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.



Beyond good governance: An agenda for developmental governance

The limitations of the good governance agenda are well reviewed in the rest of this book. The empirical relationship between improvements in the governance capabilities identified in the good governance agenda and the achievement of accelerated economic growth has not been established. There is a weak relationship identified in some regression exercises, but the strength of the relationship is weak at best. The arithmetic results suggest that the additional growth achievable through feasible improvements in good governance is limited. Deriving important policy conclusions from the results of weak multi-country regression results is also problematic for other reasons. For one thing, given the two-way causality that exists between good governance capabilities and economic growth, econometric tests are imperfect in identifying the strength of the relationship in one direction. More significantly, supporters of the good governance reform agenda have failed to identify convincing case studies of countries that actually made a significant economic transformation (from poverty to high standards of living), primarily by following the agenda that they propose. Even if we accept that achievable improvements in good governance capabilities in developing countries could result in some improvements in growth and development, this does not establish that these improvements will be sufficient for achieving a developmental transformation. The case study and statistical evidence actually supports the importance of governance, but suggests that a different set of governance capabilities were important. Countries that achieved significant developmental transitions in the past 50 years had strong governance capabilities, but none of them would have scored highly in terms of ‘good governance’ when their take-offs began or for a considerable period thereaft er. Rather, they had governance capabilities for addressing specific problems, such as overcoming constraints limiting technology acquisition, solving problems in allocating valuable resources such as land and maintaining political stability within tolerable limits. We describe these capabilities as developmental or growth-enhancing governance capabilities.


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