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Understanding Good Governance


Understanding Good Governance World Bank model: Intellectual origins 1.African failure. The term was coined by African department in 1989. Section 10 of Article 10 of ... – PowerPoint PPT presentation

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Title: Understanding Good Governance

Understanding Good Governance
Governance is the buzzword. Anne Mette (Mehteh)
Kjaer (kchjer) in her book Governanceidentified
6 types of governance1. Governance in Public
administration2.Governance in International
Relations3.Regional Governance as in
EU4.Governance for Economic Development5.Governa
nce for Democratization6.World Bank concept of
This lecture concentrates on public
administration concept of governance. Global and
regional governance will not be discussed.
  • Six major concepts from PA perspective
  • (I) An old term with new nuances
  • (II) A positive concept -A new style of
  • (111) A normative concept- good governance
  • (IV) No universal concept historical concept
  • (V) Third World concept of Governance Mo
    Ibrahim Index of governance in Africa
  • (VI) Indigenous concept of governance

  • The term governance was used interchangeably with
    the term government since the 15th century. In
    the 1970s, distinction was made between short
    term and long term changes. Government refers to
    day to day administration, while governance
    refers to long term effects of the interaction
    between technological change, social change and
    administrative action. The difference between
    government and governance was one of degree and
    nuances and not of substance. Governance
    emphasizes the role and the goals of the
    institutions rather than of institutions

Old Concept of Governance and Sovereignty
Third sector
Firms Central Government National Non-profits
Local traders Local government Local NGOs
  • The substance of government has changed. Stephen
    Goldsmith and William D. Eggers in their book
    Governance by network talks of the shift from
    hierarchical to network government. This was
    accompanied by hollowing of state. The state lost
    its supremacy. The private sector and the third
    sector became equally powerful.

Hierarchical Governance
  • This new concept of governance was elucidated by
    R.A.W.Rhodes who defined governance
    asself-organizing interorganizational network.
    The three characteristics
  • The networks are self-organizing and not
    dependent on the state
  • Secondly, it is interorganizational because no
    single agency can address the problem adequately
  • Thirdly, they are networks which are run using
    market instruments like brokerage and negotiation
    rather than control and negotiations

Differences between Hierarchical and bureaucratic
Hierarchical govt Network govt
Single professional skill Diverse professional skill
Government predominant provider Potential providers many
Outcome ambiguous process must be correct Outcome of output clear
Govt. has necessary skill Skill source diverse
Service is stand alone Multiple services for the same customer
In-house delivery (Works Ministry) Third party delivery
Hierarchical govt., Network Govt.
Service not affected by technology Rapidly changing technology
Services concentrated at single level Multiple level of government provides service
Single agency single function Multiple agency single function
Outside capacity not important Use all available assets
Reach or credibility limited Greater reach or credibility
  • There are four problems with this approach
  • 1 Too much outsourcing creates problem of
    supervision. E.g. NASA
  • 2.Lack of regulation in energy sector created
    problems of pricing and OM. Rajan and Zingales
    Saving Capitalism from Capitalists
  • 3.Lack of coordination. It cannot handle
    emergency. Homeland Security was modeled on
    hierarchical government
  • 4.Self-organizing networks do not exist in
    developing countries

Rhoades redefined governance as follows
Governance refers to self-organizing
inter-organizational network characterized by
interdependence, resource exchange, rules of the
game and significant autonomy from the state.
Jon Pierre defines governance as co sustainable
coordination and coherence among a wide variety
of actors with different purposes and
objectivesPeters and Pierregovernance relates
to changing relationship between state and
society and on a growing reliance on less
coercive policy instruments (However, they
believe that the role of the state is dominant)
World Bank model Intellectual origins
  • 1.African failure. The term was coined by African
    department in 1989. Section 10 of Article 10 of
    IBRD forbade interference in internal politics.
    Governance is a value-free term. The end of Cold
    War strengthened the bank.
  • 2.New-institutional school in economics provided
    intellectual foundation. Douglas C. North, James
    Buchanan, Ronald Coase and Herbert Simon receive
    Nobel Prize in Economics.Other proponentsHarold
    Demsetz, Tullock, Acemoglu, Allchian, Williamson

3.State failure between1955-1994. 12 states and
127 cases of civil and revolutionary war. Recent
example of state failure Liberia, Afghanistan,
D. R. of Congo, Sierra Leone, Cambodia, Rwanda,
Lebanon, Uganda, Chad, Zimbabwe, Sudan, Iraq,
Central African Republic, Guinea, Cote de Ivoire.
  • 4.The end of history and the triumph of
    democracy. Fukuyama thesis. Ideology of Thatcher
    and Reagan. Theories of New public management.
    Government should be market-based, customer
    driven, innovative, problem-solving.

Characteristics of World Bank Concept
  • 1. A shift from institution-building to
    state-building. Institutions built as islands of
    excellence may not survive. The whole state needs
    to be strengthened
  • 2.An increased emphasis on the role of the state.
    The failed states need more governance. Bank
    assistance was expanded to police and army. This
    is in stark contrast to hollowing of states in
    developed countries.

  • 3. Governance,a positive concept, became good
    governance a normative concept. Six elements in
    World Bank definition
  • 1. Voice and Accountability. Orderly transfer of
    power, freedom of association, Press freedom,
    travel freedom. Human rights, democratic
    accountability, the role of opposition
  • 2.Political stability. Military coup, insurgency,
    terrorism, assassination, civil unrest

  • 3.Government Effectiveness. Quality of
    bureaucracy, budgetary process, policy
  • 4.Regulatory Quality. Regulation, foreign
    investment, govt. intervention, tax effectiveness
  • 5.Rule of law. Crime, quality of judiciary,
    quality of police, black market, property rights
  • 6. Control of corruption. Incidence of
    Corruption, anti-corruption measures and public
    trust in government

Criticism of World Bank concept of good
  • 1. This is the definition of multinational
    companies. Even the civil society is missing
  • 2, It emphasizes the process and not the outcome.
    Growth rate, poverty rate or life expectancy,
    literacy etc. totally overlooked
  • 3.There are serious data problems in cross
    country comparison. There are halo effects and

Two grand themes of WB concept
  • 1. Economic Development depends on good
  • 2. Good governance is achievable

Critique of governance and development nexus
  • This correlation is crucial for world bank to
    justify its involvement in the internal affairs.
    Two questions (1) Is the correlation meaningful
    (2) What does the correlation signify?

Is correlation meaningful?
  • China does not fit into this format. Governance
    in China is deteriorating.
  • Indicator 1996
  • Voice Accountability -1.7
  • Political Stability -0.56
  • Government Effectiveness 0.11
  • Regulatory Quality 0.15
  • Rule of Law -0.2
  • Control of Corruption -0.1

  • Rural areas of China are in ferment. The number
    of mass incidents was 87000 in 2005- close to 240
    per day. It was 10000 in 1991.Yet growth rate in
    China during 1991-2001 was 9.8 percent, above 9
    percent in recent years. No country in the World
    grew as fast as China in the last three decades.

Bangladeshs governance Indicators
Indicator Rank 2008(LOWEST) 2008 estimate 1996 estimate
Voice and accountability 31( 15) -0.61 -0.2
Political Stability and absence of violence 10 (5) -1.54 -0.8
Government Effectiveness 23 (15) -0.77 -0.7
Regulatory Quality 21 (10) -0.82 -0.2
Rule of Law 27 (15) -0.7 -0.8
Control of Corruption 11 (10) -1.1 -0.5
Total No of countries-215
World Bank calls this Bangladesh Conundrum.The
paradox of bad governance and development in
Bangladesh. Six Hypotheses1.Devarajans
hypothesis- vibrant civil society and bypassing
the government2.WB indicators are wrong3. The
flow of resources through private sector
(remittance, garment and NGOs)
4. The relationship between development and
governance is kinked
Bad governance
5.Fernandez and Kraay. It is a nine days wonder
it will not last. An economist is someone who
takes something that works in practice and
wonders whether it will work in theory6. Fruits
of growth did not reach the poor and growth in
Bangladesh could have been much higher with good
  • Significance of correlation
  • Does economic development lead to better
    governance or does better governance lead to
    development? World Bank thinks that growth may
    not lead to better governance. Sachs argues that
    Africas governance is poor because Africa is

Historical evidence on growth-governance nexus
  • Ha Joon Chang in his book Kicking Away the Ladder
    argues that much of the elements of good
    governance were missing in the initial phases of
    Now developed countries. Women had no votes, the
    bureaucracy was corrupt, patronization was
    rampant, labor laws and corporate governance were
    missing. Better governance came with economic

Is good governance achievable?
  • These are ideals. In real life there is no
    evidence of improvement in governance world
    wide.Even G-8 countries cannot do it.
  • During 1996-2008, governance deteriorated in the
    USA by five out of six indicators

Decline in Governance of USA, 1996-2008
Indicator 2008 1996
Voice and accountability 1.55 1.72
Political Stability and Absence of Violence 0.59 1.02
Government Effectiveness 1.65 2.22
Regulatory Quality 1.58 1.26
Rule of Law 1.65 1.68
Control of Corruption 1.55 1.72

Performance of other G 7 countriesduring
1996-20081. Canada, 4 indicators down, 2
up2.France. 3 indicators down, 3 up3.Germany. 4
down, 2up.4.Japan 3 up, 3 down5. UK. 4 down, 2
upCorruption increased in UK, USA, Canada and
Germany and decreased in France and Japan.
Good governance versus good enough governance
  • Marilee S. Grindle talks about good enough
  • The agenda of good governance is long. It is
    growing. In 1997 conditions for good governance
    was 45 in 2002-03, it increased to 116.
  • The implementation capacity is limited

  • Good enough governance may be defined as a
    condition of minimally acceptable government
    performance and Civil Society engagement that
    does not significantly hinder economic and
    political development and that permits poverty
    reduction initiatives to forward.
  • Real problem is how to prioritize.

  • Some tips for prioritization
  • Find areas of strength from history
  • Look at regional best practices
  • Learn from what is working
  • Pay attention to poverty alleviation
  • Sequence the reforms
  • Think of alternatives. Do not forget government

Conclusion good governance
  • 1.All reforms are not needed. They are not
    possible. Small changes may be very useful.There
    is no universal concept.
  • 2.What needs to be done, when it needs to be done
    and how it needs to be done

Historical concept
  • This was developed by Subrata K. Mitra in his
    book The Puzzle of Indias Governance.
  • Governance is always an unfinished agenda.
    Instead of looking at unfinished business at hand
    look at the past successes.
  • For example. Look at the success of India in
    keeping it together and keeping democracy alive
    rather than at her failures
  • Build on the past success

Regional concept
  • Mo Ibrahim Index of governance. Mo Ibrahim (cell
    phone Moghul) award of 500.000 to the head of
    the state for good governance. Elements of this
    index includes
  • Safety and Security
  • Rule of Law Transparency and Corruption
  • Participation and Human Rights
  • Sustainable Economic Development
  • Human Development

  • World Bank index emphasizes the means to
    exclusion of ends. Ibrahim index takes into
    account per capita income, economic growth, road
    network, electricity, poverty, life expectancy,
    mortality, undernourishment, literacy
  • It is also too long
  • It was developed by Harvard experts. No
    indigenous roots

Indigenous Concept
  • Governance is presented as a western concept and
    is not, therefore locally owned.
  • Such concept will be country-specific and will
    have to be developed by each country

Major issues of governance in Bangladesh context
  • The rule of law is a major issue. The concept of
    matsanayam (fish-like world).Anarchy unleashes a
    Darwinian struggle for survival.Democracy as the
    solution for anarchy. Gopala in Bengal and Gopala
    in Assam.Buddhist tradition of running
    monasteries. The Buddhist doctrine of
    MahaSammata. In anarchy, the king is chosen by
    people and he represents the great consensus.
    Kautilay advised that the king's agent should
    propagate that the king was elected.

  • The Bengali proverb Dushter Daman. Shishter
    Palan. Hazrat Alis advice to Malik Ashtar,
    Governor of Egypt , do not treat the good and
    the bad alike. That will deter the good from
    doing good and encourage the bad in their bad
    pursuits. This is the incentive problem of the
    principal agent problem. Address the Greshams
    law in society.

Rule of Law- Story of Sultan Ghyasuddin Azam Shah
  • Main elements of indigenous governance
  • 1.Consensus based on democracy
  • 2.Punish the wicked court, ante-corruption
  • 3.Reward the virtuous change the recruitment
    and promotion system
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