Nobel Prize–winning economist Amartya Sen wrote in 2009 that lack of transparency in the global ﬁnancial system was among the main factors contributing to the ﬁnancial crisis that began in 2008. Had there been greater disclosure of information, regulatory authorities could have more efectively monitored the explosive growth of increasingly sophisticated and opaque ﬁnancial instruments—and the crisis might have been less severe.
An institutional environment characterized by openness and transparency is of central importance not only for private markets but also for the efective and efﬁcient management of public resources. Lack of transparency around the decisions made by policy makers and government oficials can lead to resource misallocation as funds, rather than being directed toward their most productive ends, are instead captured for private gain. Lack of transparency can also undermine the credibility of those who are perceived as being its beneﬁciaries and thus sharply limit their ability to gain public support for economic and other reforms.