The State and Development Governance Presentation to Delegations In the framework of courses organized by UNCTAD Virtual Institute on International Economic Relations, 18 March 2011 Charles Gore Head, Research and Policy Analysis Branch Division for Africa, LDCs and Special Programmes

Key concepts Governance –Why use the word “governance” rather than “government”? –Is governance only about institutions or is it about policies? Good governance –What normative values are imbued in the goodness of good governance? –Can good governance be bad? –Is good governance about procedures or outcomes? Developmental State –Is there a danger that the developmental state is “deified into some kind of omnipotent and omniscient leviathan which always gets its way” (Mkandawire 2001). Development governance: WHAT IS IT?

Good Development Governance is partly a question of procedures of governing… 6 Core Principles

…but Good Development Governance is also about development outcomes ‘Development governance is about creating a better future for members of a society by using the authority of the State to promote economic development, and in particular to catalyze structural transformation, create prodcutive opportunities and raise living standards for present and future generations’ (LDCR 2009: 15) ‘Development governance is about the processes, policies and institutions that are associated with purposefully promoting national development and ensuring socially legitimate and inclusive distribution of costs and benefits’ (LDCR 2009: 15).

Lets look at good governance

Some Definitions of Governance and Good Governance Governance is “the exercise of economic, political and administrative authority to manage a country’s affairs at all levels. It comprise the mechanisms, processes and institutions through which citizen and groups articulate their interests, exercise their legal rights, meet their obligations and mediate their differences UNDP 1997 “Good governance is epitomized by predictable, open and enlightened policy making; a bureaucracy imbued with a professional ethos; and executive arm of government accountable for its actions; a strong civil society participating in public affairs; and all behaving under the rule of law”. World Bank 1994

The current ‘good governance’ institutional reform agenda It has an immense scope It is rooted in a dichotomy between two ideal types: a formalized ‘good governance’ system and informal ‘bad governance’ system Also it involves the introduction of particular Western institutions (electoral democracy, new public management)

Table 1: The Scope of the Good Governance Agenda: Key Arenas and Principles Principle/ Arena Participatio n FairnessDecencyAccountabilit y TransparencyEfficiency Civil society Freedom of association Society free from discriminatio n Freedom of expression Respect for governing rules Freedom of the media Input in policy making Political society Legislature representativ e of society Policy reflects public preferences Peaceful competition for political power Legislators accountable to public Transparency of political parties Legislative function affecting policy Governme nt Intra- governmenta l consultation Adequate standard of living Personal security of citizens Security forces subordinated to civilian government Government provides accurate information Best use of available resources Bureaucra cy Higher civil servants' part of policy- making Equal access to public services Civil servants respectful towards citizens Civil servants accountable for their actions Clear decision- making process Merit-based system for recruitment JudiciaryConsultative processes of conflict resolution Equal access to justice for all citizens Human rights incorporated in national practice Judicial officers held accountable Clarity in administering justice Efficiency of the judicial system Source:.. The Scope of the Good Governance Agenda

Problems with the Good Governance Reform Agenda This has led to disabling reform overload Troubles with governance indicators What is good governance when a country has limited resources Instrumental value of good governance.The evidence does not indicate a close relationship between the quality of governance (according to GG indicators) and growth of per capita income BUT rather with income levels –Is good governance a good development strategy? (Meisel and Aoudia 2007)

Limits of Governance Indicators Arndt and Oman 2006: Because the average value is zero and standard deviation always one, the indicators cannot be reliably used for monitoring changes in the level of governance over time (p.61) Analysis of potential cross-country comparisons amongst LDCs on the six governance dimenions in WGI for 2006 showed that only 40 per cent of comparisons were statistically significant. That is to say, 60 per cent of the differences in governance quality amongst LDCs were too small to be statistically significant. The indicators show goodness of governance relative to other countries not in absolute terms – a country can have worsening scores even if its governance is improving.

Some Problems with Governance Indicators Arndt and Oman 2006: Because the average value is zero and standard deviation always one, the indicators cannot be reliably used for monitoring changes in the level of governance over time (p.61) Analysis of potential cross-country comparisons amongst LDCs on the six governance dimenions in WGI for 2006 showed that only 40 per cent of comparisons were statistically significant. That is to say, 60 per cent of the differences in governance quality amongst LDCs were too small to be statistically significant. The indicators show goodness of governance relative to other countries not in absolute terms – a country can have worsening scores even if its governance is improving.

LDCs with real GDP growth > 6% during the boom ( ) LDCs with real GDP growth between 6% and 3% during the boom ( ) LDCs with real GDP growth < 3% during the boom ( ) Fragile states (according to WB 2004 CPIA score) Non fragile states Real GDP growth and "fragile states" during the boom