Abstract & Overview
This paper aims to enhance the formulation of the Sustainable Development Index (SDI) by introducing a further correction term, governance lack (GL) index, in additional to the ecological impact index (EII). The GL considers a country’s governance lack by calculating a governance index (GI) with the World Governance Indicators (WGIs) starting from 1996. The SDI(g) retains the original formula of the SDI, thus remaining an indicator of strong environmental sustainability but adequately considering in its formulation the differences significant in countries’ governance climate. Finally, graphical relationships between DI and GI, and DI and (EII + GL) are shown, and the existence of these relationships are tested with WLS and nonparametric regressions. Our findings show that significant differences in country ranking were found; the graphical relationships are empirically proven; and countries with a worse GI have been further penalized in the SDI(g) ranking.