Free Political Order and Political Decay by Francis Fukuyama Page B

measuring state quality, but no such measure exists. In recent years, a number of economists have tried to devise quantitative measures of the quality of government, with varying success. Comprehensive comparison is made more difficult by the fact that the quality of government within each country varies tremendously depending on region, function, and level (national, state, or local).
    Despite these challenges, one commonly used cross-national measure of government performance is the World Bank Institute’s Worldwide Governance Indicators (WGI), which has been produced annually since the early 2000s. These indicators measure six dimensions of governance for a wide range of countries (voice and accountability, political stability and absence of violence, government effectiveness, regulatory quality, rule of law, and control of corruption). Figure 5 extracts two of these dimensions, control of corruption and government effectiveness, for a selected group of developed and less developed countries, ranked in order of their scores on the effectiveness indicator.

    FIGURE 5. Government Effectiveness and Control of Corruption, Selected Countries, 2011
    SOURCE : World Bank Institute, Worldwide Governance Indicators, 2011
    It is hard to know what the WGI numbers actually represent, since they are a mixture of procedural, capacity, and output measures, often based on surveys of experts. The measures also fail to capture the variance in the quality of government that exists within each country; the U.S. Marine Corps is very different from a local police force in rural Louisiana, just as the quality of education differs greatly between Shanghai and a poor county in the interior of China. Nonetheless, these indicators broadly suggest the tremendous degree of variance in the quality of government that exists across the world, and the fact that government effectiveness and level of corruption are correlated. As any number of studies have indicated, the quality of government correlates very strongly with a country’s degree of economic development.
    We can fill in the two-dimensional matrix of state scope versus state strength from Figure 4 with some real data, using tax revenues as a percentage of GDP as a proxy for scope and the World Bank government effectiveness indicator as a proxy for strength (see Figure 6 ). Developed countries vary considerably in the size of their governments, but we see that they all lie in the upper portion of the matrix. That is, you can become a high-income country with a large state—Denmark, the Netherlands—or with a relatively small one—Singapore, the United States. But no country can get rich without an effective government. There are a number of emerging market countries, such as China, India, and Russia, that are at approximately the midpoint of the vertical axis; 12 the poor countries in the sample are all nearer the bottom, and the weakest states are closer to zero.

    FIGURE 6. State Scope vs. State Strength
    SOURCE : World Bank, Worldwide Governance Indicators, OECD
    Taxes are for central governments only, excluding fines, penalties, and social security contributions.
    Americans love to argue endlessly about the size of government. But what the cross-national data suggest is that the quality of government matters much more than its size for good outcomes.
    What accounts for this variance in the performance of governments around the world? Why do some, like those in Northern Europe, provide a wide range of services with reasonably high effectiveness, engendering a high degree of social trust on the part of citizens, while others seem permanently mired in corruption and inefficiency, and as a consequence are regarded as parasites rather than facilitators by the population? And what is the relationship between good government and the other dimensions of development: the rule of law, accountability, economic growth, and social mobilization?
    The following chapters will try to explain