The Good Governance Indicators of the Millennium Challenge Account: How Many Dimensions Are Really Being Measured?

Martin Knoll and Petra Zloczysti

No 1148, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: This paper assesses the validity of the perception-based governance indicators used by the US Millennium Challenge Account (MCA) for aid allocation decisions. By conducting Explanatory and Confirmatory Factor Analysis of data from 1996 to 2009, we find that although the MCA purports to measure seven distinct dimensions of governance, only two discrete underlying dimensions, the perceived 'participatory dimension of governance' and the perceived 'overall quality of governance,' can be identified. Our results also show that some of the doubts that have been raised concerning the validity of perception-based governance indicators are less warranted when the indicators are applied exclusively to developing countries.

Keywords: Aid allocation; governance indicators; factor analysis; MCA; United States (search for similar items in EconPapers)
JEL-codes: C38 F35 O10 O51 (search for similar items in EconPapers)
Pages: 44 p.
Date: 2011
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: The Good Governance Indicators of the Millennium Challenge Account: How Many Dimensions are Really Being Measured? (2012)
Working Paper: The Good Governance Indicators of the Millennium Challenge Account: How many dimensions are really being measured (2011)
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