GDIA Residential School, Accra, May 6-10 2013 Good Governance: Good for Whom, and for What?

1. GDIA Residential School, Accra, May 6-10 2013Good Governance: Good for Whom, and for What? Dr Michael Jennings Dept. of Development Studies SOAS mj10@soas.ac.uk

2. We all want good governance don’t we ? ‘Good’ governance is often presented as an unambiguous ‘good’ – something we all understand and want. BUT: What is good governance? What makes it ‘good’ Who is it good for? This session will look at: Definitions of good governance The origins and meaning of good governance The governance – development nexus: is it really that simple?

3. 1. What is ‘governance’ • Hyden et al (Making Sense of Governance 2004): • ‘… how the rules of the political game are managed. Rules are typically formal but may well be informal. The important thing is that they are ‘rules-in-use’ – they are operational … Governance refers to the voluntarist intervention at the level of the regime to protect, amend, or just sustain specific rules that are important for how the political system functions and the political process operates.’ • De Sardan (IDS Bulletin, 42, 2, 2011) • ‘… we can define it as any organised method of delivering public or collective services and goods according to specific logics and norms, and to specific forms of authority. Any organised form of this delivery, operating according to specific norms, and implementing specific logics, can then be considered to be a mode of governance.’

4. ‘Good’ governance • The rules, processes and institutions that deliver public goods & services in an effective way, which contributes to (or is essential for) development and economic growth • Core elements generally seen as: • Open, transparent & accountable government systems • Independent, efficient & consistent judicial systems • Clear & consistent regulatory frameworks • Strong civil society • (Underpinned by ‘sound’ economic policy)

5. Institution approach Focus on what institutions exist & how they function GG exists because government & bureauc. are formed in particular ways BUT: Assumptions as to ‘best’ institutional form Is there a single, universal model? Results-based approach Focus on outputs: identifiable, measurable outcomes GG exists because it has met pre-set targets BUT: Is governance just the sum of its outputs? What about things that can’t be counted? Rules-based approach Focus on the rules governing the ways policy is made, implemented & regulated Good governance exists because the right rules for policy-creation are in place. BUT: How important are outcomes? Some rules suit some groups more than others.

6. 2. Good governance: good for whom, good for what ? • Good governance is part of long debates over the role of state institutions & policy in creating, supporting & sustaining development & economic growth • 1940s – late 1970s: The ‘State’ was in control of development • Late 1970s+: State became defined as main obstacle to progress • Ushered in a period of structural reforms: SAPs • Governments forced to downsize their bureaucracies • Public assets privatised • State controls over exchange rates removed • Opening up of the market (liberalisation) BUT: the reforms did not provide the hoped for stimulus for growth and development. WHY?

7. ‘Africa in Crisis’ World Bank: ‘Sub-Saharan Africa: From Crisis to Sustainable Growth (1989) • ‘Underlying the litany of Africa’s development problems is a crisis of governance.’ • ‘Overall Africans are as poor today as they were 30 years ago’ Saw key to achieving development as improving the enabling environment, in particular the state: • ‘A root cause of weak economic performance in the past has been the failure of public institutions. Private sector initiative and market mechanisms are important, but they go hand in hand with good governance.’ 1st document to outline good governance: • ‘Africa needs not just less government but better government – government that concentrates its efforts less on direct interventions and more on enabling others to be productive.’

8. 1992 WDR, Governance and Development • Report signalled a change in policy: a new emphasis on the importance of state institutions • Good governance is important because: • It creates & sustains an environment conducive to achieving development objectives • Sound development management is linked to efficacy of Bank investment • Good governance defined as: • ‘…the manner in which power is exercised in the management of a country’s economic and social resources for development. Good governance, for the World Bank, is synonymous with sound development management.’ [1992, 1] • ‘… good governance is central to creating and sustaining an environment which fosters strong and equitable development, and it is an essential component complement to sound economic policies.’ [1992, 1]

9. Bringing the state back in… ‘Even in societies that are highly market-oriented, only governments can provide two sorts of public goods: rules to make markets work efficiently and corrective interventions where there are market failures.’ [1992, 6] ‘In addition, the state must play a key role in providing services such as education, health, and essential infrastructure, particularly when such services are directed at the poor and are not forthcoming from the private sector. A well-educated labour force and adequate infrastructure are fundamental to the quality of private investment.’ [1992, 6]

10. But what kind of state? Good governance & democracy • 2 trends led to incorporation of ‘democracy’ into recipe for good governance: • Analysis of governance data & development suggested link between democratic character of western states & their level of economic development • ‘3rd wave democratisation’ that followed end of Cold War (liberal democracy had ‘won’) • Taken together seemed to provide evidence for assertion that: • Large-states were not efficient actors (reinforced neo-liberal model of new institutional economics) • Suggested multi-party democracy was an essential component of good governance

11. A victory for the State, or the Washington Consensus in sheep’s clothing ? • Good governance appears to be a re-assertion of the importance of institutions (& the state) in development processes • BUT: do donor & IFI understandings really move away from the logic underpinning structural reform? • A good state is one which: • Minimises its intervention in the market • Provides regulatory & administrative support that encourages markets • Uses its power to implement a particular set of reforms • Democracy and strong civil society are important: but to the extent they are presumed to be supportive of this wider political-economy agenda

12. 3. The development-governance nexus: is it really that simple ? • DFID (Review of governance programming, 2011): • ‘Research evidence shows a strong relationship between effective governance and development’ • ‘Effective political governance is critical to economic growth including through improved investment and productivity’. • ‘Improved governance is essential for achieving the MDGs’. • ‘Democratic governance tends to provide developmental benefits through responsive governance over the long term’. • ‘Political instability and policy uncertainty have significant negative effects.’ • USAID • ‘Critical development efforts cannot succeed without a legitimate and democratically elected government that is responsive and accountable to its citizens.’ • ‘As the Arab Spring powerfully reminded the world in 2011, democratic governance and human rights are critical components of sustainable development.’

13. Norwegian Development Agency (NORAD): • ‘Lack of progress in development has multiple and complex causes. There is now a growing consensus that bad governance and corruption are central to the problem.’ • NORAD’s approach to good governance: ‘reduction of unproductive government spending, redirection of government investment towards basic health and education, civil service reforms, creating an enabling environment for the private sector, and promoting legal and judicial reforms, greater accountability, transparency and participation.’ • The argument for governance & development link is based on New Institutional Economics: • Efficient markets are fundamental to economic development & growth • Good governance will improve market efficiency by reducing transaction costs • Development therefore requires focus not just on strengthening market, but on strengthening institutions & regulatory space in which markets operate

14. There must be evidence for the link, surely ? • DFID (2011): • Non-democratic governments have also been successful in creating development • ‘the direction of causality on these outcomes is less clear, probably running in both directions’ • Evidence shows correlation between countries scoring high on governance, & enjoying high levels of economic development • But which came first? Good governance or development? • Plenty of examples of strong economic growth from regimes not characterised by adherence to good governance form: • Taiwan & Korea in 1950s • China 1990s • Looking at growth rates also suggests link is not particularly strong

15. [MushtaqH Khan (2010), ‘Governance, Growth and Development’, ARI 138/2010, p.6]

16. Democracy & Development Asian example suggests link is not as clear as good governance agenda suggests Introduction of multiparty democracy has not substantially increased accountability & bottom-up control in many countries In some African countries it has entrenched neo-patrimonial features: Clientalism & patronage networks Corruption Corruption Asian example: money from corruption re-invested in economy to stimulate economic growth Kelsall: corruption has stimulated growth in Africa where: There are structures allowing for central control over creation & allocation of rents There is a long-term vision about using rents to promote growth by long-term investment

17. Good enough governance ? • Good governance agenda presents itself as: • The vital precondition for development • Universal in its applicability • The problem is it may be neither • 2 alternatives to the good governance agenda: • ‘Good enough’ governance: what are the key elements required for development, even if they do not accord with good governance indicators • ‘Going with the grain’ (Kelsall): building on what exists, rather than superimposing an external model

18. Conclusions • Governance is critical for development: • Development is about politics & power: and the ways in which decisions are made, by whom, for whom, clearly matters • Ideas within good governance agenda may be worthy, & worth pursuing • BUT: that is not the same as saying good governance is a fundamental pre-condition for development • Whilst we should not dismiss the concept, we should question it • Has the good governance agenda really identified the main bottleneck to rapid development?