good governance and development are supplementary.explain
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Development and improved governance have tended to go hand in hand. But, contrary to popular belief, there is little evidence that success in implementing governance reforms leads to more rapid and inclusive economic and social development. In fact, it may be the other way around.
The focus on good governance stems from the struggle to restore sustained growth during the developing-country debt crises of the 1980s. Instead of reassessing the prevailing economic-policy approach, international development institutions took aim at the easy targets: developing-country governments. Advising those governments on how to do their jobs became a new vocation for these institutions, which quickly developed new “technical” approaches to governance reform.
The World Bank, using well over 100 indicators, introduced a composite index of good governance, based on perceptions of voice and accountability, political stability and the absence of violence, government effectiveness, regulatory quality, the rule of law, and levels of corruption. By claiming that it had found a strong correlation between its governance indicators and economic performance, the Bank fueled hope that the key to economic progress had been found.
The case was flawed from the beginning. The indicators used were ahistorical and failed to account for country-specific challenges and conditions, with cross-country statistical analyses suffering from selection bias and ignoring the interlinkages among a wide array of variables. As a result, the World Bank badly overestimated the impact of governance reform on economic growth.
To be sure, governance that is effective, legitimate, and responsive provides untold benefits, especially when compared to the alternative: inefficient governance, cronyism, and corruption. But the focus on governance reform has not proved nearly as effective as promised in fostering development.
The focus on good governance stems from the struggle to restore sustained growth during the developing-country debt crises of the 1980s. Instead of reassessing the prevailing economic-policy approach, international development institutions took aim at the easy targets: developing-country governments. Advising those governments on how to do their jobs became a new vocation for these institutions, which quickly developed new “technical” approaches to governance reform.
The World Bank, using well over 100 indicators, introduced a composite index of good governance, based on perceptions of voice and accountability, political stability and the absence of violence, government effectiveness, regulatory quality, the rule of law, and levels of corruption. By claiming that it had found a strong correlation between its governance indicators and economic performance, the Bank fueled hope that the key to economic progress had been found.
The case was flawed from the beginning. The indicators used were ahistorical and failed to account for country-specific challenges and conditions, with cross-country statistical analyses suffering from selection bias and ignoring the interlinkages among a wide array of variables. As a result, the World Bank badly overestimated the impact of governance reform on economic growth.
To be sure, governance that is effective, legitimate, and responsive provides untold benefits, especially when compared to the alternative: inefficient governance, cronyism, and corruption. But the focus on governance reform has not proved nearly as effective as promised in fostering development.
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