What is a good proxy for government quality? Is it ok to use corruption as a proxy for government quality?
Using corruption is part of it but a bit restrictive way to measure government "quality". You may use aggregate indicators as the one developed by the Worldwide Governance Indicators (WGI) project from the World Bank. They reports aggregate and individual governance indicators for over 200 countries and territories over the period 1996–, for six dimensions of governance:


Voice and Accountability 
Political Stability and Absence of Violence    
Government Effectiveness 
Regulatory Quality 
Rule of Law 
Control of Corruption




What is Governance ?

According to the WGI project Governance consists of the traditions and institutions by which authority in a country is exercised.  This includes the process by which governments are selected, monitored and replaced; the capacity of the government to effectively formulate and implement sound policies; and the respect of citizens and the state for the institutions that govern economic and social interactions among them.