Increasing awareness of the importanceof governance has been accompanied by an increase in thenumber of commercial firms and nongovernmental organizations(NGOs) producing broad indicators of the quality ofgovernance and public institutions. First generationgovernance indicators, e.g., International Country RiskGuide, Transparency International's CorruptionPerception Index, are useful to identify countries withsevere corruption and other governance-related problems.However most of them have limited relevance for publicsector reform. There is a need for second generationindicators which are expected to be more specific inmeasuring performance and pay more attention to measuringgovernment processes and institutional arrangements - notjust performance.