Is Good Governance Good for Development?

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Whilst good governance is a worthy goal by itself, this book argues that it is not a prerequisite for economic growth or development. Challenging the conventional good governance paradigm favoured by the donor community, this book exposes the methodological shortcomings of the commonly-used governance indicators developed within the World Bank. It argues that aggregate good governance indicators are less helpful for identifying governance failure in specific areas needing policy interventions. Bringing together contributions from leading political scientists, political economists and development practitioners, this is the first book that focuses on such good governance issues.



Introduction: Governance and development

The idea of governance began to influence policy debates during the period of liberalizing market reforms in the 1980s. Margaret Thatcher and Ronald Reagan, in the United Kingdom and United States, respectively, sought to reorganize society and government around the principles and values of markets and private property. It was generally presumed then that such reforms would end problems of economic inefficiency, corruption and arbitrary rule in developing countries. In this context, governance was advanced as an alternative conception of authority expressed through institutions that would insulate markets from rent-seeking ‘distributional coalitions’ (Olson 1982). Nobel Laureate Douglass North’s (1981) discussion of the security of property rights from threats by the monarch or the state has also influenced the governance agenda. This emphasizes the role of institutions in providing checks and balances on the power of various organs of the state to ensure a stable, predictable and non-arbitrary state — a fundamental condition for spurring economic growth and prosperity. Thus, governance became a major concern of the Washington Consensus on development. Good governance should address market failures and ensure institutional reforms capable of making markets work better.


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