TransResearch Consortium’s book offers new way to measure government political performance

When corporate executives or policy makers need to make a decision on investments, resource allocations or new initiatives they typically consider the cost of capital, the political ramifications of their choices, or market competition. Whether implicitly or explicitly, decisions are also based on GDP, productivity and past performance.

But executives usually have little certainty on how a government performs. Fiscal decisions, accomplishments, budgetary spending, size of black markets and level of citizen support all can set the stage for success or failure.

The recently released book, The Performance of Nations (http://www.performanceofnations.org/) fills this investment and policy gap, providing the first systematic, objective assessment of the effect of politics on the socio-economic performance of nations worldwide. It provides a foundation for systematic comparative studies of political economy, comparative management and political demography. More importantly, it provides an easy and robust, GDP-like indicator to compare political performance of nations across time, space and government types.

The performance of local, state or national government directly affects the success or failure of new initiatives. Tax changes introduce uncertainty, impact the bottom line and may spawn capital flight. Budgetary expenditures can easily be mismanaged and their desired impact diminished by corruption. Entrepreneurial efforts can be stymied by regulations in emerging markets.

For example, massive U.S. investment into supporting the Afghan government was thwarted by the very low government capacity to extract taxes and implement intended programs and desired policy. Estimates show that in Afghanistan, provincial governments only effectively implement anywhere between 20 to 60 cents of every dollar received. In the 1990s, foreign direct investments into low-cost Chinese manufacturing for multinational corporations and joint ventures in the Pearl River Delta ensured China's 9.9% average annual economic growth over the last decade. In terms of picking the winners and losers of policy and investment decisions, TRC explains why political performance analysis, a missing component in business, investment and policy scenarios, is a key determinant for success.

The Performance of Nations, published in October by Rowman & Littlefield Publishers Inc., is the product of a five-year collective effort by more than a dozen scholars associated with the TransResearch Consortium (TRC) in Southern California. TRC is an incubator for emerging new ideas in world politics, economics and society. The book is the consortium's first publication and offers a road map for entrepreneurs and policy makers alike to minimize risk and maximize results.  It strives for an objective measure of whether societies are capable and effective in their government performance given different levels of development. Do citizens get what they pay for in taxes?  Is the population actively participating and supporting policy decisions?  Is the government investing effectively for sustainable economic growth?

Political performance is very different from GDP or productivity, and is not tied to a nation's poverty or wealth. It is objective, unbiased and non-judgmental. Political performance measures the capability of governments, regardless of democratic or autocratic or the policies governments use to achieve their goals. TRC's objective measures help explain rising superpowers India and China, one a democracy, the latter a single-party regime. Regime type does not dictate government performance - some democratic regimes perform well, while others fail. Likewise some authoritarian regimes are efficient, while others are not.

TRC created three objective indicators of political performance: the first is extraction, which measures the ability of government to gather revenues from the population. The second is reach, which assesses the capacity of governments to mobilize populations. The third is allocation, which finds the best distribution of government resources to maximize sustainable economic growth. Taken together, these variables measure the performance of government inputs and outputs in any society.

These political performance indicators were originally designed to aid in understanding the outcome of wars, anticipate civil unrest and better plan for national security contingencies for government leaders.  TRC also found they provide dramatic insight into capital flows, trade, migration, fertility patterns, infant mortality, and even municipal crime rates.

TRC also uses the political indicators to determine the relative size of a nation's black market, subsistence markets and other elements of the informal economy. They do this by determining a country's ability to draw productive citizens into the formal market sector as well as monitoring citizen support of government policies. When large sections of a society rebel against a government's policies, or when a government ignores important public opinion, these groups will become less and less involved in the regular, formal and taxed economy and more heavily involved in illicit activities or the black markets.

TRC's mission is to integrate systematic knowledge from economics, politics and society to assess key global, regional, national and local public and private policy. Their objective is to understand how government policy choices affect the potential for growth, and how the public and private sectors can work together to deliver sustainable growth.

The TransResearch Consortium is headquartered at the Tom and Vi Zapara School of Business at La Sierra University in Riverside, Calif. TRC was founded by faculty of the Zapara School of Business, the School of Politics and Economics at Claremont Graduate University, Claremont, Calif., and the Mark O. Hatfield School of Government at Portland State University, in Portland, Ore.  The Performance of Nations is edited by Jacek Kugler, professor of world politics at Claremont Graduate University's School of Politics and Economics, and Ronald L. Tammen, director of Portland State's Mark O. Hatfield School of Government.

La Sierra's involvement in the consortium provides the university co-branding opportunities with tier-one research institutions and offers broad opportunities for students, stated John Thomas, dean of the Zapara School of Business and one of the book's key authors. Thomas also serves as consortium chair. The business school was instrumental in collecting research data over five years leading to the book's publication. “There's more activity to come,” Thomas said.

The Performance of Nations is intended for policy makers, economists, business executives and citizens alike, giving a new understanding of the interplay between politics and economics. TRC's book provides a dialogue in which politicians, executives and citizens can engage in non-partisan debate on government performance, to figure out how all can grow together and achieve shared prosperity.