"In a cross-section of more than 150 countries, Kaufmann, Kraay, and Zoido-Lobatón provide new empirical evidence of a strong causal relationship from better governance to better development outcomes. They base their analysis on a new database containing more than 300 governance indicators compiled from a variety of sources. They provide a detailed description of each of these indicators and sources. Using an unobserved components methodology (described in the companion paper by Kaufmann, Kraay, and ZoidoLobatón, “Aggregating Governance Indicators,” Policy Research Working Paper 2195), they then contruct six aggregate indicators corresponding to six basic governance concepts: voice and accountability, political instability and violence, government effectiveness, regulatory burden, rule of law, and graft. As measured by these indicators, governance matters for development outcomes." (Summary findings)