Governance Capital Index

The Global Governance Index

Institutional Quality & Effective Governance

Governance is a fundamental pillar of sustainable competitiveness. Good governance provides the framework for economic development, social stability, and environmental protection. It encompasses the quality of institutions, regulatory effectiveness, rule of law, transparency, and the capacity of governments to formulate and implement sound policies. Strong governance creates an enabling environment for businesses, attracts investment, and ensures that economic growth benefits society as a whole while protecting natural resources for future generations.

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Governance Indicators

Key clusters to measure institutional quality and governance effectiveness

Infrastructure

Evaluation of the availability and quality of public infrastructure based on performance indicators

Fiscal sustainability

Evaluation of the balance and stability of government expenditure

Rule of Law & Corruption

Evaluation of government agencies efficiency and corruption levels

Democratic participation

Evaluation of the extend and quality of political decision making

Security

Evaluation of the availability, level, impartiality, and fairness of internal domestic security

Sustainable policies

Evaluation of stability and quality of government policies against holistic ESG aspects based on performance indicators

Why Governance Capital Matters

Strong institutions and effective governance drive sustainable development and prosperity

For Investors

  • Reduced political and regulatory risk in investment portfolios
  • Better protection of property rights and intellectual property
  • More predictable and transparent regulatory environment
  • Lower corruption reduces hidden costs and uncertainties
  • Strong infrastructure supports operational efficiency

For Businesses

  • Simplified business registration and licensing processes
  • Fair and consistent application of regulations
  • Access to quality transport, energy, and digital infrastructure
  • Reduced compliance costs in transparent regulatory systems
  • Stable financial systems supporting business operations

Bottom Line: Countries with high governance scores consistently demonstrate higher levels of sustainable competitiveness, economic stability, and quality of life.

The State of the World

A global snapshot of governance performance and trends

Global Scores

Lowest19%
Global Average48%
Global Best75%
Ideal World100%

Global Trends

Positive Trends63%
No Trend4%
Negative Trends33%
Overall Sentiment+30.3%
More NegativeMore Positive

Key Observations

1

Northern and Western European countries still profit from long-established rule of law: Luxembourg (#1), Switzerland (#2), Norway (#3), Denmark (#4) and the Netherlands (#5) occupy the top five positions, with Estonia (#8) the highest-ranked country from Central and Eastern Europe

2

There is a strong correlation between governance and prosperity: countries with high governance scores consistently show higher income levels (rank correlation 0.86 between governance score and income per capita)

3

Top-ranked countries invest heavily in public infrastructure, including transport, renewable energy, digital infrastructure and public services: the ten best-governed countries rank on average around 13th in both physical and digital infrastructure

4

Australia (#11) and New Zealand (#20) are the highest-ranked nations outside Europe, with New Zealand third in the world in rule of law. Uruguay (#31) remains the highest-ranked country in Latin America, reflecting the value of decades of democratic stability and strong institutional development

5

Among major economies, Germany is ranked 18th, France 19th and the UK 30th, while Japan (#23), Singapore (#26) and South Korea (#29) lead Asian governance performance

6

The US (#41) and China (#42) both face governance challenges, but in opposite directions: the US has fallen from 16th in 2000, held back by low stability (172nd), weak fiscal performance (119th) and polarization, while China has risen from 67th, driven by strong fiscal performance (4th) and digital transformation (8th), but remains limited by political freedoms and transparency (135th in democracy)

Governance Rankings

Explore how countries compare across governance indicators

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Rank
Country
Score
1Luxembourg75.08
2Switzerland74.68
3Norway74.15
4Denmark74.10
5Netherlands72.78
6Finland72.64
7Sweden72.25
8Estonia71.68
9Ireland70.69
10Belgium70.31
11Australia70.20
12Slovenia70.12
13Austria69.62
14Lithuania69.31
15Liechtenstein68.79
16Czech Republic67.37
17Iceland67.32
18Germany67.27
19France66.63
20New Zealand66.31
21Latvia66.30
22Portugal65.71
23Japan65.39
24Spain64.70
25Canada64.45
26Singapore64.10
27Croatia64.07
28Poland63.88
29South Korea63.68
30United Kingdom62.68

Note: Showing top 30 countries. Click column headers to sort.

FAQ

Frequently Asked Questions

About governance quality and how it is measured in the GSCI

Governance capital encompasses the quality of institutions, regulatory effectiveness, rule of law, transparency, and the capacity of governments to formulate and implement sound policies. Good governance provides the framework for economic development, social stability, and environmental protection. It creates an enabling environment for businesses, attracts investment, and ensures that economic growth benefits society while protecting natural resources.
The GSCI Governance Index evaluates seven indicator clusters: physical infrastructure quality and availability, digital infrastructure, fiscal sustainability and government expenditure balance, rule of law and corruption levels, stability and domestic security, democratic participation and political decision-making quality, and the digital transformation of public services.
There is a strong correlation between governance quality and prosperity. Countries with high governance scores consistently demonstrate higher income levels, more stable business environments, and stronger investment climates. Good governance reduces political risk, protects property rights, provides predictable regulation, lowers corruption-related costs, and delivers quality infrastructure that supports business operations.
Northern and Western European countries lead the governance rankings, benefiting from long-established rule of law: Luxembourg (1st), Switzerland (2nd), Norway (3rd), Denmark (4th) and the Netherlands (5th). Australia (11th) and New Zealand (20th) are the highest-ranked nations outside Europe, and Uruguay (31st) leads Latin America. Among major economies, Germany ranks 18th, France 19th, Japan 23rd, South Korea 29th, the UK 30th, the US 41st and China 42nd.
Top-ranked governance countries invest heavily in public infrastructure including transport, renewable energy, digital networks, and public services. These investments create the conditions for private sector growth and foreign investment. Countries with weak governance face higher costs from corruption, regulatory unpredictability, and inadequate infrastructure. The correlation between governance quality and GDP per capita is among the strongest of all GSCI dimensions.

Explore All Six Capital Dimensions

Discover how Governance Capital connects with Natural, Economic, Social, and Intellectual Capital

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