Governance Report

Introduction

As in previous years, the BTI 2022 has identified considerable regression worldwide with regard to transformation processes. The guiding principles of democracy and the market economy have been subjected to intense pressure and are being challenged by corrupt elites, illiberal populism and authoritarian rule. For the first time, the Transformation Index lists more authoritarian states than democratic states. At no time in the last 20 years has the BTI assessed levels of socioeconomic development and economic performance as being so low. The quality of government performance has also continued to decline, particularly with respect to the consensus-related aspects of governance.

While this new low results in part from the coronavirus crisis affecting the entire world, it also represents a continuation of long-standing global trends. Due to the high number of infections and deaths around the world, the severe strain on health care systems and national budgets, and the additional challenges to good governance, the COVID-19 pandemic has represented an extreme stress test and left an indelible mark on the second half of the review period.

All BTI Dimensions at a low point | Average scores of 128 countries, BTI 2012-2022

The pandemic-related setbacks have only reinforced the previous decade’s negative developments and problems. While these current declines in governance (globally, an average decline of 0.07 points on the 10-point BTI scale) are not insignificant given the high level of aggregation, they are not in themselves dire. Rather, their alarming character comes from the fact that they are only the latest dip in a persistently downward course marked by steadily growing corruption and conflict intensity.

Inefficiency and corruption

In many places around the globe, the dissatisfaction with existing governance is justified. In recent years, no more than 10 governments at any given time have been certified by the BTI as demonstrating very good governance. In the BTI 2022, this group includes only seven countries: the three Baltic states of Estonia, Latvia and Lithuania; the three Latin American democracies of Chile, Costa Rica and Uruguay; and Taiwan. The outstanding governance performance in these countries has been confirmed even after changes of government and in crisis situations, with the majority of them having consistently fallen into the category of very good governance over the last decade. Costa Rica, which has long been classified as demonstrating good governance, has broken into the top category for the first time following the government’s implementation of important and sustainable fiscal-policy reforms under President Carlos Alvarado.

However, the vast majority of the 137 states surveyed in the BTI are not well governed, and the trend continues to be one of decline. Until the BTI 2018, the group of countries showing very good or at least good governance always comprised a third or more of the country sample. This group, which ranges from Taiwan down to El Salvador in the BTI 2022, has now shrunk to about a quarter of the whole. For the first time, more than 100 countries are rated as having governments of moderate quality at best to failed governance at worst.

A particular weak point in terms of governance remains efficiency, in the use of available resources, in policy coordination and with regards to anti-corruption policy, which again shows the worst average performance level of any aspect of governance assessed in the BTI. The average global score for the BTI indicator in this area fell by a further 0.14 points during this review period, to 4.16 points. Thus, the global average corresponds to a government that has very limited willingness or ability to curb corruption, in part because the few integrity mechanisms it has established are ineffective. A total of 33 governments are at this level, including those in Mongolia, Kenya, Panama and Saudi Arabia, with 53 regimes having fallen even lower on the scale.

Autocracies, such as China, claim that state-capitalist developmental dictatorships hold advantages in terms of efficient governance and therefore also with respect to effective anti-corruption policy. However, this cannot be confirmed by the BTI. Overall, only 28 governments have demonstrated a serious commitment to fighting corruption in addition to successfully installing integrity mechanisms of middling (6 points) to good (9 points) quality. Among this group are only four autocracies: the three Gulf states of Kuwait, Qatar and the United Arab Emirates (UAE), each of which has a moderate record of performance in this area, and Singapore, which has shown good results. By contrast, of the 53 countries in which corrupt practices can be carried out with virtual impunity (1–3 points), 44 are governed autocratically. More than half of these 53 highly corrupt states are on the African continent, where only South Africa (6 points) and Botswana (7 points) represent positive exceptions.

Anti-corruption policies in democracies and autocracies | Number of countries per scoring level, BTI 2022

Overall, there are considerable efficiency and governance gaps between democracies and autocracies. Proponents claim that well-functioning developmental dictatorships have an advantage in that they can act swiftly and effectively. Yet, in fact, the quality of autocratic policy coordination trails that of democracies (–1.69), their use of available resources is significantly less efficient (–1.85), and the disparity between autocratic and democratic anti-corruption policies is particularly large (–2.14). Even though few authoritarian governments have proved able to deliver on their promises of efficiency and autocracies on average lag far behind democracies in all areas of output, this specious legitimation has been used to justify the progressive hardening of authoritarian rule.

Policy steering capability – that is, the ability to set strategic priorities, implement the government’s agenda, and be flexible and able to learn – is also considerably weaker in autocracies (–1.91). Nevertheless, a few autocracies did advance in this area in the BTI 2022, and some of the gains were significant. This group includes Singapore, the UAE, Qatar, China and Vietnam and, to a lesser extent, Morocco and Cuba.

However, their better governance scores are due not to a quantum leap in steering capability, but rather to a methodological change in the Transformation Index. Previously, the BTI had limited autocracies to a maximum score of five points per indicator within this criterion, which includes prioritization, implementation and policy learning. This was intended to reflect the fact that although well-governed autocracies engaging in strategic planning can pursue half of the BTI’s normative guiding principles – that is, a socially inclusive market economy – their internal models of governmental organization and planning run counter to the other half, namely, democracy based on the rule of law. For this reason, the thinking in previous editions was that they should receive only half of the available points at most. However, this meant that the governance performance of autocracies driven by strategic planning, such as Singapore or the UAE, could not be compared numerically with countries with moderate policy planning performance and implementation, such as Azerbaijan or Mexico. Instead, such comparisons could only be made by referencing the individual country reports. It also limited the ability to engage in a comprehensive comparison of governance between democracies and autocracies. This edition of the BTI has ended that assessment practice. In so doing, it can now confirm the previous assumptions regarding autocracies’ steering capability: Even with a system-neutral assessment, 53 of the 70 authoritarian governments fail to achieve a score above five points in any of the three indicators.

Governance in the pandemic era

With a system-neutral assessment of planning and strategic steering processes, the BTI 2022 can also answer another question that was raised frequently, especially at the beginning of the pandemic: Do participatory democratic systems of government – or, conversely, dirigiste authoritarian orders – enjoy crisis-management advantages in terms of speed, efficiency and sustainability when seeking to contain COVID-19? The current study provides empirical support for the early conjectures that autocracies do not per se gain efficiency by having more rigid governmental control, but it also indicates that democracies do not gain planning benefits owing to their more consultative style of decision-making. Rather, irrespective of the system of government, there are two things that matter: first, the capacity and capability for strategic priority-setting, for coordinated implementation and for learning flexibly from past experiences; and, second, the degree of confidence that the local population has in its government.

This puts the focus on specific aspects of crisis management: the extent to which the policies implemented are rational and evidence-based, the effectiveness of policy coordination, and the efficacy of crisis communication. The BTI has assessed the first two of these aspects since its beginning. Their centrality to pandemic management helps explain why governments that had previously scored highly in the Governance Index were generally also those that responded most quickly and effectively to COVID-19 and its consequences. This means that the highest levels of government performance in response to COVID-19 were achieved by most of the stable democracies in consolidation, such as South Korea, Taiwan and Uruguay, in particular, as well as by some well but strictly governed autocracies, such as Singapore, Vietnam and some Gulf states.

Beyond this general assessment, some more specific observations can be made. First, the pandemic once again confirmed the importance of policy learning, particularly as Asian and West African governments drew on their previous experiences with rapidly spreading viral diseases (avian flu and Ebola, respectively) to take swift countermeasures against COVID-19. Whereas the measures in China lacked transparency, those in West Africa were done in a regionally coordinated manner under the auspices of the Economic Community of West African States (ECOWAS).

Second, the governments with failed crisis management efforts were precisely those that refused to base their policies on the evidence and denied that there was any pressure to act. On the one hand, this latter group included populist regimes, such as those in Brazil, Indonesia and Tanzania, that ignored recommendations from scientists and experts and, instead, advised the use of cleansing agents or prayer against the virus while refusing to take coordinated action in response to the pandemic. Those who ideologically legitimize political decisions by referencing the supposedly established will of the people and thereby neglect evidence-based justifications and accountability also tend to have little interest in external advice, ongoing monitoring and self-critical evaluation. On the other hand, there were despotic regimes that lacked a sense of reality and simply denied the existence of the virus, such as those in North Korea or Turkmenistan, along with ideologically obstinate theocracies that initially continued to allow mass religious gatherings and refused to order vaccines from Western countries, as was the case in Iran.

Third, it is now evident that inequality, the presence of a large informal sector, and inadequate access to health systems have also been major drivers of the pandemic. These factors have posed additional problems, particularly for highly unequal societies in Latin America and southern Africa, where most governments initially responded with overly harsh and counterproductive lockdowns.

Fourth, existing governance shortcomings were illustrated by the fact that numerous governments, such as those in Argentina, India, the Philippines, South Africa and Turkey, failed to identify and coordinate an appropriate balance between protective contact restrictions and vitally important economic openings. To a lesser extent, this also applies to a number of governments in East-Central and Southeast Europe that coped relatively well with the first wave of the pandemic, but subsequently allowed infection and death rates to skyrocket with premature or excessively long openings.

Finally, it should be noted as a bright spot that the humanitarian catastrophe predicted in Africa has not materialized in most parts of the continent, even if the number of undocumented infections and deaths is likely to be high. In West Africa, this can be attributed to the prudent use of previous experience, especially with regard to the institutional structures put in place after the Ebola epidemic to facilitate coordination during pandemics. As early as mid-February 2020, health ministers from all 15 ECOWAS countries met to discuss a joint approach and to mobilize potential sources of funding for proposed interventions. In addition, the risk associated with the spread of the virus does not seem to be as serious as initially feared, possibly due to the low average age on the continent along with other favorable factors. Thus, the actual pandemic shock in Africa primarily resulted from COVID-19’s economic and social effects.

Dwindling consensus

The quality of conflict management, in particular, declined again over the last two years, as more and more governments have proved unable to prevent conflicts from escalating or have even deliberately fanned polarization and exacerbated conflicts for their own political advantage. This was particularly true in Sri Lanka (–5 points), where the ethno-nationalist government elected after Islamist attacks made a sharp change in course and has proceeded to actively undermine reconciliation processes between the Sinhalese, Tamils and Muslims, replacing them with a strategy of militarization and close monitoring.

But even the African countries in which high hopes had been placed have been affected by this trend. In addition to Benin (–2), this was particularly true of Ethiopia (–2), where Prime Minister Abiy Ahmed, a recent Nobel Peace Prize winner, engaged in military escalation against the Tigray population group. In formerly democratic Guinea (–3), traditional ethnic fault lines hardened after the controversial re-election of President Alpha Condé, who acted uncompromisingly and confrontationally toward the opposition, using excessive violence to quell protests and demonstrations.

In 28 countries, governments decreased their conflict de-escalation efforts and showed a declining willingness to engage in mediation while also increasingly excluding civil society from political deliberation and decision-making processes. Over the last two years, this has been most evident in Poland (–3), where the government has undermined coordination processes that involve social partners and subjected international support for civil society organizations to official scrutiny. However, opportunities for civil society participation also declined sharply during the review period in Brazil, El Salvador, India and Sri Lanka (–2 each).

Viewed over the period since the beginning of the last decade, the most precipitous declines in consensus-building have come in the indicators measuring agreement on transformation goals and the exclusion of anti-democratic actors. Average global scores here have fallen strikingly, in each case by more than half a point on the 10-point scale. This has been echoed in similarly declining scores for the commitment to democratic institutions among the most important political actors. During the current review period, the average score on this indicator fell by 0.36 points among the sample’s 67 democracies. The strongest factor undermining democracy over the last two years has been the reduction in active efforts by significant parts of the political elite to stabilize and support the democratic order or even the outright refusal to engage in such activities.

Backsliding of this kind was evident in 28 countries. The last decade has seen a widespread elitist non-commitment to democratic institutions, leading to a decline of about half a point on the 10-point BTI scale over this period. In turn, public approval of democracy has also deteriorated since the beginning of the last decade. However, many of the individual country reports emphasize that this does not represent a general rejection of democratic values and objectives, but rather is an expression of dissatisfaction with existing democratic practices, institutions and processes.

Hungary is a particularly telling case with regard to the erosion of consensus on transformation goals among key actors. Starting from a very high level as a member of the European Union, its score on this indicator has tumbled progressively but dramatically – from 10 to four points – under the Fidesz party, which has been in power since 2010. Normative differences regarding market organization are not the primary issue here, although the Hungarian government has also been responsible for some backsliding in this area due to clientelism and distortions of competition. Rather, the Fidesz government has deliberately weakened the rule of law and narrowed opportunities for political participation. Such actions are characteristic of populist governments that, once in power, portray themselves as being the sole representatives of the people’s will – a “will” that such governments themselves define to their own advantage.

Since it is government officeholders in Hungary who are advancing this authoritarian course, the country’s score for the successful exclusion of anti-democratic actors has fallen from eight points in the BTI 2012 to just three points today. Manipulation of the political process to this extent is unparalleled in any other formerly stable democracy. The only reason the Orbán government is not included among those experiencing the greatest declines in overall governance scores during the current review period is that Hungary had already fallen to the level of weak governance performance in the BTI 2020. In fact, along with Bosnia and Herzegovina, Lebanon and Lesotho, it was one of the few democracies to do so.

Hungary’s authoritarian approach has drawn imitators in other countries, including Brazil, India, Poland and Serbia, all of which were also still in the process of democratic consolidation 10 years ago but now rank among the biggest backsliders in the current Governance Index. Argentina, El Salvador, the Philippines, Slovenia and Sri Lanka have also shown significant regression with regard to consensus-based governance, although each at very different levels. Compared to the Philippines’ merciless war on drugs and accompanying brutal intimidation of regime critics or to the harsh exclusion of ethnic minorities and civil society actors in Sri Lanka, the erosion of consensus in the other three countries has been more moderate. This has included the confrontation between Peronists and anti-Peronists in Argentina, which has again intensified over the course of the pandemic and the structurally induced economic crisis; the disregard for established parties and democratic processes shown by Salvadoran President Nayib Bukele; and the confrontational style of Slovenia’s right-wing populist prime minister, Janez Janša. However, even in these three countries, policymakers are chipping away at democratic structures in ways that have led to concrete restrictions on participation rights and undermined the performance of democratic institutions.

Strong democratic institutions and consensus-based governance are closely intertwined. This is particularly evident when looking at the governance profiles of the 15 democracies that have lost the most ground over the last decade with regard to the core democratic institutions of elections, the freedoms of assembly and association, the freedom of expression, the separation of powers, and civil rights (average loss of ≥ 1.00 points). The shrunken governance profile derived from the averages of these 15 backsliders clearly points to a deterioration in the area of consensus-building. The specially marked indicators in the graphic below denote areas of governance performance in these 15 countries that have experienced particularly significant declines of more than 1.50 points on the BTI’s 10-point scale over a 10-year period.

The figure also identifies other major declines in governance performance with regard to international cooperation, an area that has also suffered declines during the current review period. Governments in countries that have recently experienced severe democratic declines have especially seen their international credibility erode further over the past two years. In this area, three backsliders stand out in the BTI 2022: starting from a high level, the Slovenian prime minister who demonstrated a confrontational policy style similar to that of former U.S. President Donald Trump; from a middling level, the Polish government and its obstructionist attitude toward the EU’s rule-of-law principles; and, from an already low level, the erratic Brazilian president and his predilection for torpedoing international agreements.

Of all the BTI’s 137 countries, Brazil under President Bolsonaro has suffered the largest declines in its international cooperation scores, edging out Ethiopia, Belarus and Lebanon. However, all four of these countries have lost an enormous amount of credibility at the international level. For its part, Brazil halted all constructive steps toward deeper regional cooperation, snubbing numerous Latin American governments and thereby jeopardizing the high level of trust the country has built up over recent decades as an important neighbor. The massive expansion of slash-and-burn agriculture in the Amazon as well as the country’s overall lack of efforts to protect the environment, failure to protect indigenous peoples, irresponsible handling of the pandemic, and rejection of international health cooperations have brought Brazil into conflict with numerous environmental, human rights and health organizations. In Ethiopia, the previously highly praised Prime Minister Abiy suffered a similarly catastrophic loss of credibility. International partners were shocked by the escalation of violence in the Tigray dispute. Ethiopia’s government rejected international mediation and monitoring in the matter, calling the dispute an internal affair. This was also the argument used by Belarusian dictator Lukashenko in his violent suppression of protests against electoral fraud. In ignoring warnings from potential Western partners, Lukashenko has become even more isolated in foreign policy terms and more dependent on Russia than ever before. After the end of the review period, he instrumentalized refugees from Afghanistan, Iraq and Syria in order to put pressure on Latvia, Lithuania, Poland and the EU as a whole in response to the sanctions imposed on his regime. Lebanon’s consociationalist and clientelist elites have been mired for years in self-inflicted gridlock and are dependent on foreign patrons from Iran, Saudi Arabia and other regional actors. Its international credibility was shaken not only by the ruinous banking crisis and the huge explosion in Beirut’s harbor, but also by the government’s refusal to engage in serious structural reforms in partnership with international lenders.

While these four countries represent extreme cases of power-political cynicism and diplomatic incompetence, they are also emblematic of a downward trend in multilateralism captured within the BTI in the areas of regional cooperation, the effectiveness of international agreements, and the credibility of their signatories. What is particularly problematic about this retrograde trend is that regional powers, such as Turkey and Iran, and influential regimes, such as China and Russia – all of which have seen significant declines in the BTI over the past decade – are showing disregard for an international regime built on trust and cooperation. Eschewing any attempt to engage in a consensus-based diplomatic approach, they increasingly seem to believe they can achieve greater advantage on their own. Thus, Belarus’ border provocations have mimicked Russian territorial violations; Ethiopia’s objection to external interference is reminiscent of China’s attitude toward its own repressive actions in Tibet and Xinjiang; Brazil’s foreign policy, like that of Turkey, has drifted between confrontation and overconfidence; and Iran’s Lebanese protégé, Hezbollah, like Iran itself, is both driving and being driven by an unstable regional political conflict. Given the multitude of regional and global challenges related to climate protection, migration policy and pandemic prevention, this turn away from international cooperation promises to make it even more difficult to bring about a peaceful and cooperative transformation.