Development Performance and the Institutions of Governance: Evidence from East Asia and Latin America NAURO F. CAMPOS CERGE-EI, Prague and University of Southern California, Los Angeles, USA and JEFFREY B. NUGENT * University of Southern California, Los Angeles, USA Summary. Ð The purpose of this paper is three-fold: to assess the extent to which the institutional characteristics of governance can be captured with available data, to evaluate the ability of such measures to explain development performance across re- gions, countries and time, and to examine the extent to which dierent governance characteristics are complements (rather than substitutes) to one another. Using the four operational governance characteristics, we ®nd that, ®rst, in the full sample, all gov- ernance characteristics have the expected eects on development performance and, second, both the relative importance of these characteristics and the degree of com- plementarity/substitutability among them vary by region. Ó 1999 Elsevier Science Ltd. All rights reserved. 1. INTRODUCTION An excellent example of the increasing rec- ognition of institutional factors in the eco- nomics of development is the attention given to the concept of governance by both academi- cians (e.g., Ball and Rausser, 1995; Streeten, 1996) and international agencies (e.g., World Bank, 1993, 1994, 1997; International Mone- tary Fund, 1997). While diering de®nitions of governance have been used, those of academicians tending to be more dicult to operationalize, as the ®rst to enter this ®eld, the World Bank seems to have gone further in operationalizing the con- cept than anyone else. In particular, gover- nance is said to have ®ve critical institutional components: (1) the executive, (2) the bureau- cracy, (3) the rule of law, (4) the character of the policy-making process, and (5) civil society. Corresponding to each one of these institu- tional components is a characteristic associated with good governance. In particular, (1a) the executive branch of government should be ac- countable for its actions; (2a) the quality of the World Development Vol. 27, No. 3, pp. 439±452, 1999 Ó 1999 Elsevier Science Ltd All rights reserved. Printed in Great Britain 0305-750X/99 $ ± see front matter PII: S0305-750X(98)00149-1 * The author would like to thank Deborah Brautigam, Pierre Englebert, James McGuire and two anonymous referees for invaluable comments, suggestions and crit- icisms. An early version of this paper was presented at the Conference Rethinking Development in East Asia and Latin America, held in Los Angeles, and organized by the Paci®c Council on International Policy. The authors wish to acknowledge helpful suggestions from the participants, especially Albert Berry, Yi Feng, Michael Intriligator, Jane Jaquette, Abraham Lowent- hal, Richard Sabot, Judith Tendler, and Kurt Weyland. The responsibility for all remaining errors is solely ours. The data set used in this paper is available on-line, from URL http://www-rcf.usc.edu/nugent/blackbox.htm. Final revision accepted: 15 September 1998. 439