As climate change worsens and the forces of populism gather, there is a strong argument for moving beyond narrow economic measures of national progress. This column presents a new indicator of progress that integrates environmental, social, and governance factors into growth analysis. Results show that the countries that have been able to blend economic dynamism with environmental, social, and governance dynamism are mostly developing economies. These countries often fly under the radar of traditional macroeconomic analyses. 

The separation of ownership and control for public firms may lead to fully dispersed ownership where no shareholder has an incentive to engage in governance. This column argues that blockholders (owners of large stakes) play a critical role in long-term governance, partly through a credible threat to sell their stakes. This threat is undermined by well-intentioned policy moves to create holding-period incentives and requirements. If they succeed, these policies will make exit less likely and blockholders will lose a method to discipline managers.

A city’s metropolitan governance structure has a critical influence on the quality of life and economic outcomes of its inhabitants. This column quantifies the impact of governance on productivity using data from five OECD countries. Administrative fragmentation, which complicates policy coordination across a city, has a negative effect on individual productivity. This finding, combined with benefits from good governance such as improved transport and lower pollution levels, highlights the importance of well-designed metropolitan authorities.

Schools with greater autonomy often perform well, but there is disagreement over whether this is due to better management or cherry-picking of students. Based on interviews with over 1,800 head teachers, this column finds that management quality is strongly correlated with pupil performance. Autonomous schools have better management, and this result does not appear to be driven by pupil composition or other observable factors. However, autonomy for head teachers is not enough – accountability to school governors is also needed.

By the end of the 1990s, under the incentive of Eurozone entry, most peripheral European countries were busy undertaking structural reforms and putting their fiscal houses in order. This column argues that the arrival of the euro, and the subsequent interest-rate convergence, loosened a tide of cheap money that reversed the incentives for further reforms. As a result, by the end of the euro’s first decade, the institutions and governance in the Eurozone periphery were in worse shape than they were at the start of the decade.

Divergent behaviour from Eurozone countries that have very different economic, social, and political structures is threatening the existence of the single currency. This column argues that the Eurozone is a fragile bureaucratic creation that has hardly ever raised much popular enthusiasm anywhere. If behaviour across the area remains as asymmetric as it has been over the last decade or so, the project could run into even stronger headwinds in the long run.

Many analysts of the Eurozone crisis take members’ asymmetric competitiveness for granted and underplay the role of the global crisis. This essay argues that some of the trends which now are widely assumed to be the result of the euro are actually natural consequences of two unique events: German unification and the mid-decade global credit boom.

How important are primary commodities for economic development? This column suggests that primary commodity prices are likely to ease over the next five years. Nevertheless, commodity revenues will remain high, raising challenges that, if not addressed, can harm long-run development. With good governance, however, such revenues can also be a valuable resource to help accelerate overall development.

This column provides evidence that there is great deal of difference between the governance standards of the economies in which sovereign wealth funds have been established and the standards of the industrial economies in which they are seeking to invest. It also discusses how the expansion of asset holdings of sovereign wealth funds may reduce official reserve holdings.