A parsimonious indicator of good governance

Posted on March 23, 2012 / 5 Comments

As a research organization we like data. We worry about the best indicators, for anything.

For the longest time, per capita GDP has been the simplest, least-imperfect indicator of prosperity. It has many shortcomings, but the alternatives have more. The newest run at it zooms in on happiness. If people in country A are happier than those in country B, why bother with anything else? I agree. But measuring happiness is no easy task.

My candidate is the net out-migration rate. Lower the out migration rate, the happier the people in the country must be. I know the numbers are iffy, but still, we work with lots of iffy numbers in our business.

I tested the hypothesis. Took the 13 countries with the highest growth rates in the post-war period and compared their net out migration rates with two countries that score well on PQLI: Cuba and Sri Lanka. The high PQLI countries have significantly higher out-migration rates.

The report below from NYT suggests others may be thinking on same lines:

ACCORDING to a recent Gallup World Poll, 1.1 billion people, or one-quarter of the earth’s adults, want to move temporarily to another country in the hope of finding more profitable work. An additional 630 million people would like to move abroad permanently.

5 Comments

Nihit Goyal
March 31, 2012, 12:11 pm
Professor,

This does not take into account the fact that a significant potion of the population may not have the resources to move out of the country, and may only capture the sentiment of the upper middle class at best in a country like India.
Rohan Samarajiva
March 31, 2012, 2:16 pm
A bit of a myth that only the rich migrate. Just read up on the literature: the poor move in large numbers. Afghanistan is a classic case.

But that does point to the main weakness of the idea. The poor move across borders illegally, for the most part. How does one count that?
Nihit Goyal
April 2, 2012, 1:29 pm
I did not mean to imply that the poor do not migrate at all – only that net migration would depend on desire as well as resources. The latter is unlikely to be distributed equally among different classes in society and would thus skew the indicator.

Thank you for bringing it to my notice. I do not have much idea of this literature and it would be interesting to look it up.
Rohan Samarajiva
April 2, 2012, 4:04 pm
An early piece I wrote on the subject: http://www.lbo.lk/fullstory.php?nid=973273158.
1. Nihit Goyal
  
  April 5, 2012, 11:55 am
  
  Interesting article… Thank you for sharing it.