Emad Mekay

WASHINGTON, May 9 2005 (IPS) — The World Bank called on governments Monday to release more information about their economies, saying this would help to create a ”sound investment climate” in nations seeking foreign capital for commercial development.

The bank, in a new report covering 209 countries, said borrower and lender governments alike had made little progress in improving their transparency and release of key economic data.

”In spite of a number of shining examples, the fact is that, on average, neither the rich nor the poor worlds have improved in their standards on governance over the past eight years,” said Daniel Kaufmann, report co-author and director of global governance at the World Bank Institute, the lending agency’s think tank. ”This sobering reality ought to motivate collective action in the next stage.”

The report singled out African countries for what it described as inaction on governance practices. It said that 38 out of 46 countries in the continent are both poorer than the world average and also exhibit worse governance than the world average.

Botswana, however, stood out among a handful of countries that had achieved a ”high quality of governance”, the bank said. Others in the select group included Chile, Slovenia and the Baltic nations.

The bank rated countries during the period 1996-2004 on the basis of political, civil and human rights; political instability and violence; market-unfriendly policies, and corruption controls.

Its report, ”Governance Matters IV: Updated Governance Indicators 1996-2004,” said that improvements in the quality of rule of law in a given country could boost individual incomes by as much as 300 percent in the long run.

It said examples of the type of good governance it advocates include natural resource revenue transparency mechanisms, disclosure of assets by politicians, public release of parliamentarians’ voting records, full disclosure of political campaign contributions, and openness in fiscal accounting.

However, it warned borrowing countries off instituting additional anti-corruption commissions or adopting more laws and decrees, saying experience showed that such steps often prove ineffective.

Rather, the report promoted using what it called ”the power of data” to establish transparency and attract foreign investment. The idea has been in circulation for at least as long as the bank has tracked governments’ governance performance and has been revived by the U.S. administration.

The United States, which as the bank’s single largest shareholder exerts considerable influence over the agency, has demanded that Saudi Arabia and other oil exporting countries create a public database on their oil capacity and production, saying this would help to calm jittery energy markets.

The report credited Washington with incorporating bank governance indicators in its Millennium Challenge Account, which the bank described as allocating U.S. aid and loans to poor countries based on their performance in three policy areas: governing justly, investing in people, and promoting economic freedom.

Critics, however, assailed the U.S. initiative as well as the bank report, saying they were undemocratic because they stressed governments’ responsiveness to donor governments and investors rather than domestic constituents.

”To most people around the world, good governance, one would think, would mean the level of responsiveness of a government to its own people. That is not what the World Bank means when it talks about good governance,” said Doug Hellinger, executive director of the Washington-based advocacy group Development GAP.

”It’s fairly clear that the bank has used governance as a mechanism for facilitating their control of economic policies in those countries,” he added.

The bank report said the lending agency’s governance prescriptions had yielded benefits for locals. ”Countries with better institutional quality have grown faster,” it said.

Developing countries long have voiced dissatisfaction over secrecy and a so-called democracy deficit at the bank and its sister agency, the International Monetary Fund (IMF).

The issue came to a boil again in the past few months over the naming of a successor for James Wolfensohn, the bank’s outgoing president. Next month, he is to be replaced by Paul Wolfowitz, the deputy U.S. defense secretary, in a move proposed and pushed through by Washington, which retains a traditional but not official monopoly over appointments to head the bank.

Borrowing countries also have voiced growing unease with the political and economic conditions to which bank and IMF financing is tied.

At meetings here last month of the finance and development officials who sit on the agencies’ key policy-making committees, officials from Asian nations said one reason they had been building up regional foreign currency reserves was that they did not want to end up in desperate need of bank or IMF loans, as they had been during the financial crises of 1997-1998.

Emergency loans from the institutions had come at too high a cost in terms of political intrusiveness and undemocratic conditions, the officials said.