This is a paper I’ve been working on for a while. It is still definitely in ‘beta’ mode, and so am happy to take comments and criticisms on it.

The paper essentially develops a measure of transparency that has coverage across a wide number of countries, between 1980-2010.  The data is available on the ‘Datasets’ page on this site. whilst the paper itself can be found on the ‘Research and CV’ page.

The index is developed along similar lines to the Corruption Perceptions Index from Transparency International, and the World Bank’s Governance Indicators. Readers will note that transparency has been divided up here into two components: Political Transparency, and Information Transparency. I have made the distinction because I think it is an important one to make.  There’s a lot of talk around about ‘Big Data’, and getting governments to be more open with the statistics they have at their disposal. There have been criticisms of this from some, in the sense that simply making more data available does not of itself render a government suddenly ‘transparent’. I agree, in the sense that transparency and accountability are not necessarily the same thing. Nevertheless, to discount the value that this information has is still wrong-headed. Information, irrespective of whether it helps make the government more accountable or not, is still valuable – to civil society, international agencies and, most importantly, to the private sector.  Therefore I have a component for ‘Information Transparency’, which is a composite index of measures that purport to measure specifically the amount (and quality) of information being released by the government.  Over the entire period, I have 12 separate sources for this measure, which I have then combined to form one score for up to 191 countries.

The Political Transparency index is constructed in exactly the same way, in that it is a composite index of existing measures.  The difference here is that for Political Transparency, we ARE talking about accountability. The amount of information released is essentially immaterial. What matters for political transparency is that information is potentially discoverable. One example of this is whether the country has a free and independent media.   The ‘Fourth Estate’ operates effectively as an additional constraint on the government, holding it to account for its actions.  This rationale therefore is that this type of transparency is most useful for constraining issues such as corruption and bribery, because of the potential reputational and financial costs to being ‘found out’ are much greater for people engaging in corrupt activities. The Political Transparency index has been compiled from 12 sources, and is available for up to 194 countries.

Having derived these two composite indices, I then undertake a fairly brief application of them with respect to economic growth since 1980.  The evidence presented here suggests that it is not necessarily the level of political or information transparency that is important to growth, but rather changes in transparency.  Specifically, increases in information transparency has a large effect on economic growth. Countries that have, on average, grown the fastest over the past thirty years are the ones that have also seen large increases in their Information Transparency.  To investigate whether this is just a natural consequence of economic growth (that is, as countries grow, more information naturally gets released), I also run a causal analysis, and the results strongly suggest that increases in information transparency are an important precursor to growth. In other words, for economic growth to occur, a country must first improve the amount of information it releases to the public, and so the implication is that the greater access to information helps economic growth in a fairly direct manner.  Conversely, there really is no evidence that Political Transparency has played any substantive role in economic growth over the past thirty years.  Although this requires far more research, this tends to support the idea that corruption can very easily go hand in hand with economic growth in the short run. China is probably a good example of this, in that their exceptional growth over the past twenty years or so has come during a period where there is no freedom of the media, and the political machinations of the government are still very opaque. They have, however, made enormous strides in improving the amount of economic and financial information they collect and release to the public over this period.  At some point down the track, I’ll probably try and investigate a longer run story, in which I would imagine political transparency will play a much more prominent role.  But I’ll leave that for another day!