A country’s governance scores for each of the six WGI governance dimensions are estimated using the following four steps:
STEP 1: Assigning indicators from the underlying sources to the six governance dimensions. Individual questions or variables from the underlying data sources are mapped to up to two of the six governance dimensions. For example, a firm-survey question on the regulatory environment would be assigned to Regulatory Quality, or a CPIA indicator on transparency, accountability, and corruption would be assigned to both Voice and Accountability and Control of Corruption. The list of variables used in the WGI (for the recent year for each underlying data source), and how they are mapped to the six dimensions, can be found by clicking on the dimension names listed here. Note that not all data sources cover all countries, hence the governance scores for each country are based on different sets of underlying data.
STEP 2: Rescaling the individual source data to range from 0 to 1. Each question from the underlying data sources is rescaled to range from 0 to 1, with higher values corresponding to better governance outcomes. For example, if a survey question uses a scale from 1 to 4, a response of 2 would be rescaled as (2 – 1) / (4 – 1) = 0.33. When a data source provides more than one question or variable relating to a given governance dimension, the rescaled values are averaged to form source-by-dimension value. This ensures that each source contributes only one signal per dimension and prevents data sources with more questions or variables from exerting undue influence.
A combined dataset containing all source data in a single file is available in both Excel and Stata formats. Although the variables are nominally rescaled to the same 0–1 range, this underlying data are not necessarily comparable across sources. For example, one data source may use a 0–10 scale but have most scores clustered between 6 and 10, while another uses the same 0–10 scale but spreads responses across the full range. The max–min rescaling described above does not correct for these source differences, but the Unobserved Components Model (UCM) procedure used to construct the governance scores does (see below).
STEP 3: Using an Unobserved Components Model to construct a governance estimate for each dimension by taking a weighted average of the source-by-dimension data. To aggregate data across multiple sources, the WGI uses a statistical technique known as an Unobserved Components Model (UCM). The UCM first makes the rescaled 0–1 data comparable across sources and then constructs a weighted average of the data for each country and each dimension. The model assumes that the observed data from each source are a linear function of the unobserved level of governance plus an error term. Because this linear relationship differs across sources, the UCM adjusts for the remaining non-comparability in units noted above.
The resulting governance estimates are a weighted average of the available source data, with weights determined by the pattern of correlations among sources. Summary information for the weights applied to the component indicators, as well as the parameter estimates from the UCM, can be downloaded in Excel and Stata format. The UCM assigns greater weights to sources that are more strongly correlated with the others. The resulting governance estimates are expressed in units of a standard normal distribution, ranging from approximately –2.5 to 2.5, with higher values indicating better governance.
STEP 4: Transforming the UCM-generated governance estimates to a 0–100 absolute governance score. The WGI transform the governance estimates for each country, year, and dimension—typically ranging from approximately –2.5 to 2.5 —into absolute scores on a 0–100 scale, with 100 representing the best absolute governance performance. This transformation requires establishing fixed upper and lower performance benchmarks for each dimension. Two hypothetical benchmark countries are therefore constructed: a “best-case performer’’ and a “worst-case performer.’’ The best-case performer is assigned a value of 1 on every representative source indicator, and the worst-case performer is assigned a value of 0. Their governance estimates define the upper and lower bounds of the governance scale for that dimension and correspond, by definition, to absolute scores of 100 and 0 on the 0–100 scale.
The benchmark estimates are calculated separately for each dimension and each year. All UCM-generated country–year estimates are mapped linearly between these two benchmarks to obtain absolute governance scores: absolute score for a country = 100 × (governance estimate – worst-case performer estimate) / (best-case performer estimate – worst-case performer estimate).
Details on the aggregation procedure can be found in the WGI methodology paper. A full reproducibility package is available here.