. One index is based on the existence of
            freedom of information laws. A second index called the
            "transparency" index measures the frequency with
            which economic data are published in countries around the
            world. Empirical analysis shows that countries which have
            better information flows as measured by both indicators have
            better quality governance.
repnme: repnme: do more transparent government govern better?
display_title: do more transparent government
            govern better
listing_relative_url: /research/2003/06/2390975/more-transparent-government-govern-better
topicv3: Macroeconomic Vulnerability and Debt
            m1326057 1104,Justice m1326106 840,Data Privacy m1327097 2369,Governance Indicators m1327488 834,Public Administration m1327723 723
publishtoextweb_dt: 2010-07-01T00:00:00Z
historic_topic: Education
origu: Poverty Reduction & Econ Mng Div (WBIPR)
no_of_pages: 48
author_keys: 0: author_key: 99125
model_extractions: I POLICY **RESEARCH WORKING PAPER** 3077

# **Abstract**

Islam explores the link between information flows and governance or institutional quality. Economic theory expounds on the importance of information on economic outcomes either through its direct effect on prices and quantities or through its effect on other factors such as institutions and the quality of governance. She shows that countries with better information flows also govern better. Two kinds of indicators are used to assess better information flows. One index is based on the existence of freedom of information laws. A second index called the "transparency" index measures the frequency with which economic data are published in countries around the world. Empirical analysis shows that countries which have better information flows as measured by both indicators have better quality governance.

This paper-a product of the Poverty Reduction and Economic Management Division, World Bank Institute-is part of a larger effort in the institute to disseminate its work on institutions and governance. Copies of the paper are available free from the World Bank, 1818 H Street NW, Washington, DC 20433. Please contact Roumeen Islam, roomJ4-15 1, telephone 202-473-2628, fax 202-676-9810, email address rislam@worldbank.org. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. June 2003. (41 pages)

> **_The Policy Researcb Working Paper Series disseminates the findings_** _of_ **_uork in progress to encourage the excgange of ideas about_**

> **_development issues. An objective_** _of_ **_the series is to get the findings out quickly, even if the presentations are less than fully polished The papers carry the names_** _of_ **_the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those_** _of_ **_the authors. They do not necessarily represent the vieuJ_** _of_ **_the World Bank, its Executive Directors, or the countries they represent._**

Produced by Partnerships, Capacity Building, and Outreach
# **Do** More Transparent Governments Govern Better?

**Roumeen Islam'**

**World Bank**

I would like to thank Nurul Islam and Daniel Kaufinann for helpful discussions on this topic. I am grateful to Chunfang Yang for her excellent research assistance and helpful suggestions. I also thank Theodora Galabova for her excellent research assistance.
Information is a critical ingredient in efficient, well-functioning markets, both economic and political. More information allows better analysis, and better monitoring and evaluation of events which are significant for people's economic and social well-being. It allows economic and political decision-makers to evaluate opportunities and manage risks better. It allows for the possibility that decisions in economic and political markets will enhance social welfare. The importance of information in markets for different types of goods and services has long been recognised in theory (Ackerlof, 1970, Stigler,. 1961, Stiglitz with Rothschild,1976, Stiglitz with Grossman, 1980, Stiglitz and Weiss, 1981, Braverman and Stiglitz, 1986, Stiglitz, 1984, 1987a, 1987b, 1987c, 1988, 1989, 2002, among others). Modem macroeconomics as well as microeconomics and finance are based on theories of how expectations are formed using the information available to decision-makers and how these expectations translate into actions which affect future outcomes. These theories focus not only on how much information there is but also on how people use that information. A plethora of authors have investigated the effects of information on stock markets and on bank loans and interest rates. In the aftermath of the recent financial crises around the world several empirical papers have looked at how information might be used to predict crises and/or adapt policy to prevent crises (Wirjanto, 1989, Chote ed.,1998, and Chowdhry and Goyal, 2000). Jappelli and Pagano (1993 and 2001), Galindo and Miller (2001), Faukenheim & Powell (forthcoming), and Barron & Staten (2003) are among those that consider how information provided by credit rating agencies/bureaus affects how markets function.

More recently, papers have looked at the empirical evidence linking the responsiveness of governments as well as private actors to better information provided by the media (Islam 2002, World Bank, 2002). For example, Besley and Burgess (2001, 2002) find that regions in India where the media are more active are also regions which are the least likely to suffer from famines during droughts. This is because regions where the media have a greater reach are also the areas where voters are more informed about political choices and able to cast votes accordingly. Political leaders knowing that their performance can be monitored and may affect re-election possibilities are more accountable to voters. Dyck and Zingales (2002), find that a more active media as proxied by a media which has a greater circulation can be a powerful influence on the corporate governance environment. The media provides information that affects the reputation of corporate managers and thus their incentives to behave in a certain manner. Shiller (2002) and Herman (2002) discuss how media influence may in fact distort economic reality or provide a biased version of the "truth".

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There is a tremendous range of information<sup>thatispotentiallyvaluableinmaking</sup> economic decisions: to give some<sup>examples, it can range fromsimpleprice information, to the</sup> disclosure of govemment processes<sup>andlaws,todisclosureofprivatecompanyaccounts.</sup> Information is thought to be critical in<sup>affecting how a country is govemedand how accountable</sup> private business is to its customers<sup>andshareholders.Yetwhatinformationisproduced,</sup> disseminated, and analysed depends<sup>ontheincentivesof publicand privateagentstodoso.</sup> Stiglitz (2002) discusses the incentives<sup>ofgovernmentstorestricttheflowofinformation.</sup> Govemments play a critical role<sup>sincethey canrestrictorfacilitateinformationflow.Many of</sup> the institutions (laws, regulations,<sup>organsof thestate)thatgovernmentsdesignarecreatedto</sup> manage the flow of information<sup>inaneconomy.Formuchoftheinformationrelevantto</sup> decision-makers in political and economic<sup>markets,governmentis in fact thesole repository (and</sup> producer).

Djankov et. al (2001) demonstrate<sup>that who provides informationhasa strong influence</sup> on what information is transmitted.<sup>Theyshowthatmediaownershipaffects economicand</sup> political outcomes by influencing<sup>the natureof the information transmitted.Specifically,they</sup> focus on the issue of state ownership<sup>ofthemediaandtheimpactonsocial and economic</sup> outcomes. Private business owners<sup>willproduce,analyseanddisseminateinformationif itis</sup> profitable to do so, or if it enables<sup>themtoinfluence public opinion ina way that increases their</sup> non financial gains, such as social<sup>stature.Demetz and Lehn(1985,1988)hypothesizethat this</sup> effect which they call the "amenity<sup>potential" is quitehigh.Grossman and Hart (1988)referto</sup> the non-financial benefits as the<sup>"private benefitsof control".</sup> 3
What about those that demand information? Consumers and citizens<sup>willonlydemand</sup> information if it is perceived as useful and will only pay for it if they cannot get it otherwise.<sup>2</sup> Similarly for private business. Countries are often cited to have or not have a "culture"<sup>of</sup> openness. In other words citizens either do not see value in having certain<sup>kindsof information</sup> being made public or, put another way, do not have strong enough<sup>incentivestopressure</sup> governments or private agents to make such information available. Or sometimes<sup>theydonot</sup> have strong enough coalitions to support their desire for greater openness and/or<sup>the transactions</sup> cost of forming coalitions is too high.

This paper extends the empirical work on information and economic and political markets. It examines how the availability of information may affect<sup>governance. Specifically,it</sup> looks at (a) how the availability of basic economic data affects governance<sup>and (b) how the legal</sup> framework governing access to information might affect the quality of governance.<sup>Iask,is</sup> better knowledge about economic performance in terms of the timely<sup>availabilityof economic</sup> data associated with better economic and political outcomes? Second,<sup>I examinehow restrictions</sup> on the use of information can affect the quality of governance. In<sup>particular,how restrictionson</sup> the media may affect information flows and therefore governance.<sup>Massmediaprovide</sup> consumers and producers with information that they use to make<sup>decisionsineconomicand</sup> political markets. The specific restriction I consider is the presence of<sup>a Freedomof Information</sup> Act or Law (FOIA). FOIs determine the modalities by which citizens or<sup>privatebodiescan</sup> obtain information which resides with public entities.

It is clear how economic data helps economic markets function<sup>better.Investors,</sup> consumers and producers can make better business decisions by better<sup>assessingmarket</sup> conditions for their products. For example, price and inflation data<sup>help determineconsumers'</sup>

> **2** Information being a public good suffers from the classical problems.

4
expenditure patterns both between products and over<sup>time.Whymightweexpectagreater</sup> availability of economic data to be associated with better<sup>quality government?For a number of</sup> reasons more widely available data can help governments<sup>governbetter.For one,the publiccan</sup> judge their governments' ability to make sound<sup>policyby lookingatsuchdata.The abilityto</sup> judge leaders according to how they perform<sup>in theeconomic spherecanaffectthelevelof</sup> support the government has and determines how long<sup>theystayin power.Incountries where</sup> different constituents are able to gauge economic<sup>performance,and wherecitizensarewell</sup> informed, people are more likely to demand<sup>governmentsthatgovernbetterandgovernments</sup> have more of an incentive to do well. That is governments<sup>become moreaccountabletotheir</sup> people. Even in non-democratic. countries<sup>policymakersmayfeelboundtoproducebetter</sup> economic policy because they are monitored more<sup>effectively andtheycareabouttheir</sup> reputations. They will be more wary of making large<sup>mistakes.</sup> Second, data can help better coordination between members<sup>of government.For example,</sup> the budgetary process can benefit from data<sup>onoutcomesrelatedto fiscalexpenditures.Third,</sup> the use of data to design policy can improve policymaking,<sup>helpidentifygoalsandevaluate</sup> alternative policies; and it can help policymakers to<sup>understandthe relativemagnitudesof the</sup> issues for which they may have had only a qualitative<sup>feel.A better understandingof the effects</sup> of policies can lead to a change in the nature of the<sup>policiesadopted.Forthesereasons, the</sup> provision of timely and good quality economic<sup>datacan improve governance.</sup> Countries which produce economic data on a<sup>timelybasisandpromotetheir</sup> dissemination are also likely to be countries which<sup>supportbetter informationflowsallaround.</sup> In other words, economic data can be thought of as<sup>a proxy for other kindsof data.It isof course</sup> an imperfect proxy since experience clearly shows that<sup>governmentsmayonoccasiondivulge</sup> economic data but not political data.

5
Aside from access to regular economic data people need infornation on a variety of issues related to public sector activity. They need timely information on decisions related to various aspects of government activity, on how these decisions will be implemented, information on the consequences of these decisions and the process through which they are reached. Yet in many countries access to this type of information is very limited either because of the laws or regulations which restrict access, or simply because the administrative capacity to organize and disseminate information does not exist. Laws facilitating access to information held by the public sector can play an important role in increasing information flow and facilitating the monitoring government. This paper examines how the presence of Freedom of Information (FOI) laws may affect how countries govern. Of course, the extent to which better information will affect choices of course depends on how people can act upon their choices- many other laws affect this ability (e.g. insult and defamation laws). I focus on only one of the several possible relevant laws. Data

# The Transparency Index

In order to investigate the relevance of widely available economic data for the quality of governance, I created an index which I call the "transparency" index. I take 11 representative variables from 4 sectors: the real, fiscal, financial and external sectors for a total of 169 6
countries, among which 145 are developing and 24 developed, using the World<sup>Bankdefinition</sup> of developed and developing.<sup>3</sup> The 11 representative variables are: gross<sup>domesticproduct(Q,</sup> line 99b in IFS<sup>4</sup> ), unemployment (Q, line 67c in IFS), the consumer price<sup>index (M,IFSline64),</sup> exports (M, line 70 in IFS), imports (M, line 71 in IFS), foreign direct<sup>investment(Q,line</sup> 78bed), the exchange rate (M, exchange rate at the end of period national currency<sup>units, line ae</sup> in IFS), government revenue (Y, IFS line 81, central government<sup>fiscal revenue), government</sup> expenditure (Y, IFS line 82, central government fiscal expenditure),<sup>moneysupply-M2(M, sum</sup> of IFS line 34 and 35) and the deposit interest rate<sup>5</sup> (M, IFS<sup>line601).Theseindicatorsare</sup> certainly not an exhaustive list of economic data that might<sup>beconsidered importantfor</sup> monitoring and judging economic policy outcomes, but they do represent<sup>theindicatorsthat all</sup> countries should have to some degree.

For each of these variables, I determined the "desirable" frequency level. This level<sup>was</sup> determined by observing the actual frequency level with which the<sup>dataarepublished inmost of</sup> the industrialized/high income countries and taking the most frequent<sup>levelasbeingsomething</sup> that is both achievable and desirable. A "Q" indicates that the data is<sup>expectedto beavailableon</sup> a quarterly basis, the "M" indicates its availability on a monthly basis and<sup>a"Y" itsavailability</sup> on a yearly basis. In other words GDP numbers can be and are produced<sup>on aquarterly basisin</sup> some, mostly richer countries. These countries are assigned the highest<sup>score(ora1) in terms of</sup> "transparency" with respect to GDP as long as they are also available<sup>onatimely basis.As</sup> Table I explains, both the frequency and the date for which<sup>thelatest dataareavailableare</sup> counted in formulating the index.

> **3** Developed countries are those classified as "high income" or having<sup>gross national income equal to or greater than</sup> US$9,206 per capita. Countries with lower per capita income<sup>areclassifiedas developing.</sup>

> 4 IFS refers to the International Financial Statistics - a publication<sup>of theInternationalMonetary Fund.</sup>

> 5 Generally this is a 3-month deposit rate.

7
**Table 1. Data Coding**

Cut off points are based on the examining data at end-June 2002 and in mid- November 20026:

||m|Q|**y**|
|---|---|---|---|
|1|3monthslag:2002/7|6monthslag:2002/3q|1yearlag:2001|
|2|6monthslag:2002/4|12monthslag:2001/3q|1.5yearlag:2000|
|3|withlongerlag|withlongerlag|longerlag|
|**4**|lowerfrequency, reas|onablyuptodate(2002/1|qforM,2001forQ)|
|5|lowerfrequency, longe|rlag||
|6|notavailablefromWD|I,IFS,or anyotherofficia|lwebsites|

For example, if I search for the CPI data in middle November 2002, and if the data are available for July 2002 or for more recent months, it is assigned a score of "1". If monthly data are available, not for July or later, but at least up to April 2002, then the score is "2". If the monthly data are only available for March 2002 or are even older, the score is "3". If the data are reported in lower frequency, for example, they are quarterly or annual and if the data are reasonably up to date (for data such as the CPI which are "desired" on a monthly basis, the requirement is that if it is reported as quarterly data, it should be available at least for the first quarter of 2002 or if annual data, then it needs to be available at least for the year 2001), then the score is "4". If the data are both produced at a lower frequency and is older than required a score of "4", or _"5"_ will be assigned. If the data are not available from any of the four sources (WDI, IFS, RMF or WB external websites or official websites of the countries), a "6" is assigned. The scores for each country on all indicators are averaged.

For GDP data, quarterly data are "desired", if the data are available for the first quarter of 2002 or for a more recent quarter, the country gets a score of "1" on this measure. If quarterly

> 6 Some additional countries were added in November 2002; the table is based on the observations in November.

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data are available but only for the third quarter of<sup>2001or later,butnot forthefirst quarterof</sup> 2002, the score assigned is "2". If the quarterly<sup>data are onlyavailable for the second quarter of</sup> 2001 or are even older; the score is a "3". If<sup>thedataarereportedat alowerfrequency,for</sup> example, they are annual, then in order to<sup>get a"4",thedata needto beavailablefor atleast up</sup> to the year 2001. Otherwise it will be assigned<sup>a</sup><sup>_"5"._Again,"6"will beassignedif none of the</sup> sources checked have the data.

For annual data, such as government revenue or<sup>expenditure,if thedataareavailableup</sup> to the year 2001, it is assigned a "1"; "2" is assigned<sup>if the most recentdata arefor the year 2000.</sup> Otherwise the score is "3". Using this methodology,<sup>the UnitedStatesis assigneda valueofI</sup> for the consumer price index because the<sup>CPI forSeptember2002 isavailable intheIFS</sup> November 2002 edition. Uruguay is assigned<sup>avalueof2becausethemostrecentCPIis for</sup> June 2002. And Zambia is assigned a<sup>valueof 5 becausethemostrecentCPIwasreportedfor</sup> 1997.' For a couple of countries the coding was not<sup>followedexactly.Two countriesgot a better</sup> score for having higher than "desirable" reporting<sup>frequency thoughtheirscoreswouldhave</sup> been lower since the lag in data was longer<sup>than theoptimumordesiredlag.Armeniahas GDP</sup> figures up to October 2001 and Luxembourg has<sup>FDI data upto April 2001;both areof monthly</sup> frequency. The former could only score a "2" and<sup>thelattera "3",byconsideringthelags.But</sup> they receive "1" and "2", respectively, since the<sup>dataareavailable ata higherthan"desired"</sup> frequency.<sup>8</sup>

> 7 Note that for some of the countries the index was prepared looking at end-June publications. The index was then broadened to cover 40 more countries, but the<sup>end-date for theseis November.Thisdiscrepancyhas not made much</sup> of a difference since countries that tend not to report<sup>on a timelybasiswould havethesametendencywhetherone</sup> looks at their numbers in June or in November.

> 8 For these two countries the cut-off point was June;<sup>they werein the first groupinvestigated.</sup>

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I define "available" by checking the following sources: the World Development Indicators published by the World Bank, the Intemational Financial Statistics published by the International Monetary Fund (November 2002) and the internet (official websites of the government, such as Central Banks, statistical agencies, the Ministry of Finance, etc). Some of the internet sources and the WB/IMF publications are based on national publications.

In addition, when coding information from a web site of the Central Bank and/or the statistics agency, in cases where there were no actual statistics on the site but it was indicated that the relevant data were available in a publication, the country received a score that reflected the most recently published issue of the printed publication. E.g. for the end-June cut-off date, if the web site indicated that there was a report containing the data published in April, then the country received a I for that data. If the last issue available was that of January 2002, the score was a 2 and so on. These decisions were particularly relevant for statistical information published by the national statistics agencies in several middle income or rich countries, especially Brazil, Cyprus, Greece and Germany.

In cases where the web site was inaccessible after two attempts, the information was considered as NOT being available from this source. Countries affected include Costa Rica, Guatemala, Honduras, and Benin. The code for each data type is then added together to create an index of transparency in economic activities and they are averaged. The best score for "transparency" is thus 1, and the worst possible is 6 (if a country scores 6 on all 11 indicators).

It is important to note two things: even if the internet site is accessible, many individuals with interest in the data may not have easy access or any access to the internet. In cases where there are national publications, interested people may not be able to purchase it in a bookstore or the cost may be exorbitantly high. A mitigating factor may be that as long as some key 10
individuals or organizations (such as researchers, and the media) have access to this information, there is some chance that others who are interested in key variables will<sup>beableto obtainthe</sup> necessary information. Despite this fact, the measure of availability used in this paper almost surely overstates how much information on common economic data is<sup>easilyavailablein</sup> practice.

The index, thus constructed is used to assess the importance of information/transparency on institutional quality or governance. It is likely that countries that produce timely data on these indicators are more likely, on average, to produce more timely economic data of<sup>other kinds.</sup> The transparency index indicates how much information governments are<sup>willingto</sup> disclose - but the FOI law gives access to more than just economic data.

# A) Access to Information Index

Even when governments publish simple economic data, the people they<sup>governmaynot</sup> have sufficient information to judge outcomes and monitor performance. Information<sup>on a wide</sup> variety of activities that is not immediately encapsulated in the type of economic<sup>datadiscussed</sup> above, can be very important in ensuring accountability of government.<sup>Informationonhow</sup> decisions are made, as well as the immediate inputs into, and outcomes<sup>of,thesedecisionsare</sup> critical for monitoring purposes. A key question is how does society<sup>getinformation on what it</sup> wants and needs to know about its government? In many countries there are<sup>clearrulesorlaws</sup> which define the rights of individuals and private entities - often defined<sup>ingeneralterms in the</sup> constitution and defined in more detail in Freedom of Information (FOI)<sup>laws.The adoptionof</sup> FOI laws is quite recent in the case of most countries. As citizens around the world have become progressively more aware of their rights and have learned the value of<sup>adoptingsuchlaws from</sup> their neighbours, they have adopted FOIs. FOI laws may vary in both content and scope from 11
country to country. Some laws are very<sup>detailed regardingwhatinformationmay bekept secret</sup> and under what circumstances and some are<sup>quite general. 9</sup> Regulations and laws governing access<sup>toinformationandtheabilityofpeopleto</sup> disseminate information freely may be<sup>coveredinother relatedlaws as well.Pressandmedia</sup> laws may determrine how much information<sup>iscirculated.Restrictive practicessuchasrequiring</sup> journalists or newspapers to be licensed<sup>by thestate maylimit theflow of information, either by</sup> restricting entry or by inducing media personnel<sup>tocensor information disseminationfor fear of</sup> reprisal from government. These restrictions<sup>alsovaryin kindandscopebetweencountries.In</sup> Austria there is no requirement on journalists<sup>ornewspaperstobelicensed.' 0IntheCzech</sup> Republic journalists are not required to<sup>be licensedor accreditedbutnewspapersare requiredto</sup> be licensed. However, an amended Press Law in<sup>1990haschangedtheformer licensing</sup> requirements of any publishing activity<sup>intoasimple registration.Allperiodicalpressis</sup> registered with the Ministry of Culture." In Ethiopia, journalists are not required<sup>to be licensed or accredited;however, newspaper</sup> licenses are issued by the Ministry of<sup>InformationandCultureandareannual,beingrenewed</sup> upon payrnent of the prescribed annual<sup>fee.12Thereisafeeof US$1,185forrenewalof a</sup> license; and prospective and existing newspapers<sup>arerequired to maintainbank balancesof US</sup> $1250 as a bond against potential offenses<sup>that journalistsmight commit. Publicationsthat fail to</sup> demonstrate at least this degree of solvency<sup>whenever requiredby theMinistryof Information</sup>

> **9** See Martin and Feldman (2003), Transparency<sup>Internationalwebsite.</sup>

> 10 (http://www.austriaemb.org.au/media.htm<sup>and www.hrcr.orp./safrica/expression/telesystemaustria.htmnl.</sup>

> " Law #81/1966 ("On periodical printings"<sup>regulatesthe publicationsof the press andother mass media.</sup>

> 12 Proclamation 34/1992, Art. 7). According<sup>to the websiteijnet.org/Archive/2001/8/17-10268.html,an editor of the</sup> sports newspaper Kicker, failed to renew<sup>its- licenseand was sentencedto one monthin prison.</sup>

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and Culture may have their licenses revoked.<sup>13</sup> The fee, compared to Ethiopia's per capita GDP is high- GDP per capita being $122.1 in 2001.'4 The purpose of all such laws is to define a framework for the sharing of information. Sometimes just the act of adopting a law can signify a reduction in the restrictions imposed on information flow. Sometimes the adoption of a law can make people more aware of the value of information (Chongkittavom, 2002). Such laws are one important element in the whole institutional environment affecting information flow.

Adopting a FOI is clearly not enough to ensure that it is effective. Government agencies must be required to publish information and there must be some implementating mechanism for the FOI. For example, in some countries a central commission is charged with ensuring that information gets out to the public as in the case of the Information Commission in Ireland, the Data Protection Inspectorate in Estonia and the Office of the Official Information Board in Thailand,<sup>15</sup> while in Georgia, Bulgaria and Finland this is not the case. Countries vary greatly in the time it takes to satisfy requests for information. In Estonia, Hong Kong, China, and Hungary, the laws specify, that responses to requests must be made before or by the 15th day. In South Africa, the limit specified is 30 days and in Thailand the limit is not specified though it must be within a "reasonable period".

In case requests for information are denied, in most cases, the nature of the appeals process is also specified. Generally, the courts are responsible for oversight: in Canada the final appeal goes to the Federal court. In Ireland there is a review by an Information Commissioner

> 3<sup>3</sup> www.cpj .org/attacksO0/africaOO/Ethiopia.html and www.cpj .org/protests/Olltrs/Ethiopia3I OctOlpl.html '<sup>4</sup> World Bank data.

> 15 Various sources: I)Information Commissioner in Ireland - Freedom of Information Act 1997, Part IV, article 33; obtained from: www.humanrightsinitiative.org 2) Data Protection Inspectorate in Estonia - Public Information Act, RTI 2000, 92, 597, Chapter VI, article 44; obtained from: L1NET 3) Office of the Official Information Board - Official Information Act, B.E. 2540 1997, Section 6; obtained from: www.humanrightsinitiative.org);

13
and then an Appeal to the High Court. In Thailand,<sup>appeals aremadetotheInformation</sup> Disclosure Tribunal, and in Hong Kong, China,<sup>totheOmbudsman.Itisclear thatseveral</sup> institutional features need to be developed to ensure<sup>thereis effectiveimplementationof FOIs.A</sup> survey by the Bulgarian Access to Information Programme<sup>Foundationin 2000,foundthat one</sup> year after the country adopted a freedom of information<sup>law,only: 42% of the Bulgarianpublic</sup> administration had implemented it effectively. A study<sup>bytheRomanianAcademicSociety</sup> showed that while "while 68 percent of Romanian<sup>institutionshadanofficeinchargeof</sup> informing citizens about what they do, only 16 percent<sup>had the requiredlist of data informing the</sup> public." (Reuters, Dec 17).16 Despite these caveats, however,<sup>it is possible to say that a country</sup> with an FOI law is more likely to be more open having<sup>takenan importantstep towardsallowing</sup> better information flows from the public sector to<sup>the private sector.</sup> Not only are FOI laws a relatively recent phenomenon<sup>on the scene(seeTable2)with</sup> only 50 countries having adopted one as of May 2002<sup>and 54 as of end 2002, but manycountries</sup> are still trying to work out how to implement them<sup>effectively.Preciselybecausetheadoption of</sup> such laws is relatively recent, it some countries it<sup>might be difficultto arguethat they have had a</sup> substantial effect on governance. Yet, even in these<sup>casesit mightbe argued that adoptionof a</sup> FOI act may be taken as one of the acts a government<sup>takesinan ongoingprocesstoimprove</sup> transparency: it is rarely the first act. Thus the existence<sup>of anactmay beanindicatorfora</sup> general move towards ensuring greater access to<sup>information.</sup> i-I B) Other Data I use two sets of governance/or institutional quality<sup>indicatorsto study the relationshipbetween</sup> transparency, and governance. The first set is developed<sup>by(Kaufmann,KraayandZoido-</sup> Lobodan, KKZ, 1999). The second set is composed of<sup>the ICRG indicators. The KKZ indicators</sup> 16 This is taken from an article by Antonia Oprita "Romania<sup>mustshape up lawsto get into EU'"</sup> 14
are taken from the years 1997-98. The ICRG indicators used span several years from 1984 to 1997. The former indicators measure aspects of govemance such as: graft, government effectiveness, regulatory burden, the rule of law, political instability and violence, and voice and accountability. The latter indicators measure corruption, the extent to which the rule of law is respected, bureaucratic quality, contract repudiation and expropriation risk.

Other variables used in this paper are: an indicator for the freedom of the press, 1999, from Freedom House which ranges between 1 and 100, a variable indicating the extent of state ownership of the press (poss) and television (toss) both taken from Djankov et al (2001), newspaper circulation (circu) defined as circulation per 1000 people, 1996 - from the United Nations Educational, Scientific, and Cultural Organisation, Statistical Yearbook. All three of these variables have been shown to be associated with institutional quality (Djankov et al, 2001, Besley, Burgess and Pratt, 2002 ). The GNP per capita figures are an average of the years 199296 in the regressions with the KKZ variables and 1979-83 for the ICRG measures. They are taken from the World Development Indicators, 2000, World Bank. Many of the regressions control for the legal origin of the country - whether English, French, Scandinavian or German. How long a country has been in existence as an independent nation can be expected to have an effect on institutional quality since institutions develop slowly over time. This variable is aiso used to assess the robustness of the transparency variable. Finally, a dummy variable which distinguishes between countries that have a FOI law and those that do not is used as a controlling variable. This indicator is composed from data held by Article 19 of International Center and Censorship, (ICC,1993) and World Bank research and shown in Table 2.17

> 17 **Author's** compilation.

15
**Table 2. Countries with** FOIA

|Country|Yearof<br>Introduction|NameoftheLaw|
|---|---|---|
|Albania|1999|Lawontherightofinformationoverofficialdocuments|
|Argentina|1998|FOIlaw|
|Australia|1982|FOIA|
|Austria|1986|Obligation to Infonnationlaw-itisnotFOIA|
|Belgium|1991-2001|seriesoflaws and decrees|
|Belize|1994.|FOIA|
|Bosnia-Herzegovina|2001|FOIA|
|Bulgaria|2000|Access to Information Act|
|Canada|1983|AccesstoInformationAct|
|Chile|1999|LawonAdministrative Documents|
|Colombia|1888,1985||
|Czech Republic|1999|Law onfreeaccesstoinformation|
|Denmark|1985|The PublicInformationLaw|
|EU|2001|Regulation regardingpublicaccesstoEuropean Parliament, CouncilandConmissiondocuments|
|Estonia|2000|PublicInformationAct|
|Finland|1951,1999|Acton theOpennessofGovernmentActivities|
|France|1978|Freedomofaccess totheadministrativedocuments|
|Georgia||FreedomofInformation (chapter3)|
|Ghana|1999|RighttoInformationBill|
|Greece|1986,1999|AdministrativeProceedingsCode|
|Hong Kong|1995|Code onAccesstoInformation|
|Hungary|1992|Data Protection Law|
|KyrgyzR|2001|LawontheGuarnteesandFreedomofAccesstoInfoTmation|
|Iceland|1996|InformationAct|
|Ireland|1997|FreedomofInfo_mtionAct|
|Israel|1998|FreedomofInfomatonLaw(5758-1998)|
|Japan|1999|Law concerningtheDisclosurofInformationheldbyalministiveorgans|
|Latvia|1998|-_<br>FreedomofInformationLaw|
|Lithuania|1996|LawonProvisionofIonfoationtothe_Public|
|Mexico|2002|FredomofInfom-tionAct|
|Moldova|2000|Law onAccesstoInformation|
|Netherlands|1991|Law onOfficialInformation|
|NewZealand|1982|OfficialInformatonAct|
|Nigeria|1999|FreedomofInformationBill|
|Norway|1971|FreedomofInformationAct|
|Panama|2002|LawonFree Access toPublicRecords|
|Poland|2001|FreedomofInformationAct|
|Portuga|1993|LawonAccessto AdministrativeDocunments|
|Romania|2001|Lawregardingthefree accesstothe informationofthepublcinterest|
|Russian Federation|1995|<br>LawonInfinrmation,Infromatization andProtectionofInformation;LawonState Secrets|
|Slovalda|2000|Actonfreeaocesstoinformation|
|SouthAfrica|2000|PromotionofAccess to informationact|
|South Korea|1996|ActonDisclosureofInformationbyPublicAgencies|
|Spain|1992|Legalregimeofthepublicadministrationsandthecomnaonadministrative procedure|
|Sweden|1766.|FreedomofthePress Act|
|Thailand|1997|OfficialInfonrmationAMt|

# **Descriptive Statistics**

Table 3 shows the transparency index for selected countries. Aggregating and averaging the transparency indicator among countries of different income levels shows that rich countries are more than twice as "transparent" (Table 4). What is interesting though is that some high 16
income countries, half of which<sup>are oil producers,have verylow transparencyratings. Theseare</sup> the United Arab Emirates, Qatar,<sup>Kuwait,NewCaledonia, Brunei,theBahamas,and Slovenia.</sup> The variation among high income<sup>countriesisthe highestamongthethreegroups.For thelow</sup> income countries not only is the<sup>averagetransparency lowerbutthe variationbetweencountries</sup> is also smaller.

**Table 3. Transparency Indicator**<sup>**for SelectedCountries**</sup>

|Country|Transparency<br>|Country<br>|Transparency<br>|Country<br>|Transparency<br>|
|---|---|---|---|---|---|
|Afghanistan|6<br>|France<br>|I<br>|NewZealand<br>|1.36<br>|
|AIbania<br>|2.18<br>|Gabon<br>|4.09<br>|Nigeria<br>|3.91<br>1|
|Algeria<br>|2.45<br>|Georgia<br>|3.18<br>|Norway<br>O|16|
|Angola|3.45<br>|Germany<br>|I<br>|man<br>|.<br>|
|Argentina|1.36<br>|Ghana|3.82<br>|Pakistan<br>|2.64<br>|
|Armenia|2<br>|Greece<br>|1.45<br>|Panama<br>|1.91<br>|
|Australia<br>|1<br>1<br>|Guatemala<br>|2.27<br>|Paraguay<br>|3.82<br>1|
|Austria|1<br>|Guinea<br>|4.36<br>|Peru<br>||
|Bahamas,The<br>|2.45<br>|Guyana<br>|3.09<br>|Philippines<br>|1.18<br>1|
|Bahrain|2.55<br>|Haiti<br>|2.45<br>|Portugal<br>|309|
|Bangladesh|3<br>|Honduras<br>|2.64<br>|Qatar<br>|.<br>109|
|Barbados|1.64<br>|HongKong,China,<br>|1<br>|Romania<br>|.<br>|
|Belgium|1.27<br>|Hungary<br>|1<br>|RussianFederation<br>|1<br>273|
|Belize|2.82<br>|Iceland<br>|1.36<br>|Rwanda<br>|.<br>|
|Benin|3.91<br>|India<br>|1.91<br>|SaudiArabia<br>|2.64<br>4|
|Bolivia<br>|2.09<br>|Indonesia<br>|2.82<br>|Senegal<br>||
|BosniaandHerzegovina<br>|3.45<br>|Iran,IslamicRep.<br>|3<br>|Sierra Leone<br>Si|3.09<br>I|
|Botswana-|2.82<br>|Iraq<br>|5.27<br>|ngapore<br>||
|Brazil<br>|1<br>|Israel<br>|1.36<br>|Slovenia<br>|3.09<br>|
|Brunei|5.91<br>|Italy<br>|I_So<br>|malia<br>|5.91<br>109|
|Bulgaria|1.45<br>|Jamaica<br>|2.73|SouthAfrica<br>|.<br>|
|Cambodia<br>|2.73<br>|Japan<br>._<br>||Spain<br>|1<br>236|
|Cameroon<br>|3.73<br>|Kazakhstan<br>|1.18<br>|SriLanka<br>|.<br>345|
|Canada|1<br>|Kenya<br>.<br>|2.64<br>|Suriname<br>|.<br>2|
|CapeVerde<br>|3.55<br>|Korea,Dem.Rep.<br>|6|Swaziland|.55<br>1|
|CentralAfrican Republic|4.27<br>|Korea,Rep.<br>|__Sweden<br>||.09<br>I|
|Chad|2.73<br>|Kuwait<br>|2.73<br>|Switzerland<br>||
|Chile|I<br>|Latvia<br>|1<br>|aiikistan<br>|4.91<br>|
|China<br>|2.45<br>|Lebanon<br>|2.7<br>|Tanzania<br>|2.73<br>I|
|Colombia<br>|1<br>|Lesotho<br>|3.18<br>|Thailand<br>|555|
|Congo,Rep.<br>|4.82<br>|Liberia<br>|3.3<br>|Trinidad and Tobago<br>|.<br>155|
|CostaRica|2.09<br>|Libya<br>|2.86<br>|Tunisia<br>|.<br>|
|Coted'lvoire|3<br>|Lithuania<br>|1.55<br>|Turkey<br>|I<br>|
|Croatia|1.09<br>|Madagascar<br>|3.73<br>|Uganda<br>|2.73<br>|
|Cuba<br>|5.36<br>|Malawi<br>|3<br>|UnitedArabEmirates<br>|2.09<br>1|
|Cyprus|1<br>|Malaysia<br>|1<br>|UnitedKingdom<br>||
|Denmark|1|Malta<br>|1.91<br>|UnitedStates<br>|1<br>|
|Djibouti|3.45<br>|Mauritania<br>|4<br>|Uzbekistan<br>|5.3<br>|
|Dominica|4|Mexico<br>|1.18<br>|Vanuatu_L<br>|4<br>|
|Ecuador<br>*|1.18<br>|Mongolia<br>|3.18<br>|enezuela,RB<br>|2.36<br>|
|Egypt,ArabRep.<br>|2.73<br>|Mozambique<br>|4.18<br>|Vietnam<br>|3.27<br>227|
|Equatorial Guinea<br>|3.64<br>|Namibia<br>|3.36<br>|Yemen,Rep.<br> FdR|.<br>164|
|Estonia<br>|1<br>|Nepal<br>|2.82<br>|Yugoslavia,e.ep.<br>Zbi|.<br>391|
|Fiji|3.45|Netherlands<br>|1.18<br>|ama<br>|.<br>|
|Finland|1|New Caledonia|5.09|Zmbabwe|3.64|

17
**Table 4. Descriptive Statistics: Transparency Relative**<sup>**to IncomeLevels**</sup>

|IncomeLevel|NumberofCountries|Mean|Std.Dev.|Min|Max|
|---|---|---|---|---|---|
|Low|59|3.44|1.04|1.73|6|
|Middle|77|2.26|1.13|1|5.55|
|High|34|1.6|1.17|1|5.91|
|High(onlyNorthAmer icaandEuropean)|27|1.11|0.2|1|1 .81|

As Table 5 shows, high income countries<sup>are -muchmorelikelytohaveFOIlawsbut</sup> many still do not have them (just under 50%). Among<sup>thelowincome countries,countriessuch</sup> as Moldova and the Kyrgyz Republic have a FOI law but<sup>neitherIndianor Bangladeshdoes.Yet</sup> on freedom of the press ratings, Freedom house rates<sup>Indiaand Bangladesh higherthan the</sup> Kyrgyz Republic. The freedom of the press rating<sup>for India,Bangladesh,and theKyrgyzRep</sup> are: 63, 41, and 36, respectively. The difference is probably<sup>due totwo facts:first information</sup> can be "free" without the FOI, and second the press<sup>can befreebut nothaveaccesstoreliable</sup> information. Moreover, the FOI act has relevance<sup>for otheractorsbesidethepress:business</sup> interests for example.

**Table 5. FOIA Distribution in High-Middle-Low Income**<sup>**Countries**</sup>

|Income|Obs|Percentage|Std.Dev.|Min|Max|
|---|---|---|---|---|---|
|Low|61|11%|0.32|0|1|
|Middle|85|23%|0.42|0|1|
|IHigh|34|56%|0.5|0|1|

The correlation between transparency and other<sup>freedomof media(information) variables</sup> are quite high and significant as might be expected.<sup>Djankovetal(2001)haveshown thatin</sup> countries where state ownership of the media is high, the<sup>pressislessfree.The transparency</sup> 18
indicator constructed in this paper is significantly correlated with variables that have been used in the literature to indicate how freely information flows in an economy, particularly information provided by the media. Table 6 below shows that countries in which transparency is lower, freedom of the press is lower, state ownership of the press also tends to be higher, there is less chance of finding a freedom of informnation law and television also tends to be dominated by government.

**Table 6. Correlation of the Freedom of Media Variables**

||Freedom<br>ofPress|FOI|Circulation|StateOwnership<br>ofPress|Transparency|State<br>Ownership<br>ofTV|
|---|---|---|---|---|---|---|
|FreedomofPress|1||||||
|FOI|0.3720***|1|<br>|.|||
|Circulation|0.5600***|0.4533***|**1**||||
|StateOwnershipofPress|-0.6486***|-0.4946***|-0.6117***|1|||
|Transparency|-0.5338***|-0.4089***|-0.64***|0.6424***|1||
|StateOwnershipofTV|-0.4833***|<br>-0.4295***|-0.43***|0.8914***|0.4777***|1.0000|

_Note: three asterisks means the correlation is significant at 0.01 level.._ A graphical representation of the transparency index with the governance indicators tells an interesting story. Figures 1-6 shows the index plotted against three of the KKZ indicators and 3 of the ICRG indicators.

**Figure 1. Transparency Index and Government effectiveness (KKZ)**

<!-- Start of picture text --> 2.0822 2 0<br>8 0<br>0<br>0~~~0 0<br>0: Oo 0o 0 0 0<br>0 ~~~0 0 0<br>808 ° -o o0 o °0 0°<br>c:gSo 0 0 0 8 0 0 00 0 0<br>E 5 0 oo 0 0 0O 0 00 0 0 008 0<br>E ~~0 0 80<br>0 0 00 0<br>0 0 000<br>o 0 0 00<br>00 0 0<br>0 0<br>1.18831 0<br>tansparency<br><!-- End of picture text --> 19
> Figure 2. Transparency Index and Regulatory burden (KKZ)

<!-- Start of picture text -->
1.24478  0 0, o  o<br>8800  0008  0  0  00<br>6 800  00.0  00  00<br>e0  . O  o0  0  0So  o  o<br>0 °o°° 0  00  °  0  o  0°  ° 0 00<br>9  °  000 °  °°  0  8  o 0<br>Sa  w  0 8~~~~~~ 0  0  00800  0 0<br>m  0  000  0  0  ~~~~~~~0  0<br>00  0  0<br>0  0<br>0~~~~~~~~~<br>0~~~~~~~~~<br>-3.14219  -__<br>1  ~~~~~~~~~~~~~~~~6<br>transparmncy<br>Figure 3.  Transparency  Index  and Graft  (KKZ)<br>2.12902  - o0 0<br>0<br>0  0<br>o  0 0<br>8<br>90<br>0  0<br>o  0  00  0  0  00  0<br>8  0  0  0  0  : 0  00  0<br>0  o  0  0  0  00<br>000  0 008  0 0  8  0 0  8 0  0 0~~~~~~~~~~~~~~~~ 0o<br>o  o  8§~  o  000°<br>0  0  o<br>-1.56681  0<br>6.0125 800  8  o  0~0  transpoarency o  0  0<br><!-- End of picture text -->

Figure -1.5668 **4.** 000Transparency 0 Index 0 and Corruption **(ICRG)** <!-- Start of picture text --> 000<br>6.015 - 00 8 0 00 0 0 0<br>0 0 0 0<br>0 0 8 o 0<br>CD 0 0 0 0 0 00 0 0 0 0<br>E~~~0 0 0 3 . 00 0 o 0 0 000<br>00 00 000<br>0~~~~~<br>0 0 0 0 0<br>0<br>.68125 0 0<br>transparency<br><!-- End of picture text --> 20
**Figure 5. Transparency Index and Rule of Law Index** (ICRG)

<!-- Start of picture text --> 6 00000 0<br>0<br>o<br>00 0 o<br>8<br>00 o ° 00° o O o °<br>_0 0 ° 00 00 0 0 oo 0<br>0~~~~~~~<br>8000 . 00 0<br>000 0 0§0 0 g<br>E 0 0 00 0 0<br>0 Og 0 0 00<br>0 0<br>0 0 oQ coo0 0<br>0~~~~~<br>1 ' 0 ' 6<br>trnsparency<br>6. Transparency Index and and Contract repudiation repudiation risk (ICRG)(ICRG)<br>6 - 8 o<br>0 0<br>0~~~~ 0 0<br>go 0 0 0<br>_80 - 0 0 00 0 00 00 0 00<br>*) 0 0 0 90<br>cm ~~~08 0<br>o 0 8 80 0 ° 0 0. 8 8 0 0 0 O 0 0 0 0 °<br>E _ 80 0<br>0o 0 0 oo o<br>0 0<br>0<br>0 0 0<br>1.23 0<br>1 ~~~~~~~~~~~~~~~~6<br>bansparency<br><!-- End of picture text --> Figure 6. Transparency Index and and Contract repudiation repudiation risk (ICRG)(ICRG) Each of the scatter plots indicate a negative association between the index and

> governance indicators. Bar graphs looking at governance indicators and access to information tell a similar story as shown in Figures 7-10.

21
> Figure 7. Average Government Effectiveness In

> Countries with or without FOIA (KKZ indicator)

<!-- Start of picture text --> 0.6<br>0.5<br>0.4<br>0.3 -<br>03 _<br>0.1 n<br>-0.2 I n<br>-0.3 2<br><!-- End of picture text --> <!-- Start of picture text --> Figure 8. Average Regulation Burden in Countries<br>with and without FOIA (KKZ indicator)<br>0.5<br>0.4<br>0.3 ____-_<br>0.2-<br>0.1<br>0.<br>-0.1 no FOIO<br>-0.2 -<br><!-- End of picture text --> <!-- Start of picture text --> Figure 9, Average Corruption In Countries<br>with or without FOIA (ICRG indicator)<br>5<br>4.5<br>4<br>3.51<br>3<br>2.5 -<br>2-<br>1.5<br>0.5<br>0<br>no FOIA FOIA<br><!-- End of picture text --> 22
<!-- Start of picture text --> Figure 10, Average Rule of Law in Countries<br>wlth or without FOIA (ICRG Indicator)<br>4.5<br>4<br>3.5<br>2.5 _,<br>2. = _ - - t--- ---<br>0 1._ l~r I _<br>no FOIA FOIA<br><!-- End of picture text -->

# **Regression Results**

Tables 7a-b shows the most parsimonious specification of a regression of transparency on institutional quality. It shows that controlling for GDP per capita, the transparency index is strongly correlated with governance (many at the 1% confidence level). More transparent governments govern better for a wide number of governance indicators such as government effectiveness, regulatory burden, corruption (both KKZ and ICRG), voice and accountability, the rule of law, bureaucratic efficiency, contract repudiation, expropriation risk and a composite ICRG index.

This result holds also when a subset of countries in the sample - that composed of over 100 developing countries is considered as shown in Tables 8a-b.

**Table 7a. Transparency and Governance**

<!-- Start of picture text --> DATA SET: KA UFMANN, KRAA YAND ZOIDO-L OBA TON<br>How authorities are selected and Capacity of the state to Respect of the state and<br>r laced implement sound policies the citizens for the rules<br>Voice and Political Instability Government Regulatory Rule of Graift<br>Accountability and Violence Effectiveness Burden Law<br>Income per capita *39*** *55*** .4** .30*** .63*** .54***<br>_____________ (5.11) (8.44) (802 (6.13) (11.49) (8.7)<br>Transparency -.17** -.06 ..14* ~ .14*** -.04 .<br>_______________(-2.14) (-1.16) (-.9 (-2.74) (-.76) (-1.85<br>Constan t -2.71 *e -. 444*** -3.4*** .l.99*** -5.08*** -4.26**<br>_______________ (-3.48) .(-6.84) (-6.2) (-3.95) (-9.41) (-.2<br>#obs . 136 125 126 131 131 125<br>____ R___ __ .42 .52 .55 .45 .64 .57<br><!-- End of picture text -->

**23**
**Table 7b. Transparency and Governance**

_DATA SET: ICRG, Averaged over the period 1984-1997_

||ICRG|Corruption|Ruleof<br>Law|Bureaucracy<br>Quality|Contract<br>Repudiation|Expropriation<br>Risk|
|---|---|---|---|---|---|---|
|Incomepercapita|.*59***<br>(4.6)|.59***<br>(3.63)|.84***<br>(5.4)|.75***<br>(4.58)|.56***<br>(4.45)|.48***<br>(4.58)|
|Transparency|_-.50***_<br>(-6.39)|-.56***<br>(-5.49)|-.50***<br>(4.56)|-.55***<br>(-5.31)|-.46***<br>(-5.35)|-.430"<br>(-5.92)|
|Constant|.39|.10|-1.8|-1.03|.79|1.68*|
||(.36)|(.07)|(-1.35)|(-.75)|(.73)|(1.85)|
|#obs|94|94|94|94|94.|94|
|R__|_<br>.59|.47|.54|.50|.57|.58|
|_*indicatessignificanceat.I le_|_vel,**at. _|_05leveland_*|**_at.01leve_|_l._|||

**Table 8a. Transparency and Governance in Non-OECD Countries**

<!-- Start of picture text --> DA TA SET: KA UFMANN, KRAA Y AND ZOIDO-LOBA TON<br><!-- End of picture text -->

||How authoritie<br>rep|sareselectedand<br>laced|Capacityoft<br>implement sol|he stateto<br> ndpolicies|Respectofthe<br>citizensfo|state andthe<br>rtherules|
|---|---|---|---|---|---|---|
||Voice and<br>Accountability|Political Instability<br>andViolence|Government<br>Effectiveness|Regulatory<br>Burden|Ruleof<br>Law|Graft|
|Incomepercapita|.22***|.45***|.30***|.27***|.51**|.35***|
|<br>(1)|(2.69)|(5.61)|(4.91)|(4.61)|(8.12)|(5.62)|
|Transparency|-.12*|-.03|-.09*|-.13**|-.001|_-.05_|
||(-1.74)|(-.59)|(-1.77)|(.02)|(-.02)|(-1.1)|
|Constant|i1.57**|-3.76***|-2.44***|-I.79***|-4.29|-2.93**|
||(-2.01)|_(-5.09)_|(4.45)|(-3.27)|(-7.51)|(-5.45)|
|#obs|113|102|103|108|108|102|
|R__|_<br>.18|.33|.31|.30|.45|.34|

**Table 8b. Transparency and Governance in Non-OECD Countries**

_DATA SET: ICRG, Averaged over the period 1984-1997_ <!-- Start of picture text --> ICRG Corrupti6n Rule of Law Bureaucracy Contract Expropriation<br>Quality Repudiation Risk<br>Income per capita .27*** .19 .43*** .32** .32*** .26**<br>(2.83) (1.48) (3.68) (2.58) (2.84) (2.79)<br>Transparency -.32*** -.35*** -.26** -.32*** -.32*** -.29***<br>(4.46) (-3.8) (-2.4) (-3.24) (-3.75) (4.14)<br>Constant 2.13$* 2.32** .36 1.36 2.01** 2.82***<br>(2.69) (2.30) (.36) (1.34) (2.15) (3.56)<br>#obs 72 72 72 72 72 72<br>.34 .19 .24 .21 .32 .32<br><!-- End of picture text --> Table 9 shows the significance of the index after controlling for legal origin. Using table 9 as the standard set of regressions, several variations are run by adding different variables one at a time to check for the stability of the significance of the transparency index. The index 24
remains significant for most of the indicators above and often at the 1% level for all these permutations.;

**Table 9a. Transparency and Legal Origin Terms**

||_DATASET_|_:KAUFMANN,K_|_RAYANDZOI_|_DO-LOBAT_|_ON_||
|---|---|---|---|---|---|---|
||Howauthoritie<br>re|sareselectedand<br>p**l** ced<br>-|Capacityof <br>implementso|thestateto<br>undpolicies|Respectofthe s<br>citizensfor|tate andthe<br>the rules|
||Voice and<br>Accountability|Political Instability<br>andViolence|Government<br>Effectiveness|Regulatory<br>Burden|RuleofLaw|Graft|
|SocialistLegalCode|-.31|-.06|.-62***|-.67***|_-.51***_|-.80**|
||(-1.77)|(-.32)|(-4.28)|(-4.3)|(-3.57)|(-5.91)|
|FrenchLegalCode|-.02|-;13|-.10|-.<br>11|-.29**|-.35***|
||(-.14)|'(-.91)|(-.84)|(-1.18)|(-2.74)|(-317|
|GermanLegalCode|.29|.24|.20|-.31**|.29|-.11|
||(-1.51)|(1.10)|(.84)|(-2.27)|(1.65)|(-.38)|
|ScandinavianLegalCode|.65**|49**|.62**|-.07|.48***|79***|
||(4.1)|_(3.53)|(493)|(-.63)|(4.08)|(4.82)|
|Income|.34**|_.51***_|40***|.25***|54***|44***|
||(4.22)|(7.05)|(6.73)|(4.94)|(10.18)|(7.65)|
|Transparency|Ig**|-.06|-.17***|-20***|-.06|-.16***|
||<br>(-2.371|(-.98)|(-3.23)|(4.1)|**_*_**<br>(-1.38)|(-30|
|Constant|-2.16**|-4.06***|-2.79***|-1.34**|4.14*0*|-3.03***|
||,~(-2.77)|(-5.45)|(-4.75)|(-2.51)|(-7.71)|(-5.51)|
|#obs|136<br>|125<br>|126<br>|131<br>|131<br>|125<br>|
|=R|<br>.46|_.55_|.63|.55|.69|.69|

# **Table 9b. Transparency and Legal Origin Terms**

_DATA SET: ICRG, Averaged over the period 1984-1997_

||ICRG|Corruption|RuleofLaw|Bureaucmcy<br>Quality|Contract<br>Repudiation|Expropriation<br>Risk|
|---|---|---|---|---|---|---|
|SocialistLegalCode|.44<br>(1.63)|.73<br>(2.57)|1.16**<br>(5.27)|.01<br>(.06)|.32<br>(.92)|68e<br>(2.64)|
|FrenchLegalCode|-.40**|-.20|-.31|-.73***|-.28*|-.38***|
||(-2.53)|(-.92)|(-1.43)|(-3.31)|(-1.82)|(-2.81)|
|GermianLegalCode|.67**|_.51_|.86**|75***|.92**|54***|
||(3.7)|(1.43)|(2.43)|(2.8)|(6.17)|(4.3)|
|ScandinavianLegalCode|840**|1.47e*|1.17***|.88***|59**|39**|
||(4.<br>12)|(5.32)|(4.49)|(2.98)|(3.1)|(2.65)|
|Income|.53"<br>(4.2)|_51**_<br>(3.17)|78***<br>(5.20)|.66***<br>(4.02)|.525*<br>(4.12)|45*5*<br>(4.51)|
|Transparency|-.42***|-.47***|-.39***|-46**|-.39***|-.37*0|
||(-6.04)|(4.85)|(-3.82)|(4.77)|(-4.88)|(-5.57)|
|Constant|.81|.53|-1.54|-.24<br>|1.02|1.89*|
||(.8|1)<br>(.41|)<br>(-1.25)|(-19)|(1.01)|(2.29)|
|#obs|94|94|94|94|94|94|
|R<br>|.68<br>|.54<br>|.62<br>|.61|.65|.67|
|_*indicatessignifcance_**_at.I _**_l_|_evel,_******_at.05_|_leveland_<sup>_55 5 _</sup>|_at.01 level._||||

Controlling for various regional dummies (such as Africa, the Middle East and North Africa, East Asia, South Asia or Eastern Europe) does **not** alter these results significantly. Adding years since independence as an additional variable in **the** specifications (does reduce the 25
significance of the transparency<sup>indexsomewhat insomeof the casesbut generallytheresults</sup> stay the same: the transparency<sup>index issignificantly correlatedwith governanceindicators.</sup> Others have found that state ownership<sup>of the mediais associatedwithpoorereconomic</sup> and social outcomes. I use an index<sup>developed by Djankovet al(2001)andWorldBank(2002),</sup> to see whether the transparency<sup>indexisstillsignificantoncethisindexisadded (notshown).</sup> However, the data on: ownership of<sup>the media isonly availablefor a muchsmallersample.I find</sup> that.addition of state ownership of<sup>the mediato the right hand side of the regressionsreduces the</sup> impact of the transparency index<sup>in someof the regressions(some of the -versions using the KKZ</sup> indicators) but the general conclusions<sup>arestill valid.That is,evenin countrieswhere muchof</sup> information packaging and dissemination<sup>tothegeneralpubliciscontrolledbygovernment,a</sup> government that publishes more<sup>economicinformationgoverns better on average.</sup> The transparency index is significant<sup>atthe10%levelevenaftercontrollingfor</sup> newspaper circulation, freedom of<sup>the pressandthepresenceof a Freedomof Informationlaw</sup> (see Tables lOa-lOf).

# **Table lOa. Transparency and Freedom**<sup>**of Press**</sup>

_DATA SET: KAUFmANN, KRAAYANDZOIDO-LOBA_<sup>_TON_</sup> <!-- Start of picture text --> How authorities are selected and Capacity of the state to Respect of the state and<br>rep wced i*n.knwnt d Dolicies the citizens for the rules<br>Voice and PoCitical lstability Govemnment Regulatory Rule of Graft<br>._______________ Socialist Legal Code Accountability -.03 and Vioknce .08 Effectiveness -.51*** Burden -.55*** LAW -.40*** -.68**<br>___________________ _ . 2 (-.3S). .47) (-3.51) (4.15) (-3.15) (-5.17)<br>French Legal Code -.04 -.12 -.08 -.09 ..28** -.34***<br>.________ Gcmian Legal Code . (-.61) -.06 (-.92) .09 (-.76) .10 -.(-1.11) 41*** (-2.71) .21 (-3.19)-.22<br>.___ ~(-.70) . (.50) (.48) (-3.22) (1.29) (-.83)<br>Scandinavian Legal Code .05 .23 .45*** - -.25 .32* - .59.*<br>(.66) (1.53) (3.5) (-2.19)** (2.52) (3.58)<br>Income .13*** .41*0* .33*0* .18*** .48*** .360*0<br>(3.87) (5.19) (5.94) (4.06) (8.55) (6.88)<br>Transparency .030* .01 -.12** -.14*** -.009 -.09<br>(21.9) (.80) (-2.24) (-3.09) (-.20) (-2.14)<br>Freedom of press (reverse) .03*** .01*** .01*** .01*** .009*** .01***<br>(21.9) (418) (3.72) (5.16) (3.61) (4.40)<br>Constant -2.57*.* -4.2*0* -2.94*** -1.49*0* -4.27*** -3.19*0*<br>(-8.1) (-5.82) 1 (-5.45) (-3.37)' (-8.24) (-6.52)<br>#obs 135 124 125 130 130 124<br>.____________________ R.89 _ .62 .67 .63 .72 .74<br><!-- End of picture text --> 26
# Table **10b.** Transparency and Freedom of Press

# _DATA SET: ICRG, Averaged over the period 1984-1997_

||ICRG<br>|Corruption<br>|RuleofLaw<br>|Bureaucracy<br>Quality|Contract<br>Repudiation|Expropriation<br>Risk|
|---|---|---|---|---|---|---|
|SocialistLegalCode|.65<br>|.98**|1.45***|.21<br>|.55|85**|
||(1.45)<br>|||(.48)<br>|(1.02)|(2.07)|
|FrenchLegalCode|-.34**<br>|-.12<br>|-.23<br>|-.69***|-.22|-.34*|
||(-2.35)<br>|(-.58)|(-1.10)<br>|(-3.24)<br>|_(.1.55)_|(-2.75)|
|GermanLegalCode|_.50**_<br>|.35<br>|.65*|*54**|*75***|38***|
||(2.94)<br>|(.98)<br>|(1.89)<br>|(2.10)|(5.39)|(3.04)|
|ScandinavianLegalCode|*59***<br>|1.23***<br>|.87***<br>|.60**|*35**|.17|
||(3.25)<br>|(4.22)<br>|(3.39)<br>|(2.12)|(2.57)|(1.31)|
|Income|.46***<br>|43***|.68***|.58***|44***|39***|
||(4.68)<br>|(3.17)<br>|(5.92)|(4.16)|(4.73)|(4.93)|
|Transparency|-.31***<br>|-.35***<br>|-.25**<br>|-.36***|-.27***|-.28***|
||(-5.12)<br>|(-3.33)<br>|(-2.54)<br>|(-3.83)<br>|(-3.87)<br>|(506)|
|Freedomofpress(reverse)|.01**<br>|.02***<br>|.02**<br>|.02***|.02***|01***|
||(3.59)|(2.78)|(3.59)|(2.68)|(3.8)|(3.79)|
|Constant|.28<br>|-.07<br> <br>|-2.24**<br> <br>|.76|.46|1.46**|
||(.39<br>|)<br>(-.0|)<br>(-2.32)|(-.72)|(.66)|(2.34)|
|#obs<br><sup>2</sup>|93<br>|93<br>|93<br>|93|93|93|
|R.<br>|.73<br> <br>|.59<br>|.68<br>|64|.72|.72|
|_*indicatessignifcanceat.I_|_level,_<br>_at_|_.05leveland_**_*_**|_at.01 level._||||

# Table **10c.** Transparency and Circulation

# _DATA SET: K4 UFMANN, KRAA YAND ZOiDO-LOBA TON_

||How authorities<br>_<br>repla<br>|areselectedand<br>ced|Capacityofth<br>implement soun|estateto<br>dpolicies|Respectofth<br>the citizensf|estate and<br>ortherules|
|---|---|---|---|---|---|---|
||Voiceand<br>Accountability<br>|Political Instability<br>andViolence<br>|Government<br>Effectiveness|Regulatory<br>Burden|Ruleof<br>Law|Graft|
|SociaGstLegalCode|-.32<br>|-.05<br>|-.73***<br>|-.81***<br>|-.60***|-.80***|
||(-1.54)<br>|(-.27)<br>|(-3.85)|(4.52)|(-3.5)|(4.60)|
|FrenchLegalCode|-.13<br>|-.20<br>|-.<br>25*<br>|-.08<br>|-.39***|-.46***|
||(-.80)<br>|(-1.35)<br>|(-1.88)<br>|(-.86)<br>|(-3.13)|(-3.51)|
|GermanLegalCode|.30<br>|.25<br>|.04<br>|-.46**<br>|37*<br>|-.09|
||(1.38)<br>|(.88)<br>|(.14)|(-2.31)|(1.9)|(-.27)|
|ScandinavianLegalCode|*57***<br>|*53***<br>|.55***|-10|_.51***_|76***|
||(3.07)<br>|(347)<br>|(3.52)<br>|(-.88)|(3.92)|(3.97)|
|Income|.24<br>|.34***<br>|35***<br>|-.01|.48***|49***|
||(1.65)<br>|(3.00)<br>|(3.10)<br>|(-419)|(511|4.15)|
|Transparency|-.15<br>|-.05<br>|-.21**<br>|-.12*<br>|-.04|-.18**|
||(-1.50)<br>|(-67)<br>|(-241)|(-1.98)|(-.79)|(-2.4)|
|Circulation(reverse)|.12<br>|.09<br>|.02<br>|.25***<br>|.03|-.03|
||(1.32)<br>|(1.23)|(.30)|(4.21)|(.44)|(-.52)|
|Constant|-1.89*<br>|-3.02***<br>|-2.36***|-.16|-3.69***|-3.22***|
||(-1.69)<br> <br>|(-3.30)<br>|(-2.68)|(-.21)|(-5.13)|(-3.69)|
|#o<br>|bs<br>~~~~<br>|102<br>101<br>|101<br>|12<br>|102<br>|101<br>|
|R|.48|50|62|56|66|69|

27
# **Table 10d. Transparency and Circulation**

_DATA SET: ICRG, Averaged over the period 1984-1997_

||ICRG|Corruption|RuleofLaw|Bureaucracy<br>Quality|Contract<br>Repudiation|Expropriation<br>Risk<br>|
|---|---|---|---|---|---|---|
|SocialistLegal Code|.32|.65**|1.13***|.03<br>|.10<br>|_.50**_<br>|
||(1.24)|(2.1)|(4.44)|(.10)|(.37)|(2.27)<br>|
|FrenchLegalCode|-.55***|-.47**|-.41*|-.94***|-.<br>34**<br>|-.45**<br>|
||_(-3.35)_|(-2.05)|(-1.69)|(4.01)<br>|(-2.14)<br>|(-.34)<br>|
|German LegalCode|.60**|.54|.77*|.90***<br>|.66***<br>|.34**<br>|
||(2.55)|(1.31)|(1.75)|(2.86)|(3.76)<br>|(2.06)<br>|
|Scandinavian LegalCode|.77***|1.39***|1.18***|.89***|.49**|.30*<br>|
||(3.49)|(4.72)|(4.03)|(2.65)|(2.61)<br>|(1.97)<br>|
|Income|.48**|.59**|.74***|.79***|.26<br>|.28**<br>|
||(2.5)|(2.39)|(3.21)|(3.02)|(1.53)|(201)|
|Transparency|-.42***|-.53***|-.38***|-.57***|-.27***|-.30***|
||(-5.94)|(-5.35)|(-2.93)|(-5.68)|(-3.16)|(4.21)<br>|
|Circulation(reverse)|.02|-.10|.02<br>|-.18<br>|.23**<br>|.13<br>|
|._|__________<br>(.16)|(-.61)|(.13)|(-1.22)|(2.05)|(1.48)<br>|
|Constant|1.21|.58|-1.36|-.16<br>|1.80**|2.57***|
||(1.08)|(.41)|(-1.00)|(-.11)|(1.76)|(2.97)<br>|
|#obs|82|82|82|82<br>|82<br>|82<br>|
|Ra|.68|.57|.59|.62|.66|.66|

_*indicate_ **_s_** _ignificance at. Ilevel, ** at.05 level and *** at.01_<sup>_level._</sup>

# **Table 10e. Transparency and FOIA**

_DA TA SET: KAUFMANN, KRAA YAND ZoIDO-LOBA TON_

||Howauthoritie<br>rep|sare selectedand<br>laced|Capacityof<br>implementso|thestate to<br>und policies|Respectofthest<br>citizens forth<br>|ateand the<br>erules<br>|
|---|---|---|---|---|---|---|
||Voice and<br>Accountability|PoliticalInstability<br>and Violence|Govemnment<br>Effectiveness|Regulatory<br>Burden<br>|RuleofLaw<br>|Graft<br>|
|SocialistLegalCode|-.40**|-.07|-.68***<br>|-.71***<br>|-.52***<br>|-.85***<br>|
||(-2.45)|(--41<br>|(-.6<br>|(.4.49)<br>|(-3.58)<br>|(-6.17)<br>|
|FrenchLegalCode|.02|-.11<br>|-.08|-.08<br>|-.27**<br>|-.33***<br>|
||(.14)|(-.80)<br>||(-.92)<br>|(-2.57)<br>|(-2.91)<br>|
|GermanLegalCode|.45|.27|.17|-.35*|.42**|-.02<br>|
||(1.63)|(I.01)|(.51)<br>|(-1.8)<br>|(2.19)<br>|(-.04)<br>|
|ScandinavianLegalCode|.54***|_.50***_<br>|.57***<br>|-.10<br>|.48***<br>|.73***<br>|
||(3.09)<br>|(3.62)<br>|(4.31)<br>|(-.89)<br>|(3.92)<br>|(5.05)<br>|
|Income|.31*.|.46***|.37***<br>|.23***<br>|.52***<br>|.44**<br>|
||(3.7)|(5.91)|(5.29)|(3.88)|(8.28)<br>|(6.34)<br>|
|Transparency|-.09<br>|-.10<br>|-.15**<br>|.18***<br>|-.07<br>|.11**<br>|
||(-1.37)<br>|(-1.47)<br>|(-2.39)<br>|(-3.09)<br>|(-1.38)<br>|(-2.15)<br>|
|FOIA|.52***<br>|.04<br>|.26**<br>|.19**<br>|.08<br>|.23*<br>|
|(reverse)|(3.46)|(.30)|(2.04)|(2.02)<br>|(.74)<br>|(1.73)<br>|
|Constant|-2,31***|3.66***|-2.73***<br>|-1.27**<br>|-3.94***<br>|-3.16***<br>|
||(-3.01)|(4.59)|(-3.99)<br>|(-.7<br>|(-6.41)<br>|(-5.05)<br>|
|#obs|134<br>|123<br>|124<br>|129<br>|129<br>|123<br>|
|RH|.52|.54|.64|.56|.69|.70|

28
# **Table lOf. Transparency and** FOIA

# _DATA SET.ICRG, Averaged over the period 1984-1997_

||ICRG|Corruption|RuleofLaw|Bureaucracy<br>Quality|Contract<br>Repudiation|Expropriation<br>Risk|
|---|---|---|---|---|---|---|
|SocialistLegalCode|.39|.67|1.12***|-.06|.27|.65**|
||(1.01)|(1.63)|(3.87)|(-.14)|(.62)|(2.00)|
|FrenchLegalCode|-.30*|-.09|-.24|-.60***|-.20|-.33|
||(-1.92)|(-.41)|(-1.06)|(-2.68)|(-1.27)|(-2.35)|
|GerTnanLegal Code|.75**|.67|.83*|.92**|.92***|.53**|
||(2.62)|(1.23)|(1.70)|(2.42)|(5.48)|(3.36)|
|ScandinavianLegalCode|.77***|1.40***|1.12***|*79***|.53***|35**|
||(4.41)|(5.65)|(4.41)|(3.54)|(2.76)|(2.37)|
|Income|.47***|.43**'|.73***|.57***|.46**|.41***|
||(3.92)|(2.74)|(4.96)|(3.73)|(3.86)|(4.30)|
|Transparency|-.35***|-.39***|-.34**|-.36***|-.33***||
||(-5.80)|(4.17)|(-3.7)|(-3.99)|(4.87)|(-5.50)|
|FOIA(reverse)|.52***|.64**|.40|.72***|.45***|.30*|
||(2.74)|(2.57)|(1.48)|(2.81)|(2.47)|(1.95)|
|Constant|.92|.68|-1.47|-.07|1.10|1.95**|
||(1.04)|(.56)|(-1.29)|(-.07)|(1.23)|(2.53)|
|#obs|93|93|93|93|93|93|
||.71|.58|.63|.64|.67|.68|

_*indicates significance at.1 level,_ ** _at .05 level and_ *** _at .01 level._ Under the assumption that more information has greater value in democratic rather than autocratic governance regimes, an indicator for autocracy was added to the right hand side of the regressions. The inclusion of the indicators affects some of the variables; more information in more autocratic environments is less useful than in more democratic environments. However, the effect still significant at the 5 and 10 percent levels for several of the governance indicators.

These relationships do not prove one way causality since it may also be that governments that govern well have over time also been more likely to publish data. However, combined with the observation that information gives power to monitor and make good choices a significant and positive correlation between transparency and improved governance gives us pause to think: just giving better data to people can help countries do better.

29
**Table Ila. Transparency and Autocracy**

||_DATASET:_|_KAUFMANN,KR_|_AAYANDZO_|_IDO-LOBA_|_TON_||
|---|---|---|---|---|---|---|
||Howauthoritie<br>rep|sareselectedand<br>laced|Capacityoft<br>implementso|hestateto<br>ndpolicies|Respectofth<br>the citizensf|estateand<br>ortherules|
||Voiceand<br>Accountability|PoliticalInstability<br>andViolence|Government<br>Effectiveness|Regulatory<br>Burden|Ruleof<br>Law|Graft|
|SocialistLegalCode|-.11|-.01|-.56***|-.62***|-.47***|-.<br>73***|
||(-.74)|(--07)|(-3.89)|(-3.89)|(-.36)|(-5.37)|
|FrenchLegalCode|.12|-.07|-.04|-.03|-.26**|-.29**|
||(1.08)|(-.49)|36)|(-.38)|(-2.33|(-2.44)|
|GermanLegalCode|.47***|.33*|.26|-.24|.34**|-.04|
||(2.66)|(1.67)|(1.07)|(-1.62)|(2.19)|(-.18)|
|ScandinavianLegalCode|.42***|.44***|.56***|-.09|.43***|.68***|
||(4.26)|(3.07)|(4.22)|(-.85)|(3.46)|(4.24)|
|Income|.14**|.38**|.34***|21***|.47***|.37***|
||(2.24)|(4.59)|(4.46)|(3.31)|(7.27)|(5.04)|
|Transparency|-.07|-.07|-.13**|-.16***|-.05|-.09*|
||(-1.34)|(-1.04)|(-2.17)|(-2.76)|(-1.04)|(-1.77)|
|Autocracy|-.13***|-.05**|-.04***|-.03*|-.03*|_-.05***_|
||(-8.72)|(-2.44)|(-2.15)|(-2.20)|(-1.81)|(-2.88)|
|Constant|-.14|-2.76***|-2.18**|-.93|-3.41***|2.36***|
||(-.23)|(-3.21)|(-2.86)|(-1.4)|(-5.18)|(-3.21)|
|#obs|128|121|122|125|125|121|
|RT_|<br>.69|.56|.64|.56|.69|.72|

**Table llb. Transparency and Autocracy**

_*DATA SET: ICRG, Averaged over the period 1984-1997_

||ICRG|Corruption|Ruleof<br>Law|Bureaucracy<br>Quality|Contract<br>Repudiation|Expropriation<br>Risk|
|---|---|---|---|---|---|---|
|SocialistLegalCode|1.00***<br>(3.84)|1.39***<br>(4.7)|1.79***<br>(6.62)|.67**<br>(2.3)|.83**<br>(2.53)|I11***<br>(4.63)|
|FrenchLegalCode|-.18|.02|-.05|-.47**|-.07|-.22|
||(-1.12)|(.10)|(-.23)|(-2.01)|(-.41)|(-1.6)|
|GermanLegalCode|.79**|.63**|1.02***|.87***|1.06***|.63***|
||(4.08)|(2.33)|(2.98)|(3.77)|(4.36)|(3.31)|
|Scandinavian LegalCode|.65***|1.21***|1.01***|.64**|.48*0*|.25**|
||(4.30)|(5.46)|(4.2)|(2.59)|(3.51)|(2.14)|
|Income|.41***|.39***|.64***|.50***|.39***|.35**|
||(4.55)|(3.05)|(5.38)|(4.06)|(4.30)|(4.73)|
|Transparency|-.22*0*|-.23**|-.18|-.24*|-.22***|-.22***|
||(-3.19)|(-2.01)|(-1.83)|(-2.19)|(-2.97)|(-3.89)|
|Autocracy|-.12**|-.14***|-.12***|.14***|-. ***|-.09***|
||(4.89)|(4.35)|(-3.74)|(-4.27)|(4.09)|(4.79)|
|Constant|1.85**|1.6|-.39|1.05|2.00**|2.74***|
||(2.52)|(1.48)|(-.38)|(1.02)|(2.62)|(4.28)|
|#obs|91|91|91|91|91|91|
|R'|.76|.65|.68|.68|.71|.74|
|_*indicatessignificanceat._|_Ilevel,_**_at.05_|_leveland_***|_at.01level._||||

The transparency index developed here does not correct for the _quality_ of the data produced. An index covering developing countries only and constructed by the World Bank 30
attempts to incorporate some quality measures.<sup>18</sup> When some of the above regressions are run with this index instead for developing countries only, the results are similar as shown in Tables 12a-b.

**Table 12a. An Alternative World Bank Index: Developing Countries Only**

||_DATASET:_|_KAUFMANN,KR_|_AAYANDZO_|_IDO-LOBA_|_TON_||
|---|---|---|---|---|---|---|
||Howauthoritie|s are selectedand<br>laced|Capacityoft<br>implementsol|hestateto<br>ndpolicies|Respectofthes<br>citizensfor|tate andthe<br>therules|
||Voiceand<br>Accountability|Political Instability<br>andViolence|Government<br>Effectiveness|Regulatory<br>Burden|RuleofLaw|Graft|
|SocialistLegalCode|-.23|-.06|-.31*'|-.70***|-.42*"|-.52#"|
||(-1.23)|(-.32)|(-2.24)|(4.15)|(2.82)|(-3.76)|
|FrenchLegalCode|-.16<br>|-.23<br>|.01<br>|-.15<br>|-.33**<br>|-.31**<br>|
||(-1.12)|(-1.38)|(.10)|(-1.30)|(-2.63)|(-2.76)|
|GermanLegalCode|.20|-.59**|-.0005|-.97***|.13|-.35**|
||(1.06)|.<br>+(2.56)|(-0.00)|(-6.00)|(.73)|(-2.16)|
|Income|.30***|.31s**|.24***|.32***|.36*"<br>|.32"*|
||(2.96)|(2.87)|(2.81)|(4.55)|(4.35)<br>|(3.32)<br>|
|WorldBankDataIndex|-.18**|-.<br>25***|-.15''|-.<br>23***<br>|-.16*<br>|-.06<br>|
||(-2.27)|(-2.93)|(-2.63)|(4.14)|(-2.55)|(-.87)|
|Constant|-1.87*|-1.87*|-1.67**|-.23"*|-2.38***|-2.45***|
||(-1.98)|(-1.81)|(-2.22)|(4.14)||(-2.76)|
|#obs|96|90|91|95|95|90|
|R'|1<br>.30|.32|.27|.42|.39|.33|

# **Table 12b. An Alternative World Bank Index: Developing Countries Only**

<!-- Start of picture text --> DATA SET. ICRG, Averaged over the period 1984-1997<br>ICRG Corruption Rule of Bureaucracy Contract Expropriation<br>.____________ __Law ________ Quality Repudiation Risk<br>Socialist Legal Code .55*** 1.03*** 1.34*** .14 .42 .63"'<br>- (2.84) (3.76) (4.88) (.58) (1.42) (2.91)<br>French Legal Code -.48" -.26 -.37 -.83** -.33* -.52"'<br>(-2.68) (-.94) (-1.59) . (-3.21) (-1.79) (-3.50)<br>Gernan Legal Code .46** 02 -.06 .51 1.05*** .28<br>(2.13) (.06) (-.20) (1.52) (4.67) (1.59)<br>Income .34*** .29 .44** .4 5 ** .37*** .28"<br>(3.34) (1.57) (3.7) (3.01) (3.46) (3.12)<br>World Bank Data Index -.24** -.15 -.22** -.23** -.26*'' -.30*"<br>(-3.11) (4.57) (-2.27) (-2.23) (-2.99) (4.04)<br>Constant 1.77" 1.30 .46 .81 1.83* 3.12**<br>(2.08) (.90) (.48) (.69) (2.06) (3.99)<br>#obs 62 62 62 62 62 62<br>R 2 .43 .15 - .32 .84 .41 .51<br>*indicates significance at .l level, ** at .05 level and *** at .01 level.<br><!-- End of picture text --> _Note: The index of Scandinavian. Legal Code is dropped out of this regressions, because this World Bank index only has' data for developing countries, and no developing countries have the legal origin as Scandinavia._ 18 See website http://www.worldbank.org/data/tas/scbpaper.pdf 31
The regressions results are less striking for the freedom of information<sup>lawbutthey</sup> essentially tell the same story: the more access to information<sup>thebetterthequalityof</sup> governance. There are three outliers for these sets of<sup>regressions.Switzerland, Norwayand</sup> Luxemburg have no FOI law/act but have very good scores on governance. In the most parsimonious specification, I find that countries that have<sup>FOI lawsaremuchmorelikely to be</sup> well governed as shown in Table 13a below.<sup>19</sup>

**Table 13a.** FOIA **and Governance (no outlier for FOI)**

_DATA SET: KAUFMANN, KRAAYAND ZOIDO-LOBATON_

||Howauthorities<br>_____<br>repla|are selectedand<br>__________<br>ced|Capacityoft<br>implementsou|hestate to<br>ndpolicies|Respectofth<br>thecitizensf<br>|estate and<br>ortherules<br>|
|---|---|---|---|---|---|---|
||Voiceand<br>Accountability|PoliticalInstability<br>andViolence|Government<br>Effectiveness|Regulatory<br>Burden|Ruleof<br>Law|Graft|
|Incomepercapita|.*39***|.54***|.49***|.38***|.60***|.54***|
||(5.58)|(8.37)|(7.67)|(7.21)|(10.52)|(8.45)|
|FOIA|.56***|.17|.30**|.15|.15|.29*|
||(3.72)|(1.3)|(2.13)|-(1.39)|(.20)|(1.95)|
|Constant|-3.34***|4.67***|.4.18***|-3.08***|-5.04***|4.63***|
||(-6.07)|(-8.66)|(-8.19)|(-7.13)|(-10.83)|(-9.11)|
|#obs|.134|121|122|128|128|121|
|Rz1|.46|.49|.53|.41|.61|.56|

**Table 13b. FOIA and Governance (no outlier for FOI)**

_DATA SET: ICRG, Averaged over the period 1984-1997_

||ICRG|Corruption|Ruleof<br>Law|Bureaucracy<br>Quality|Contract<br>Repudiation|Expropriation<br>Risk|
|---|---|---|---|---|---|---|
|Incomepercapita<sup>t 1t</sup>|.52***<br>(4.39)|.49***<br>(3.14)|.78***<br>(5.15)|.64***<br>(4.37)|.52***<br>(4.2)|.46***<br>(4.52)|
|FOIA|1.17**<br>(5.31)|L.39***<br>(4.90)|1.09***<br>(3.66)|1.46***<br>(5.08)|L.01***<br>(4.71)|.86**<br>(4.54)|
|Constant|-.63<br>(-.73)|-.84<br>(-.74)|-2.89**<br>(-2.64)|- .95*<br>(-1.84)|-.29<br>(-.34)|.50<br>(.67)|
|#obs|91|91|91|91|91|91|
|R2|.56|.44|.49|_.51_|.52|.48|
|_*indicatessignifcanc_|_eat.1level,** _|_at.05leveland_|_***at.01_|<sup>_level._</sup>|||

9 The three outliers are omitted from this table.

32
Controlling for legal origin shows that the presence of a FOI law is correlated with good governance through mostly three measures in the KKZ: voice and accountability, and regulatory burden and sometimes with graft and government effectiveness as well (see Tables 14a-b).

# **Table 14a. FOIA, Legal Origin, and Governance**

||_DATASET:_|_KAUFMANN,KR_|_AAYANDZOI_|_DO-LOBATO_|_N_||
|---|---|---|---|---|---|---|
||How authoritie<br>r|sare selectedand<br>laced|Capacityof <br>implementso|the stateto<br>und policies|Respectofthe<br>citizensfo|stateandthe<br>r therules|
||Voice and<br>Accountability|PoliticalInstability<br>andViolence|Governnent<br>Effectiveness|Regulatory<br>Burden|Ruleof<br>Law|Graft|
|SocialistLegalCode|-.33**|-.02|-.60**|-.61***|-.48**|-.79|
||.(-2.0)|(,.13|(4.08)|(-3.75)|(-3.36)|(-5.82)|
|French LegalCode|.01|-.12|- -.07|-.10|-.28|-.33*|
||(-1l)|~<br>(-89)|(-.60)|(-1.05)|(-2.64)|(-2.86)|
|GernanLegalCode|.48*|.30|.22|-.30|.44**|.02|
||(1.74)|(1.14)|(.68)|(-1.50)|(2.33)|(.07)|
|Scandinavian LegalCode|*54***|.50***|.59***|-.09|.48***|.75***|
||(3.04)|(3.59)|(4.21)|(-.72)|(3.86)|_(5.05)_|
|Income|.38***|.54***|.47***|.36***|.57***|_.51***_|
||(5.47)|(8.26)|(7.62)|(7.41)|(10.9)|(8.6)|
|FOIA|.55*|.06|.31**|.24**|.10|.26*|
||(3.71)|(.52)|(2.34)|(2.55)|(.92)|(1.92)|
|Constant|-3.20***|.<br>4,54***|-3.93***|-2.82**|4.5**|4.06*|
||(-5.77)|(-7.93)|(-7.73)|(-6.81)|(-10.31)|(-8.93)|
|#obs|137|124|125|131|131|124|
|R'|.52|.53|.62|_.50_|.69|.69|

**Table 14b. FOIA, Legal Origin, and Governance**

_*DATA SET: ICRG, Averaged over the period 1984-1997_ <!-- Start of picture text --> ICRG Corruption Rule of Bureaucracy Contract Expropriation<br>._______ _______ Law Quality Repudiation Risk<br>Socialist Legal Code .61 .90** 1.34*** .17 .48 .86*<br>-(1.64) (2.29) (4.77) . (.4) (1.12) (2.76)<br>French Legal Code -.28 -.08 -.23 -.56** -.18 -.31*<br>(-1.51) (-.34) (-.92, (-2.3) (-99) (-1.86)<br>German Legal Code 1.12*** 1.05* 1.19** 1.30*** 1.27*** .88***<br>(3.42) (1.85) (2.32) (3.19) (6.04) (46<br>Scandinavian Legal Code .96** 1.60*** 1.30*** .99*** .71*** .53**<br>(3.98) (5.09) (4.5) (3.59) (2.8) (2.56)<br>Income .58V** .55*** .84* * .68*** .57*** .520*<br>(4.39) (3.28) (5.36) (4.21) (4.35) (4.91)<br>FOIA .79*** .95*** .67** 1.00*** .70*** .56**<br>(3.59) (3.39) (2.26) (3.5) (3.32) (2.97)<br>Constant -.83 -1.24 -3.17*** -1.92 -.53 .30<br>____________(-.88) (-1.01) (-2.82) (-1.64) (-.58) (.39)<br>#obs 94 94 94 94 94 94<br>- R 2 .62 .5 .58 .59 .59 .57<br>*indicates signifzcance at.) level, ** at .05 level and *** at .01 level.<br><!-- End of picture text --> These results hold under various permutations of the relationship; such as when state ownership of the media, various continent dummies and transparency are added. Controlling for 33
newspaper circulation, freedom of the press and a measure of autocracy does not change the basic results (see Tables 15a-b, 16a-b).

# Table 15a. Governance vs. Legal Origin, **FOIA** and Circulation

# _DATA SET: KAUFMANN, KRAA YAND ZOIDO-LOBA TON_

||How authoriti<br>n|esareselectedand<br>placed|Capacityof<br>implementso|thestateto<br>undpolicies|Respectofth<br>thecitizensf|e stateand<br>or the rules|
|---|---|---|---|---|---|---|
||Voice and<br>Accountability|PoliticalInstability<br>andViolence|Government<br>Effectiveness|Regulatory<br>Burden|Ruleof<br>Law|Graft|
|SocialistLegalCode|-.34*|-.03|-.66***|.79***|-.59***|-.75***|
||(-1.71)|(-.19)|(-3.53)|(4.35)|(-3.51)|(4.41)|
|FrenchLegalCode|-.04|-.19|-.18|-.05|-.37***|40e**|
||(-.26)|(-1.29)|(-1.36)|(-.54)|(-2.96)|(-2.85)|
|GermanLegalCode|.44|.28|.16<br>|-.40<br>|.41*<br>|.02<br>|
||(1.4)|(.94)|(.47)|(-1.6)|(1.9)|(.04)|
|ScandinavianLegalCode|*57***|*54***|*59***|-.08|.52***|.80***|
||(2.94)|(3.63)|(3.65)|(-.86)|(4.03)|(4.82)|
|Income|.23|35***|.41***|.01|.48***|53***|
||(1.56)|(3.25)|(3.44)|(.13)|(5.24)|(4.49)|
|Circulation|.11|.09|.04|.26**|.03|-.02|
||(1.33)|(1.28)|(.50)|(4.42)|(.43)|(-.34)|
|FOIA|.57***|.04|.29*|.19*|.12|.27*|
||(3.35)|(.32)|(1.92)|(1.74)|(.97)|(1.72)|
|Constant|-2.36**|-3.28***|-3.52***|-.80|-3.86|-4.17***|
||(-2.47)|(-4.35)|(4.62)|(-129)||(-5. 77)|
|#obs|103|101|101|3||101|
|RI|<br>_.55_|_.50_|.60|.56|.67|.68|

# Table 15b. Governance vs. Legal Origin, FOIA and Circulation

_*DATA SET: ICRG, Averaged over the period 1984-199 7_

||ICRG|Corruption|Ruleof<br>Law|Bureaucracy<br>Quality|Contract<br>Repudiation|Expropriation<br>Risk|
|---|---|---|---|---|---|---|
|SocialistLegalCode|.32<br>(I.00)|.64*<br>(1.79)|1.12***<br>(3.88)|.02<br>(.04)|.09<br>(.27)|49*<br>(2.08)|
|FrenchLegalCode|-.37**<br>(-2.01)|-.26<br>(-1.05)|-.25<br>(-.96)|-.68**<br>(-2.62)|-.20<br>(-1.23)|-.34**<br>(-2.24)|
|GermanLegalCode|79*<br>(2.00)|.76<br>(1.24)|.93<br>(1.57)|1.18**<br>(2.49)|.81***<br>(2.78)|.46*<br>(1.7)|
|ScandinavianLegalCode|.83***|1.47**|1.24***|*97***|.53**|.35*|
||(3.52)|(4.62)|(4.09)|(3.22)|(2.36)|(1.89)|
|Income|.32*|.40*|.60***|57**|.16|.17|
||(1.97)|(1.77)|(2.89)|(2.62)|(1.09)|(1.34)|
|Circulation|19**|.14|.19|_.05_|*33**|.27***|
||(2.06)|(.99)|(1.44)|(.41)|(3.68)|(3.52)|
|FOIA|.69***|79***|.58*|1.02***|.56***|42*|
||(3.15)|(2.81)|(1.89)|(3.41)|(2.93)|(2.38).|
|Constant|.45|-.41|-2.07|-1.17|1.36|1.98**|
||(.46)|(-.30)|(-1.62)|(-.88)|(1.52)|(2.48)|
|#obs|8.2|82|82|82|82|82|
||.67|.53|.58|.60|.66|.63|

_*indicates significance at_ **_.I_** _level,_ ** _at .05 level and_ *** _at .01 leveL_ 34
# **Table 16a. FOIA and Autocracy**

# _DATA SET: KAUFMANN, KRAAYANDZOIDO-LOBATON_

||Howauthoritie<br>re|sare selectedand<br>Capacityof <br>placed<br>implement so|thestateto<br>undpolicies<br>|Respectofth<br>the citizensf<br>|estateand<br>ortherules<br>|
|---|---|---|---|---|---|
||Voice and<br>Accountabili<br>ty<br>I|PoliticalInstability<br>Government<br>andViolence<br>Effectiveness|Regulatory<br>Burden|Ruleof<br>Law|Graft|
|SocialistLegalCode|<br><br>-.17<br>|.03<br>-.54***<br> <br>|-.56***<br>|-.46***<br>|-.72***<br>|
||(-1.31)<br>|(.16)<br>(-3.79)<br> <br>|(-3.4)<br>|(-3.2)<br>**|(-5.53)<br>*|
|French Legal Code|.14<br>|-.08<br>-.01<br> <br>|-.03<br>|-.27<br>2|-27<br>223|
||(1.31)<br>|_(-56)<br>(-.13)<br> <br>|(-.3)<br>|(-.37)<br>|(-.)<br>|
|German LegalCode|45**|.29<br>.22<br>|-.<br>30*<br>|43**<br>|.001<br>|
||(2.16)<br>|_(14)<br>(.73)<br>|-177<br>|(2.54)<br>|(0.0)<br>|
|ScandinavianLegalCode|.33**|.42***<br>.52***|-.14|.42***<br>|.65***<br>|
||(2.63)|(2.87)<br>(3.77)<br>|(-1.12)<br>|(3.22)<br>|(4.51)<br>|
|Income|.12**|42**<br>.38***|.28***|50***|.40***|
||(2.17)|539)<br>(478)<br> <br>|(4.7)<br>|(7.68)<br>|(5.33)<br>**|
|Autocracy|.13***<br>|_-05**_<br>-.04*<br> <br>|.04***<br>|-.03*<br>|-.05+<br>|
||(-9.07)<br>|(-2.74)<br>(-2.43)<br>|(-2.75)<br>|(-1.85)<br>|(-2.89)<br>|
|FOIA|.46***|.02<br>.25**|.20**<br>|.07<br>|.19<br>|
||(3.97)|(.16)<br>(2.00)<br> <br>|(2.02)<br>|(.63)<br>|(I.53)<br>|
|Constant|-.37<br>|-3.30***<br>-2.91***<br>|-1.94***<br>|-3.82***<br>|-2.85**<br>|
||(-.70121)|(45<br>(407)<br> <br>|(-3.51)<br>|-62<br>|(-4.23)<br>|
|#obs<br>|129|121<br>122|126|126|121|
|R<sup>2</sup>|.72<br>**Table**<br>_*DATASET_<br>|_.56_<br>.63<br> **16b.FOIA andAutocra**<br>_:ICRG,Averaged overt _<br> <br> <br>|.52<br>**cy**<br>_heperiod1_<br> <br>|.69<br>_984-1997_<br> <br>|.72<br>|
||ICRG|Corruption<br>Ruleof<br>Bureau<br>|cracy<br>Contr<br> <br>|act<br>Exp<br>|ropriation<br>|
|||Law<br>Qual|ity<br>Repudi|ation|Risk<br>|
|SocialistLegalCode|1i17***|1.56***<br>1.97***|*77**<br>1.|01***|1.34***|
||___________<br>(4.13)|__<br>_<br>(5.17)<br>(8.36)<br>|(2.42)<br>(<br>|2.87)<br>|_(5.55)_<br>|
|FrenchLegalCode|-.08<br>|11<br>.02<br> <br> <br>|-.33<br>|.03<br>|-.13<br>|
||___________<br>_(-.50)_|_<br>_<br>(.49)<br>(.09)<br>(-<br>|1.48)<br> <br>|(.17)<br>|(-.92)<br>|
|German LegalCode|.84***|.71<br>*93***<br>.|99***<br>1.<br>|07***<br>|.65**<br>|
||(5.28)|(2.17)<br>(3.09)<br> <br> <br>|(4.78)<br>(<br> <br>|6.10)<br>|(4.65)<br>|
|ScandinavianLegalCode|.65***|1.20***<br>1.00***<br>.|64**<br>.|48***|260**<br>|
||(3.94)|(5.11)<br>(4.14)<br>|(2.92)<br>|(2.8)<br>|(1.83)|
|Income|39***|.36***<br>.63***<br>|47***<br>.|38***||
||(4.94)|(3.02)<br>(5.43)<br>|(4.49)<br>|(4.64)|(5.00)|
|Autocracy|.14***|.16***<br>_-.15**_<br>.|15***<br>-.|12***|-12**|
||(-6.96)|(-5.67)<br>(-5.22)<br>(|-5.51)<br>(-|5.94)|(-6.51)<br>|
|FOIA|.45***|47**<br>.29<br>.|65***<br>.|42***|27*|
||(2.88)|(2.26)<br>(1.20)<br>|(2.89)<br> <br>|(2.67)<br>|(2.03)<br>|
|Constant|1.40**|1.23<br>-.<br>71|.54<br>1<br> <br>|.55**<br>|2.24**<br>|
||(2.35)|(1.28)<br>(-.77)<br> <br>|(.68)<br> <br>|(2.54)<br>|(4.06)<br>|
|#obs|91|91<br>91|91|91|91|
|R|.76|.64<br>.68|.69|.71|.71|

_*indicates signifi cance at.1 level,_ ** _at .05 level and_<sup>***</sup><sup>_at .01level._</sup> Economic theory tells us that information is<sup>needed tomakesoundeconomicand</sup> political choices, to monitor agents and reward<sup>orpunishaccordingly.Better availabilityof</sup> economic data and the ability of people to demand<sup>andreceive theinformation theyneedis</sup> 35
highly correlated with governance.<sup>Governmentsthatdonotproduce, organizeandshare</sup> information will be hampered in<sup>policymaking.Goodpolicymakingrequiresup-to-date</sup> information on the economic situation;<sup>good policymakingrequiresthe sharingof information</sup> for better coordination, analysis and<sup>monitoring.</sup> These two sets of investigations have demonstrated<sup>that informnationflowsasproxied by</sup> the two indices, the transparency index<sup>andthe accesstoinformationindex,arepositively</sup> correlated with the quality of governance.<sup>Bettergovernancehas beenempiricallydemonstrated</sup> to be correlated with higher growth. Extrapolating,<sup>thereisacloserelationshipbetweenbetter</sup> information flows and how fast economies<sup>grow.</sup> Better decision-making in economic and<sup>politicalmarketsboostsgrowth.Wealso know</sup> that many different policy choices<sup>andinstitutionalfeaturesaffect informationflows.</sup> Governments can choose to publish<sup>dataandotherinformation ontheiractivitiesandtheycan</sup> choose whether or not to establish<sup>the regulatorysystemand organizationalstructure thatallows</sup> production and dissemination of data<sup>and access to information.Thus,in the policy guidance that</sup> development advisors seek to impart,<sup>advising countriesontheimportanceof processingand</sup> sharing data, on making this data<sup>widelyavailableispolicyadvicethatcanboosteconomic</sup> growth. This paper has not demonstrated<sup>causality frommore transparencytobetter institutional</sup> flows. It is likely that better governments<sup>are alsomorelikely to promotemoretransparency.Yet</sup> it does give us some food for thought.

More research is definitely needed<sup>to takea closerlook attherelationshipbetween</sup> transparency and governance or information<sup>and economicgrowth.Thispaper providesa simple</sup> way to quantitatively assess whether<sup>themagnitudeof theassociationissignificantandworth</sup> another look.

36
The indicators used in the paper could be developed further. For example, the transparency indicator could be strengthened by considering not just the frequency and availability of data but also the quality of the data produced by governments. Moreover, my definition of "availability" probably overestimates the actual availability of data in developing countries and could be fine-tuned. Expanding the data set (e.g. to look at social indicators) would also be another direction in which the indicator could be developed. The FOI indicator could be substantially strengthened by considering how these laws are actually implemented, if at all, in countries. Another issue would be whether people are allowed to use the information they obtain: for example are newspaper journalists able to print information they obtain without fear of imprisonment - harsh libel and defamation laws would affect journalists' behaviour. Looking at other restrictions, such as licensing of the media to prevent entry- would also enrich the analysis.

37