CIVIL-LIBERTIES, DEMOCRACY, AND THE PERFORMANCE OF GOVERNMENT PROJECTS

This article uses a cross-national data set on the performance of gove rnment investment projects financed by the World Bank to examine the l ink between government efficacy and governance. It demonstrates a stro ng empirical link between civil liberties and the performance of gover nment projects. Even after controlling for other determinants of perfo rmance, countries with the strongest civil liberties have projects wit h an economic rate of return 8-22 percentage points higher than countr ies with the weakest civil liberties. The strong effect of civil liber ties holds true even when controlling for the level of democracy. The interrelationship among civil liberties, civil strife, and project per formance suggests that the possible mechanism of causation is from mor e civil liberties to increased citizen voice to better projects. This result adds to the evidence for the view that increasing citizen voice and public accountability-through both participation and better gover nance-can lead to greater efficacy in government action.