Towards more operationally relevant indicators of governance

Increasing awareness of the importance of governance has been accompanied by an increase in the number of commercial firms and nongovernmental organizations (NGOs) producing broad indicators of the quality of governance and public institutions. First generation governance indicators, e.g., International Country Risk Guide, Transparency International's Corruption Perception Index, are useful to identify countries with severe corruption and other governance-related problems. However most of them have limited relevance for public sector reform. There is a need for second generation indicators which are expected to be more specific in measuring performance and pay more attention to measuring government processes and institutional arrangements - not just performance.