Government Finance Development Economy

Economic and Political Indicators: Do we Still Need Them?

Synchronism indicator. Picture: Leo Reynolds/flickr

In a somewhat unexpected turn of events, the presentation of Matthias Busse on Thursday, 1st March entitled ‘Governance in Developing Countries’ at the CIS Colloquium series led to a heated debate on the necessity and validity of indicators, such as those for example developed by the World Bank. Unlike in usual antipositivist development circles, however, the audience engaged in a constructive debate with Busse about his research design concerning the following hypothesis: ‘External drivers of change are less effective than internal ones to improve business regulations’; but how can we discern internal drivers of change from external ones, and how can we measure the well-being of the business regulation framework?

At the beginning, Busse clarified that the project he presented is still in its early stages; yet, he invited disagreement by not being able to explain how internal drivers of change could, even theoretically, be differentiated from external ones. External drivers, such as the IMF or the World Bank, provide conditional loans, which in turn directly affect the so-called internal drivers of change: FDI, press freedom, or trade. Hence, it might be difficult to independently measure and then compare the effect of these two factors on the regulatory framework.