Governance is a three dimensional situation which is consisted of economic, political and civic governance. The economic governance is based upon all those factors which help to sustain economic development. The political governance is based upon the institutions which are used to rule on the part of govt. While the civic governance represents the participation of masses in the decision making. Normally, it is said that if the levels of civic governance, political governance and economic governance are higher, the level of good governance or humane governance will also be higher.
After the measure of Human Development Index (HDI) as a measure of economic development, economists are using Humane Governance Index (HGI) to measure economic development. The HGI is a composite index of civic, political and economic governances. Now the question rises how these governances are measured. It is discussed below:
(1) Measurement of Economic Governance:
The economic governance is measured with the help of fiscal policy (budget deficit), monetary policy (rate of inflation), commercial policy (current account deficit), expenditures in social sector (the govt. expenditures on health and education) and the liberalization of the economy (the ratio of official and open market exchange rate).
(2) Measurement of Political Governance:
The political governance is measured with the help of different political indicators like corruption, level of bureaucracy, accountability, law and order situation and ethnic tensions etc.
(3) Measurement of Civic Governance:
The measurement of civic governance is measured with the help of degree of freedom of expression, i.e., how far the people express their opinion regarding govt. policies and actions, the discrimination between people regarding race, religion, language and sex, the holding of fair elections based upon multi-parties and rule of govt. in the country.
Table or Schedule:
All such is presented with the help of schedule:
We have already told that the Humane Governance is based upon economic governance, political governance and civic governance. Therefore, when HGI is constructed the un-weighted average of economic governance, political governance and civic governance is calculated. The purpose of doing so is to make it parallel to HDI. To get the indices regarding political, economic and civic governance, the factor reduction method is used. For this purpose, all the data is converted into one range, as from zero to one (0 — 1). The following method is adopted for the transformation of each indicator.
For example, the index number is calculated regarding inflation in Pakistan with the help of HGI. We suppose that present rate of inflation in the country is 10% which is shown by X, the minimum rate of inflation in the series is -20% and the maximum rate of inflation is supposed to be 80%. Accordingly, the index number regarding inflation rate will be as:
In the same way, we can find the index number regarding other economic indicators. Moreover, it has been made sure that those values which are equal to one will be preferred. Reference above example, if the rate of inflation in the country is 80%. The index number will be:
80+20/80+20 = 1
The country having lowest inflation rate its index number for inflation will be zero. To revert this order whole of series will be subtracted from 1. Consequently, the index of inflation in the country having lowest inflation rate will be one (1), while it will be zero (0) in the country having highest inflation rate.
After converting the data in the required range and order, the Factor-Reduction Method will be used to abolish the correlation which is existing in the indicators of each dimension. After this process all the indicators of economic governance and political governance will assume the form of two main components. Whereas the components of civic governance will turn into one main component. Afterwards, we shall calculate the average of components in each item. Dividing the such average by the highest values of such average components, we get three index numbers, as:
Economic Governance Index, Political Governance Index and Civic governance Index.
Taking average of these three index numbers we get aggregate Humane Governance Index (HGI).
Now we present index numbers regarding economic governance, political governance, civic governance and humane governance. These index numbers will help us in ranking .these countries that which state of development has been attained by them.
Humane Governance Index (HGI), Table or Scedule: