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Introduction
Governance matters have been an integral part of societies since the dawn
of civilisation, and especially so with respect to what values, ethics and
rules of conduct and justice should be upheld, how societies should be
organised, and who should hold power and authority. Ancient scriptures,
which typically cast a wide net, were the first to address such matters.
Over the centuries, a very long list of philosophers including, Confucius,
Kautilya, Aristotle, Rousseau, Adam Smith and Karl Marx have also left
their mark on the subject. However, this paper focuses on governance and
development since 1991 when the Soviet Union collapsed and communism with it as it marked an important opportunity for departure from
the status quo.
But what does one mean by governance? The term governance does not
carry a universally accepted definition. In its broadest form, governance is
portrayed with respect to the state and society quite apart from the narrow field of corporate governance. I view governance as encompassing two
key but overlapping dimensions. The first refers to all aspects of the way
a nation is governed, including its institutions, policies, laws, regulations,
processes and oversight mechanisms. The second dimension is its cultural
and ideological setting, for governance is perceived and shaped by values,
culture, traditions and ideology.
Within this broad context, the purpose of this paper is to discuss the
current role of theory, policy and practice at the intersection of governance
Michael Chibba is Managing Director and Board Member of the International Centre for
Development Effectiveness and Poverty Reduction, and, concurrently, Director and Practice
Leader of Canadian International Development Consultants.
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rules-based and accountable institutions are crucial for successful development; and (3) social capital for actions to facilitate competitiveness
and build strong institutions occur within a social context. Furthermore,
these pivotal aspects of governance require three conditions to facilitate
economic development: clear definition of roles for institutions and other
players; responsiveness of governance arrangements to existing conditions,
plus adaptability to change; and a consistent focus on the public interest.
Importantly, this way of thinking about governance and development also
results in the pursuit of broad-based governance interventions or reform.
The second school of thought, which I have referred to as the cautionary school of governance for growth, emerged from research that showed
a link between good governance and economic growth (for example, see
Knack & Keefer 1995; Easterlin 1996; Hausmann et al. 2004) that is,
countries with good governance have higher rates of economic growth
in comparison to those with poor governance. Indeed, for many economists and political economists, therefore, the main theories of governance
and development are found in the interpretation of the dynamics of the
relationship between governance and economic growth. Furthermore,
not only are growth and increases in per capita income viewed by some
academics as the raison dtre of development, but enhanced governance
is viewed to be at the heart of the development puzzle. One leading academic economist has even declared that good governance is development
itself. Combine it with material well-being, and we attain the Nirvana of
advanced societies (Rodrik 2008).
In recent years however, the literature on the pursuit of governance for
growth has increasingly taken a cautionary tone, highlighting risks, pitfalls
and limitations. This shift reflects the myriad of problems encountered
by developing countries in the pursuit of governance for growth. Another
possible reason is that the validity of this theory was open to question in
the face of generally widespread positive rates of economic growth during
the few years immediately preceding the current international financial
and economic crises. Interestingly, Rodrik (2008) offers a measured and
cautionary conclusion to his recent paper on governance by noting that
economists have little to say about good governance, but much to contribute to the governance for growth agenda.
Another example of this cautionary approach is Acemoglus recent arguments, which generally fall within this same school of thought. Acemoglu
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(2008) argues that the link between enhanced governance and governance
for growth is neither clear-cut nor can it be confidently pursued as a policy.
He offers five additional recommendations that are essentially cautionary
points (directed in the first instance to World Bank economists): (1) there
is no general recipe for improving institutions; (2) the pitfalls of policy
reform should be avoided, and the political economy constraints should be
recognised; (3) policies can create new and potentially dangerous political
constituencies; (4) public goods are indispensable; and (5) openness and
transparency are important.
The third school of thought and perhaps the most creative, robust
and interesting theory on the overall subject is provided by North et al.
(2008). They divide the worlds 200 countries into two parts: 175 countries
with 85% of the worlds population have a social order that first appeared
about ten millennia ago, and exists to this day in various forms or stages
that are part of the natural state (which replaced the primitive or first
social order). The remaining 25 countries, representing about 15% of the
global population, are characterised by the third social order, which first
emerged in a few societies at the end of the eighteenth and beginning of
the nineteenth centuries the open access society.
There are at least three other key points to the thesis presented by
North et al. (2008). First, social order is maintained through the interplay
between competition, institutions and beliefs. Second, with respect to the
transition to open access, the historical and institutional context is important, but the specific details of change and the specific institutions that are
the agents of change differ across societies. Therefore, they believe that
modern economics fails to understand that interventions and proposed
reforms supported by international organisations must conform to existing
beliefs about economic, social and cultural systems in the natural state
(i.e. the developing country) to be appropriate and successful. Failure to
recognise this produces new institutional forms that are less effective than
the ones they replace; and specifically because the broad prescriptions
that mimic the open access orders are prescribed, including less regulatory
control, absence of monopolies, more secure property rights and improved
provision of public goods such as education, and more complete markets
(North et al. 2008). Third, institutions and organisations help to reduce the
threat of violence and disorder. It is these key insights that are central to
this thesis on governance, development and social order.
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One of the early reviews was by Leftwich (1994), who stated that the
ideological basis of the good governance agenda was an expansion of the
neoliberal approach. His interpretation of the concept of good governance was that it has three aspects: (1) the systematic aspect, which means
a democratic capitalist regime of a minimal state; (2) the political aspect,
which is defined by a democratic mandate, and includes features such as
free and regular elections and checks and balances on power, ideally in
the image of developed country governments; and (3) the administrative
aspect, with a focus on an independent, accountable, efficient and open
public service. Furthermore, his main argument is that enhanced governance is, first and foremost, a function of state character and capacity.
Finally, within this context, Leftwich criticises the World Banks approach
to enhanced governance for its narrow administrative point of view as
nave and simplistic.
The review by Ayeni (2000) explored the subject from an ideological
and agenda-setting perspective, also with special attention to the meaning
of good governance, though with respect to its relevance and applicability
to development in Africa. Ayenis views are at the intersection of politics, economics and public administration. Importantly, he criticises the
neoliberal agendas democratic values and strong market orientation as
perhaps not appropriate to the African context, especially with respect to
the practical issues of design and implementation of good governance in
Africa where societies are fundamentally different from those in the West.
He laments the fact that yet apparently contemporary good governance
literature purports to finally have discovered how society can best be governed when centuries of addressing this question have been ultimately
unsuccessful in finding a globally acceptable formula. He concludes that
measures to enhance governance cannot be imported, and that they should
be a product of the local environment (values, institutions, structures).
The recent work of Grindle (2004, 2007) avoids the ideological debate
by implicitly accepting the neoliberal ideology, and instead focuses on
issues of strategy and an operational framework for good enough governance that is, in lieu of what is perceived as a broad and unmanageable
menu for good governance pursued by international institutions and donor
governments. Grindle further suggests that particular interventions can be
assessed by looking at the context for change and by analysing the implications of the content, albeit with focus on certain political, operational
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and technical issues. Grindle is on the right track here; however, her
work overlooks some key real world aspects of the nexus that are also of
fundamental importance in practice (see below for an elaboration of this
point).
Five key current issues
Directly related to the guiding principles and governance framework outlined above are some of the key current issues that are being advanced
in the policy arena of the nexus, and in the resulting enhanced governance agenda. These key issues include: (1) broad-based interventions and reform; (2) M&E and measurement of governance indicators;
(3)development performance and aid effectiveness; (4) decentralisation;
and (5)economic policy formulation and management. Let us now turn to
each of these issues.
To begin with, one important defining issue is whether broad-based
governance reforms are appropriate and effective from a developmental
viewpoint. In general, broad-based governance reforms are viewed as
part of the successful society school of thought. Arguably, for ideological, institutional and operational reasons various bilateral and multilateral
organisations especially, national aid agencies, international and regional
financial institutions, and UN agencies pursue a broad-based reform
agenda. Another way of looking at this key issue is that the dominant
thinking at these institutions (sometimes referred to as an orthodox
approach) is that since good or sound institutions facilitate growth, broadbased institutional reforms are therefore necessary. However, critics of this
orthodoxy such as Leftwich (1994) and Fukuyama (2008) argue that
a narrow administrative viewpoint that focuses on institutional reform as
the main entry point to development is flawed as it ignores other pivotal
aspects of the development and governance nexus. While this orthodoxy
appears to be very slowly undergoing a metamorphosis, it has a limited
scope for change as the Bretton Woods-era governance constraints remain,
guided by the prevailing institutional mandate and related principles of
engagement.
Another key current policy issue is M&E of governance interventions and measurement of indicators of governance (i.e. metrics). This
issue is also seen as a necessary policy and programming thrust by many
international institutions to raise awareness, strengthen administrative
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very least, in the use of political economy to further an inclusive development alternative (for discussions on this, see Chibba 2008a, 2008b, 2008d,
2009a, 2009b). On a totally different track, market- and technology-based
interventions offer complementary and incremental approaches to address
poverty; and this also underscores the need for appropriate regulations and
oversight for enhanced governance. Finally, culture and socioeconomics
bear heavily on governance and development matters, and especially on
the success or failure of economic policy formulation and management, as
indeed each of the other four dimensions bears testimony to this fact.
Where do we stand?
In sum, and first and foremost, theory has a rather modest and peripheral
role to play in the policy arena. This conclusion on the role of theory in
policymaking on governance for economic development is also voiced by
Acemoglu (2008, p. 2) who notes that,
academic research progresses slowly and according to its own dynamics, which
often reward ideas that are contrarian even if they have limited empirical relevance. Only ideas that have withstood the test of time will one day become
relevant for the policy sphere.
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economics, politics, and the institutional and cultural context within which
it is perceived, advocated and pursued.
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scope of enhanced governance as these matters are also inherently ethnocentric. Thus, governance matters as a whole are a highly contested aspect
of societies and they are usually accompanied by lobbying and competition in the search for what is best for a particular society, given contextual
constraints. Moreover, even when there is a modicum of agreement on the
subject, there is often a lack of consensus on what is considered essential
or worthy of being monitored, evaluated, and measured from the potentially immense agenda with which institutions and experts are confronted.
Good enough governance was proposed by Grindle in response to this,
but its inherent flaws and limited relevance render the concept and strategy impractical. In addition, the reliability of data on measurement of the
quality of governance in developing countries is questionable, and also
largely experimental in nature. And, as governance metrics are viewed as
a technical matter without giving due attention to various other pivotal
factors highlighted thus far, the findings from surveys and evaluations
offer very limited real or practical value beyond a specific project or programmes operational framework. Thus, the value, utility and success of
governance interventions are suspect. Indeed, despite the laudable intentions to promote enhanced governance by the international community, it
is worth reiterating that the World Bank (2006b) recently concluded that
there has been no significant change (based on selected and preferred
governance indicators) in the overall quality of governance in the world.
This outcome, given the major push by several international organisations
to improve governance around the globe, is worrisome to some observers
and suggests, to others, that perhaps the focus of the debate and action on
governance matters is indeed misjudged and misplaced. Several observers of governance matters (for example, see Fukuyama 2007b) have
concluded that rather than look at average ratings for democracies or how
governance is faring at the country level, concrete solutions must be found
to structure democratic institutions to support development results and
to sustain democratic governance, as lack of sustainability of governance
interventions and reforms is as much a problem as successfully introducing governance reform. In short, M&E and metrics are essentially treated
as technical and management issues within a societal and developmental context. Thus, factors such as politico-economics, ideology, politics
and culture in developing countries what I refer to as the contextual
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democracy at the local level was enhanced as political inclusion had taken
place that is, segments of society previously excluded in political life had
benefited from decentralisation and are now included in the process. In
addition, they found that decentralisation has also resulted in profound
changes in public policy. In Bolivia, a redistribution of public resources to
the local level has been accomplished; in India, a comprehensive and successful land reform programme has been implemented in the state of West
Bengal, and corruption has been curtailed; and in South Africa, the decentralisation programme, which is only a few years old, requires integrated
development plans to be drawn up by local governments in an inclusive
development manner (that is, with participation by all groups, including the
poor), and this appears to be taking place. On the other hand, the authors
also argue that the drawbacks to these programmes are equally significant.
Nonetheless, such empirical evidence (even if exploratory in nature) from
actual field work on decentralisation and development is sparse. Moreover,
numerous obstacles to successful implementation surfaced in practice for
reasons such as poor programme design, the downside to the politics of
decentralisation, and the lack of adequate readiness of the political and
bureaucratic systems to introduce and/or sustain decentralisation. At this
juncture, it is useful to be reminded that there are inherent limitations to
the validity and applicability of evidence-based research from these (and
indeed all) developing countries: the drawbacks of evidence-based policy
include the fact that it is often country-specific or site-specific (hence, it
is not widely applicable); and second, that it takes a long time for it to be
accepted (Chibba 2008a). In essence, the double-edged sword problem
raised earlier is evident in practice as in decentralisation interventions it
is the contextual dynamics that often determine the success or failure of
interventions. Surveys of decentralisation and development conducted in
the last few years, as well as the work of others who have studied this subject with reference to a specific aspect of it (such as human development,
service delivery or poverty reduction), would certainly concur with this
conclusion (see, for example, Jutting et al. 2005; Chaudhury & Devarajan
2006; Fritzen & Lim 2006). Nevertheless, decentralisation continues to be
a fundamental part of the governance and development agenda in many
countries, though it is largely exploratory in nature in most cases.
Finally, economic policy formulation and management is another critical area of the nexus. The collapse of the neoliberal model of governance
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and economic policy management has several lessons to offer. First, that it
was a utopian paradigm to begin with, as evidenced by the current global
financial and economic crises. Indeed, in practice, markets do not naturally self-correct for errors, biases and externalities; second, markets do not
necessarily allocate resources efficiently (hence the need for regulations
and governance); and, third, markets are innately driven by self-interest
and not necessarily to serve the public interest. Fourth, the premise that
a single model of governance and development can apply to all circumstances and contexts is fundamentally flawed, for there is no universally
acceptable stellar model of governance for all societies, no less for the
formulation, applicability and management of economic policies. Gunnar
Myrdal (1968), a Nobel Laureate in economics, reached a similar conclusion in Asian Drama: An Inquiry into the Poverty of Nations. Fifth, as with
the other key current issues, contextuality is a powerful determinant of
the outcome and impact of interventions. In this regard, I shall now turn
to the Botswana case study, which serves as a case in point.
The Botswana case
Botswana is often viewed as exemplary of good governance in Africa (for
instance, see Stiglitz 2002a, 2002b; Iimi 2006; Kaufmann et al. 2006; Rodrik
2007; Acemoglu 2008). But recent field research and related findings and
analysis (Chibba 2007, 2008b, 2008c, 2009a, 2009b) challenge this conclusion, and suggest that the conditions for enhanced and stellar governance
in Botswana are lacking in several critical areas, including: inclusive development, institutional policymaking and implementation, sectoral planning
and development, and economic policy formulation and management.
These weaknesses are most evident with respect to, inter alia:
monetary policys long-term failure to achieve its main objectives of
achieving a low, sustainable and predictable rate of inflation
the continued inability of the government to diversify the economy
(which is essentially one-industry based)
the fact that, despite three decades of robust economic growth (averaging around 9% annually), progress has not been inclusive as poverty is
widespread and inequality is severe i.e. the Gini coefficient is 0.63
(IMF 2008) where 1.0 denotes absolute inequality and 0 represents
perfect equality
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and flaw is carried forward into practice. As such, it is arguably the single
most important weakness in the international development agenda on
governance. The five current governance issues that were discussed above
show ample proof of this. Indeed, focusing on what is relevant to a specific
development context, or what can conceivably work in the real world, can
help to better frame policies and also assist in designing and implementing
appropriate interventions.
Concluding remarks
This review and analysis of the current role of theory, policy and practice
in governance and development suggests that there is no universally
applicable stellar model or approach to the subject.
Another revealing conclusion that has surfaced is that the relevant
theories of governance and development have a remarkably limited role
to play in shaping policy and practice. Indeed, theory is largely employed
in metrics, advocacy, and in research and analysis.
Finally, perhaps the single most important problem in policies and
practices on governance for development is the failure to ensure that the
contextual dynamics found in each developing-country setting are not
overlooked.
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