engleski

Assessment of Governance Quality in Europe and Latin America: What is Different?

The paper presents analysis of different issues regarding the quality of governance, using the findings of the Executive Opinion Survey, conducted by the World Economic Forum and published in the Global Competitiveness Report 2007/2008. The main tool for analyzing the governance quality in the countries under review was the "Institution pillar"(index). Data for altogether 40 countries were analyzed, 20 from Latin America and 20 from a virtual group named "developing Europe". Country-level data were aggregated on the country-group level using weighted averages and analyzed using statistical indicators. For both country groups that the "Institutions" rank is significantly worse than the overall competitiveness rank. In developing Europe, weighted average position is as low as 102.2, while in Latin America stood at 97.9. It seems that institutions quality is really the issue significantly hindering competitiveness for both country groups, which is more pronounced in Europe. Situation in Europe is strikingly bad for "Property rights" and slightly better in Latin America, but still not well. In "Ethics and corruption" the situation is near to a catastrophe in Latin America and somewhat better regarding corruption in Europe. "Undue influence" is virtually the same for both country groups while with "Government inefficiency" situation is very bad, particularly for regulatory burden in Latin America and transparency of government policy in Europe. For "Security" situation is alarming for Latin America and rather bad in Europe. However, situation regarding terrorism is somewhat better in Latin America and crime in violence is better controlled in developing Europe. "Corporate ethics" is very unpleasant in Europe and significantly better in Latin America. Within "Accountability", efficacy of boards and auditing is relatively well while protection of minority shareholders is a very significant problem in developing Europe. Smaller countries seem to have better institutions, while the larger are more complicated to "manage" through institutional framework. On the level of indicators, significant negative correlation with property rights, corruption for public funds, trust of politicians and efficiency of legal framework. Structural similarity between the two country groups is rather low with each facing specific problems in most of the issues of governance quality.

governance; Latin America; developing Europe; institutions; competitiveness

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