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Annu. Rev. Polit. Sci. 2016.19:89-105. Downloaded from www.annualreviews.org

Francis Fukuyama
Freeman Spogli Institute for International Studies, Stanford University, Stanford,
California 94305; email: f.fukuyama@stanford.edu

Annu. Rev. Polit. Sci. 2016. 19:89–105 Keywords


First published online as a Review in Advance on transnational cooperation, networks, public administration,
December 21, 2015
nongovernmental organization (NGO)
The Annual Review of Political Science is online at
polisci.annualreviews.org Abstract
This article’s doi: The term governance does not have a settled definition today, and it has at
10.1146/annurev-polisci-042214-044240
least three main meanings. The first is international cooperation through
Copyright  c 2016 by Annual Reviews. nonsovereign bodies outside the state system. This concept grew out of the
All rights reserved
literature on globalization and argued that territorial sovereignty was giving
way to more informal types of horizontal cooperation, as well as to supra-
national bodies such as the European Union. The second meaning treated
governance as a synonym for public administration, that is, effective im-
plementation of state policy. Interest in this topic was driven by awareness
that global poverty was rooted in corruption and weak state capacity. The
third meaning of governance was the regulation of social behavior through
networks and other nonhierarchical mechanisms. The first and third of
these strands of thought downplay traditional state authority and favor new
transnational or civil society actors. These trends, however, raise troubling
questions about transparency and accountability in the workings of modern
government.

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INTRODUCTION
It is impossible to review the state of the academic literature on governance without first defining
the term. There is, however, no consistent understanding of the meaning of the word governance
today, which indicates a degree of disarray in the field that purports to study it.
The word governance derives from the Greek verb kubernan, which means to steer a ship—the
sense in which it was used in Plato’s Republic. From this was derived the Latin verb gubernare,
which in turn was the source of the French gouverner, and thence the English words government
and governance (see Plattner 2013). Corporate governance had a settled meaning in business and
legal circles for much of the 20th century, but the adjectiveless term governance, used in deliberate
opposition to the more traditional word government, came into common use only in the early
1990s. Today “governance” is applied promiscuously to a whole range of activities that have in
common the act of steering or regulating social behavior. The very vagueness of the term and its
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widespread application have led some observers to charge that it has become an “empty signifier”
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(Offe 2009).
In this article, I review the literature on the three largest baskets of meaning of the word
governance: governance as international cooperation through nonsovereign bodies outside the
state system (international governance); governance as public administration (good governance);
and governance as the regulation of social behavior through networks and other nonhierarchi-
cal mechanisms (governing without government). The first and third of these meanings clearly
overlap, the chief difference being the domain (i.e., international versus domestic) in which they
apply. I proceed to an overview of attempts to measure governance (primarily in the second sense
of the term, governance as public administration), then conclude with some observations of the
strengths and weaknesses of the literature.

INTERNATIONAL GOVERNANCE
The first uses of the word governance, in deliberate opposition to the term government, occurred in
the early 1990s in conjunction with a burgeoning literature on globalization. Many observers began
to note that the ability of sovereign states to control behavior on territory they ostensibly controlled
was weakening (Wriston 1992, Barlow 1996, Friedman 1999). This was driven, according to
this new literature, by technological change and the increasing movement of capital, people,
and ideas across borders, although Krasner & Stephen (1999) noted that traditional notions of
sovereignty had always been something of a fiction. Rosenau & Czempiel’s (1992) Governance
Without Government documented the ways in which international cooperation was being managed
by a host of organizations outside of traditional states.
If traditional international cooperation was seen as the product of centralized, hierarchical
states interacting with one another through formal mechanisms such as international law, the
new literature emphasized new avenues of cooperation. One large stream looked at supranational
governance—primarily in the European Union, the only international organization that had suc-
cessfully delegated powers to a transnational body that was increasingly seen as displacing the
authority of national states (e.g., Gruber 2000, Wallace & Wallace 2000, Sabel & Zeitlin 2008).
A second stream emphasized what is sometimes referred to as intergovernmentalism, in which
states remain the main actors, but actual cooperation is undertaken through horizontal and often
informal linkages by subordinate agencies acting autonomously of hierarchical control (Slaughter
2004). A third stream noted that “hard” international law had been displaced by a “soft” version
that did not have legal authority but was more flexible and achievable (Abbott & Snidal 2000,
Goldstein et al. 2000, Halpern & Mehrotra 2000).

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The largest body of writing on international governance focused, however, on “new” transna-
tional nongovernmental actors of various sorts, including multinational corporations (Yilmaz 1998,
Drahos & Braithwaite 2001, Haufler 2001); transnational nongovernmental organizations (NGOs)
(Ronfeldt & Thorup 1993, Smith et al. 1997, Keck & Sikkink 1998, Spiro 1998, Florini 2000); labor
unions (Mazur 2000, Burnett & Mahon 2001); and other groups whose work was seen as displacing
cooperation by traditional nation-states (for an overview see Lake 2010, Held & Pitts 2011).
Much of the recent writing on international governance has focused on specific sectors in
which the influence of nonstate actors is seen to be particularly prominent. There is a large
body of work, particularly from business schools, about collaborative standards initiatives, in
which NGOs promulgate voluntary codes of conduct. These include environmental regulation
(Wapner 1994, Young 1997, Chartier & Deléage 1998, Meidinger et al. 2003, Cashore 2004,
Trebilcock & Kirton 2008), product standards setting (Roht-Arriaza 1995), health (Buse & Walt
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2000), labor standards (Burnett & Mahon 2001, Locke 2013, Berliner et al. 2015), and corporate
social responsibility more generally (Kahler & Lake 2003, Christman & Taylor 2006, Albardera
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2008, Steurer 2010). Several authors have pointed out that although some of these newer forms
of regulation are performed entirely by private actors, they nonetheless occur “in the shadow
of hierarchy” (Héritier & Lehmkuhl 2008) or at other times in direct cooperation with state
regulators (Abbott & Snidal 2010). Finally, there is also a literature on more overtly political forms
of governance in postconflict societies or areas of “limited statehood,” where various international
actors, including the United Nations and various NGOs, have essentially displaced the local state
as a source of governance (Risse & Börzel 2010).
The new literature on international governance is enormous, and in some sense now constitutes
a large part of the field of international organization. It overlaps considerably with the literature on
nonhierarchical approaches to domestic social regulation discussed below (Governing Without
Government). I will return to some of the theoretical and normative dimensions of this set of
issues in that section and in the concluding section.

GOOD GOVERNANCE
A second literature that appeared in the 1990s was based on a completely different meaning of
the term governance. The word was largely treated as a synonym (or euphemism) for traditional
public administration, that is, the implementation of policies not by new nonstate actors but by
old-fashioned governments.
The significance of this literature needs to be seen in the context of shifting fashions in the
world of development policy. From the late 1970s through the early 1990s, advice given to poor
countries by Western governments and the development agencies they backed centered on a
neoliberal agenda of deregulation and privatization, informally known as the Washington Con-
sensus (Williamson 1994). In line with the broader Reagan and Thatcher revolutions in domestic
economic policy, governments were seen primarily as obstacles to robust economic growth. Be-
ginning with the failed privatizations in the former Soviet Union and Africa’s experience with
structural adjustment in the early 1990s, however, economists began to recognize the importance
of state institutions as a foundation for market exchange. This was underpinned on a theoretical
level by the writings of Douglass North and his followers, who pointed out the importance of
institutions such as property rights in promoting growth (North 1990). The role of effective states
was publicly recognized in the policy community with the publication of the World Bank’s 1992
study Governance and Development, as well as the 1997 World Development Report entitled The
State in a Changing World, which “brought the state back in” (Evans et al. 1985) with an emphasis
on the effective provision of basic public goods and services (World Bank 1992, 1997). The Bank’s

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then-new president, James Wolfensohn, gave a landmark speech in 1995 referring to the “cancer
of corruption,” which he argued was an obstacle to growth, and which would become a central
focus of Bank activity in the coming decade (see Mallaby 2004). Since then, public sector reform,
anticorruption, and more generally what came to be termed good governance have comprised a
renewed field of academic study.
Although governance in this sense clearly refers to behavior by traditional states, there is still
considerable ambiguity as to its exact meaning. Does the “good” in good governance refer to
the political ends that government is supposed to serve, or is it restricted to the effective imple-
mentation of whatever end the political system establishes? In particular, does good governance
include democratic accountability and protection of individual liberties, or is it possible to have
good governance in an authoritarian country?
There is no consensus in the economics literature on the theoretical issue. North’s original
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focus was on legal institutions, including property rights and contract enforcement, but later
he seemed to broaden the definition to include democratic access to the political system as well
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(North et al. 2009). Similarly, in their definition of “inclusive” institutions necessary for long-term
growth, Acemoglu & Robinson (2013) refer not only to property rights but also to democratic
participation and political pluralism. The empirical literature shows a strong correlation between
consolidated democratic institutions and high per capita income, although the direction of causality
is not clear (Barro 1996, Przeworski et al. 2000). However, the existence of rapidly growing
authoritarian states (e.g., the East Asian “tigers” and China) suggests that democracy is not a
necessary part of the institutional mix that facilitates growth. Rothstein & Holmberg (2011)
show that various development outcomes, including but not limited to per capita GDP growth,
are more strongly correlated with the quality of state services than with democracy. A study
by Dahlberg & Holmberg (2014) using Rothstein’s dataset shows that citizen satisfaction (and
therefore, presumably, perceptions of legitimacy) is more strongly correlated with bureaucratic
quality than with procedural democracy as an input to governance. Bäck & Hadenius (2008)
suggest that there is an inverse correlation between democracy and state capacity at low levels of
development but that they become correlated at higher levels. If state capacity is more important
than democracy in fostering growth in the early stages of development, this would explain the
simultaneous existence of authoritarian fast developers and rich democracies.
Much of the academic literature on good governance tends, however, to focus on governance as
implementation, that is, the state’s capacity to provide basic public goods and services. In this area,
the bulk of theorizing has been built around work that either was done by economists or has drawn
heavily on economic concepts that were imported from the private sector into the public. One
such idea was the introduction of choice and exit into what had traditionally been the monopolistic
provision of public services by the state, an idea that led to the proliferation of vouchers and
charter schools around the world (Friedman 1962, Hirschman 1970). Another was the application
of principal–agent theory to the public sector. Under this framework, implementation problems
and corruption were seen as a result of the misalignment of incentives between principals and
agents; solutions required changing the agents’ incentive structure and economizing on agency
costs (Milgrom & Holstrom 1991, Milgrom & Roberts 1992).
Out of this general approach flowed New Public Management (NPM) in the late 1980s and
early 1990s, from public administration experts like Hood (1991, 1995) and Pollitt (1993). NPM
reflected several not obviously related strands of thought and sought to use corporate practices
such as benchmarking, performance measurement, pay for performance, outsourcing, and ac-
countability to citizens as customers in public agencies (Lane 1987, Boston & Martin 1996, Lynn
1998, Pollitt & Boukaert 2000). At its core, NPM involved a bargain in which public agents would
be granted increased autonomy in return for greater accountability (Hood 2001).

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Although many of these concepts are still present in more recent writings on governance
(Lodge & Gill 2011), we have long since passed the heyday of these approaches (Haque 2007,
Dunleavy et al. 2006). NPM was articulated and first put into practice in Britain, New Zealand,
Australia, and the United States. The effort to introduce market-like mechanisms into the public
sector never sat well with many continental Europeans, who came out of a more statist tradition
and disliked the introduction of market mechanisms and business practices into the public sector
(Haque 2001), although some observers have argued these differences are exaggerated (Dunn &
Miller 2007). Especially during the 1990s, NPM was associated with government downsizing and
privatization, which many saw as a gutting of state capacity (Dibben et al. 2004). Several studies
pointed to the cultural embeddedness of NPM (e.g., its dependence on the prior existence of a
Weberian state) and showed that there was considerable cross-country variance in its effectiveness
(Schick 1998, Nickson 1999, Batley & Larbi 2004, OECD 2005). Performance measurement
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has been criticized on a number of grounds, beginning with the absence of accurate measures
of the services many governments produce (see below, Measuring Governance) and the fact
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that the act of measurement itself can distort behavior (“teaching to the test”; see Dent et al.
2004). The outsourced state advocated by many NPM proponents itself had many unanticipated
consequences (Hood & Peters 2004; see Governing Without Government, below).
Some of the problems with NPM were intrinsic to the principal–agent model itself, such as
the fact that in many organizations authority flows from the agents to the principals rather than
the reverse [this point was made long ago by Simon (1957)]. But other limitations were specific
to the public sector, such as the importance of a public service motivation rather than material
self-interest as a driver of behavior (DiIulio 1994, Besley 2006), or the problem that many public
agencies had multiple principals with conflicting objectives.
More recently, there has been a significant amount of scholarship on the use of transparency
and participation as mechanisms for improving government performance, corresponding to such
policy initiatives as the Open Government Partnership and the Extractive Industries Transparency
Initiative. The underlying idea was derived from principal–agent theory, namely, that legislators
and bureaucrats (agents) would not be accountable to voters (principals) unless the latter had
good information about the behavior of the former. The theory assumes that ordinary voters,
and in particular the poor, do not like corruption and want impersonal service delivery, and will
act on information about malfeasance to correct the situation. A host of empirical studies have
examined the relationship between the availability of information and a variety of behavioral
outcomes including corruption, service delivery, and electoral accountability (Druckman & Lupia
2016). A number of studies have found the anticipated positive correlations between information
and reduced corruption (Blumkin & Gradstein 2002, Reinikka & Svensson 2004, Etter 2014),
better service delivery (Islam 2006, Peisakhin & Pinto 2010), and factors affecting economic
growth (Glennerster & Shin 2003, Yang 2008). Others, however, have found a weak or negative
relationship, or else have warned that additional mechanisms such as enforcement, a robust civil
society, or outside pressure must be in place for positive effects to occur (Mauro 2002, Kaufmann
& Bellver 2005, Kolstad & Wiig 2009, Rose-Ackerman & Truex 2012). The World Bank (2004),
drawing on a variety of studies, argues that the “long route” of accountability through formal
electoral institutions needs to be supplemented by “short route” accountability that adds local
participatory mechanisms. For example, participatory budgeting seeks to bypass or supplement
normal electoral channels in municipal government by opening the budgeting process directly to
civil society groups and ordinary citizens (Licha 2004).
The waning of NPM corresponded to something of a disciplinary crisis within the field of public
administration, particularly in the United States. In the mid-20th century, public administration
was one of the four constitutive fields recognized by the American Political Science Association,

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and many schools offered it as either a field within political science or a separate degree. The classic
studies from this period tended to be single-agency case studies that were rich in contextual detail
but limited in theoretical context or external validity (e.g., Selznick 1951, Kaufman 1960). This
approach progressively fell out of favor, and many universities either downgraded or eliminated
their public administration programs or merged them into public policy ones (Kettl 2002). NPM
was in a sense the last big idea to come out of the field; much of the work in this space has been
taken over by economists or political scientists using econometric techniques or, more recently,
randomized experiments to investigate behavior at a micro level. At this juncture, it is not clear
whether these latter approaches will aggregate into something that looks like a general theory of
governance, or will have policy applications beyond program evaluation.1

GOVERNING WITHOUT GOVERNMENT


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Corresponding to the new literature on international governance was a parallel one on domestic
governance. This approach emphasized actors outside the state that were now said to be pro-
viding government-like services sometimes as complements to, and sometimes as substitutes for,
traditional state institutions. The counterpart to Rosenau & Czempiel (1992) in international
relations was Rhodes’ (1996) article “The New Governance: Governing Without Government”
(followed by Rhodes 1997), which argued that new modes of governance had arisen in recent years
and stipulated that “governance refers to self-organizing, interorganizational networks” (Rhodes 1996,
p. 660; italics in the original). The British government, Rhodes contended, had been hollowed
out through the downsizing and privatizations of the Thatcher era; into this vacuum stepped the
new networks. The following decade saw a large and burgeoning literature on governance without
government coming mainly from European and British writers (Peters & Pierre 1998, Knill &
Lehmkuhl 2002, Kooiman 2003).
The idea of governance as something delivered by networks arose out of the economic theory
of the firm, pioneered by Coase (1937) and elaborated by Williamson (1985, 1990). Coase raised
the question of why hierarchical firms existed, given the economists’ presumption that markets
are allocatively efficient; he argued that hierarchies economized on transaction costs. The spread
of information and communications technologies led to arguments that peer-to-peer communi-
cations would drop the transaction costs of horizontal types of organization, and thus advantage
markets at the expense of hierarchies (e.g., Malone & Yates 1987, DiMaggio et al. 2001). These
claims became particularly prevalent with the commercialization and widespread adoption of the
Internet during the 1990s. Many proponents of these new technologies argued that hierarchies
per se (including large corporations as well as governments) were outdated and would soon be
replaced by self-organizing networks. Complexity theory and places like the Santa Fe Institute
came into vogue, providing a theoretical justification for the notion that self-organized networks
could displace hierarchies (Waldrop 1992). The sociologist Manuel Castells (1996) described the
rise of a “network society” that was replacing the old order of hierarchies.
Of course, neither states nor firms disappeared in this period. Although enthusiasm for self-
organization dissipated somewhat after the bursting of the dotcom bubble in 2001, the notion of the

1
The other large body of writing on governance as public administration comes out of the field of administrative law, both
in the United States and in Europe. Much of this work is, understandably, related to the specific legal frameworks that exist
in the respective regions, for example, the Administrative Procedure Act in the United States and the growing body of case
law and administrative acquis in the European Union. Although much of the legal literature is normative or qualitative, an
increasing number of studies use quantitative techniques to assess the impact of regulatory and other laws (Ho & Quinn 2009;
O’Connell 2011, 2015).

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network as an organizational form standing between markets and hierarchies survived and became
a commonly accepted concept. Networks were defined as peer-to-peer relationships held together
by acquaintance, friendship, or other forms of informal obligation that differed from the arm’s-
length, profit-driven relationships that existed between buyers and sellers in markets (Powell 1987,
Thompson 2003, Padgett & Powell 2012). This rather expansive definition made networks coter-
minous with “civil society,” and indeed some authors use the terms interchangeably. The period
following the fall of the Berlin Wall saw a huge uptick in interest in civil society as a critical founda-
tion for modern democracy (see, e.g., Gellner 1994), and a corresponding academic interest in the
topic that overlapped with a new literature on “social capital” (Coleman 1988; Putnam 1993, 2000).
In traditional democratic theory, civil society consists of organized citizens outside the govern-
ment, who are able to monitor it and hold it accountable through their exercise of the franchise.
Tocqueville (2000 [1840]) held that the “art of association” (that is, the propensity of citizens to
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enter into voluntary organizations) was critical to the success of American democracy even when
these groups were apolitical; the act of associating constituted a “school of citizenship” and led to
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more overtly political types of participation. Nonetheless, members of civil society remained the
objects and not the subjects of governance.
The new literature on governance saw the role of nonstate actors somewhat differently. Net-
works, civil society, or whatever name one chose for organizations between the market and the
state could not only monitor the behavior of governments but also actively partner with govern-
ments to provide services that had previously been the exclusive domain of the state. According to
Howlett & Ramesh (2014, p. 318), whereas “governing” is what governments do, “‘governance’ is
about establishing, promoting and supporting a specific type of relationship between governmental and non-
governmental actors in the governing process” (italics in the original). Similarly, private firms could
exercise governance functions through industry self-regulation (Freeman 2000, Haufler 2001,
Cashore 2002), but they could also partner with either governments or civil society organiza-
tions to produce things that looked like public goods (e.g., by observing environmental or labor
standards through corporate social responsibility programs). Steurer (2013) envisioned the entire
governance space as a Venn diagram with three overlapping circles representing government,
the private sector, and civil society, respectively. Each circle had a domain where it exercised its
own authority (hard and soft regulation by governments, civil regulation by NGOs, and industry
self-regulation by the private sector), but the areas where the circles overlapped corresponded to
public comanagement, private coregulation, public coregulation, and tripartite regulation. Mod-
ern governance could thus occur in any of these spaces. According to Knill & Lehmkuhl (2002,
p. 44), the specific combination of actors would ideally depend on “the congruence between the
scope of the underlying problem and the organization structures of the related actors, the type of
problem, and the institutional context. . . .”
An early question addressed by this literature was why governance had shifted out of the state
toward either private or nongovernmental actors. There were at least three broad reasons cited.
The first, coming from the ideological right, originated in the view (which became commonplace
in the Reagan–Thatcher period) that modern government was bloated, inefficient, and too big.
As we have seen, NPM was associated in its early days with both downsizing (or rightsizing)
government, outsourcing, and privatization of many government functions. In this tradition, the
private sector was seen as the preferred locus of governance functions previously performed by
states because it was inherently more efficient. Separating the implementing organization from
the policy maker would allow the latter to promote competition for service provision, and hence
greater efficiency (World Bank 2004). To this day, in the United States, hostility to government
per se creates strong pressures to move as many activities out of the public sector as possible;
but these pressures were felt as well in other democratic societies. The outsourcing trend in

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government paralleled a similar trend in the private sector in this period, facilitated by information
and communications technologies that reduced the transaction costs involved in moving functions
outside of organizations (Davidow & Malone 1992).
A second driver of the shift out of traditional government was more at home on the ideological
left, having to do with the left’s inherent distrust of hierarchy. For many scholars, governance by
network—that is, through NGOs or other nonstate, nonmarket actors—constituted a normatively
sanctioned form of democratic participation. The formal domain of democratic governance via
elections, political parties, big media and the like was seen by many in this group as having been
captured by corporate or other elite interests; the only counterweight could be the nonprofit
sector, which collectively could represent something like a democratic public interest.
Finally, there were nonideological functionalist arguments in favor of the newer forms of
collaborative governance. The business of governing modern societies had grown very complex;
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citizens expected the delivery of a host of services from health care to public transport to disaster
relief in areas where traditional governments had neither expertise nor capacity. Private or civil
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society organizations were arguably closer to the populations they served, more aware of local
conditions, and more flexible in their ability to deliver services. These organizations were often
free of the rigidities characterizing the civil service, and thus could hire and promote workers
more flexibly than government agencies.
For all of these reasons, governance by actors outside the government tended to have a positive
valence for many early observers. There has, however, been a newer wave of more critical writing.
Privatization and government downsizing, of course, had been attacked from the beginning as
undermining the public interest and depleting state capacity. Verkuil (2007) provides a framework
for understanding what aspects of sovereignty could be legitimately outsourced; he argues that, in
cases like the hiring of the security firm Blackwater to protect US diplomats in Middle East combat
zones, this delegation had become highly problematic because the use of violence ought to be a
monopoly function of government (see also Singer 2007). Other academic critics have put forward
frameworks for understanding where the new policy instruments were imperfect substitutes for
government or were being used improperly (Smith & Lipsky 1993, Howlett & Ramesh 2014).
Radford (2013) describes the rise of “public authorities” in the United States (that is, private or
quasi-public entities performing public functions, such as running highways, stadiums, and the
like) in recent decades. She argues that when these functions were taken out of the public sector,
the lines of democratic accountability were hopelessly muddled. Kettl (2002) notes that the rise of
nonstate actors in the delivery of public services in the United States implies both a tremendous
increase in the complexity of public policy implementation and an overall decrease in the ability
of public authorities to influence behavior. Although certain areas of public life are still subject
to hierarchical command-and-control authority, government officials in many other domains can
only suggest, wheedle, lobby, or indirectly influence other social actors.
Another important area of scholarship concerning governance without government has to do
with the empirical question of how large the phenomenon is. For all of the broad assertions that we
are now living in an era where government services are being delivered by actors outside the state,
there is very little quantitative evidence on where and to what extent this shift has taken place, and
of its consequences for citizens (Hill & Lynn 2004, Jordan et al. 2005). Mettler (2011) points out
that, particularly in the United States, a great deal of public policy—for example, the subsidization
of low-income families and the encouragement of home ownership—is not undertaken through
affirmative action by the government but rather through tax exemptions, and that tax expenditures
amount to a gigantic “submerged state” of whose aggregate size voters are scarcely aware. DiIulio
(2014) notes that, owing to the American voters’ dislike of government bureaucracy, the size of
the federal government has been capped for several decades; although the number of bureaucrats

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today is roughly the same as it was in 1960, the amount of government spending they process has
increased nearly fivefold. This has led to an explosion of for-profit and nonprofit contractors, as
well as a migration of many federal functions to states and municipalities. He argues that whereas
the federal government is relatively transparent with regard to hiring and expenditures, these other
organizations are not; simply trying to estimate the size of the government as implemented through
contractors in a single large American city is well-nigh impossible. DiIulio further notes that such
organizations often distort public priorities by becoming active lobbyists on their own behalf.
The existing literature thus points to an absence of basic data regarding the aggregate size of
the phenomenon referred to as governance without government. The problem gets even worse
when one tries to evaluate the quality of the services thus delivered, or asks whether these newer
forms of governance actually lead to “good” governance.
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MEASURING GOVERNANCE
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There has been a great deal of scholarly activity in the past two decades around the question of
the measurement of state quality, driven by the same forces that propelled the literature on good
governance.
In this area, the lead was taken not by academics but by policy organizations that needed some
way of evaluating the impact of their programs. The World Bank had long maintained a proprietary
Country Policy and Institutional Assessment (CPIA) index, based on its own staff ’s ranking of
client countries, to measure government performance. Owing to political sensitivities, the CPIA
was never made public for all countries that the World Bank rated for many years, and thus was not
available for academic research. In the 1990s, the Bank supplemented these internal measures with
a publicly available dataset, the Worldwide Governance Indicators (WGIs), which is now updated
yearly (Kaufmann et al. 1999 and subsequent years). The WGIs measured government quality
in six categories: voice and accountability, political stability and absence of violence, government
effectiveness, regulatory quality, rule of law, and control of corruption. The World Bank Institute
collected no new data for the WGIs; rather, it used an aggregation of other existing measures,
most of which were expert perception surveys.
The WGIs drew on and were supplemented by a wide range of governance measures by other
organizations. The quality of democracy and civil and political rights had been tracked since the
1970s by Freedom House and the University of Maryland’s Polity IV dataset, and these data have
recently been supplemented by the Varieties of Democracy project. Global Integrity produces an
index that measures the gap between formal institutions and their actual performance. Corrup-
tion had been measured by the widely used Transparency International Corruption Perception
Index, while general government quality was tracked by the Bertelsmann Transformation Index
and by proprietary datasets, including the Political Risk Services Group’s International Country
Risk Guide. The Quality of Governance Institute in Gothenburg has developed a set of measures
of quality of governance for 136 countries worldwide, as well as a more detailed survey of 172 re-
gions within the European Union, based on expert surveys regarding the government’s degree of
impartiality (Rothstein & Holmberg 2011). Because of their scope and availability of time-series
data, the WGIs probably remain the most widely used aggregate indicators.
There has, however, been substantial criticism of the WGIs, which has stimulated an effort to
come up with more meaningful measures. One line of criticism has to do with their atheoretical
character (Thomas 2010). The WGIs purport to measure government quality, but they are not
based on an explicit theory of what constitutes good governance. It is not clear how the six baskets
of indicators are chosen; for example, isn’t regulatory quality a subset of government effectiveness,
and shouldn’t control of corruption be subsumed under rule of law? A number of value assumptions

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are embedded in the WGIs, beginning with the fact that voice and accountability—which can oth-
erwise be understood as media freedom and democracy—are considered intrinsic aspects of good
governance (Fukuyama 2013). Methodologically, the WGIs largely rely on expert surveys, which
contain systematic biases (Andrews 2013 points out that external experts tend to be impressed
by announcements of reforms rather than their actual implementation). Finally, there is evidence
that the variance in government quality is greater between different parts of the same government
than it is between the same ministry in different governments (Gingerich 2013), pointing to the
need for disaggregated measures of state quality.
The problem of coming up with a generally accepted set of measures of government quality is
substantial. A given government function can be measured by inputs (quality of staff, resources,
procedures, etc.), outputs (the immediate products of government action, e.g., children graduated
from school, miles of highway built), and outcomes (the consequences of government policy
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for citizens). Each of these approaches has its advocates. Rotberg (2015) makes a strong case for
outcome indicators because outcomes are the ultimate goal of public policy. The problem with this
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approach is that many outcomes in domains such as education and health are strongly influenced
by exogenous factors that have nothing to do with government outputs (for instance, educational
outcomes are much more strongly affected by neighborhood, income, family structure, and the
like than by school quality—see Coleman et al. 1966). Outputs are of course better measures of
what the government has done, but their impact on final outcomes will vary substantially according
to context. The impact of inputs on outcomes is even more attenuated, although inputs might in
some cases be useful in measuring potential rather than actual outcomes.
The problems of measurement are bad enough with regard to the traditional state, but they
multiply when applied to governance outside the state. There are a few exceptions. In the domain
of education, careful studies have compared the performance of charter or private schools to public
ones. Measuring the performance of a contractor, or of a civil society organization operating in
parallel with the government, is possible on a micro level; an expanding number of experimental
studies measure the outcome effects of a variety of policy interventions and institutional effects,
both for government and NGOs. But there are vast areas of outsourced public policy where no such
scrutiny exists. As noted above, even knowing the extent of government delegation and outsourcing
in the aggregate is today not really possible for even the most data-rich advanced countries.

CONCLUSIONS: GAPS AND WEAKNESSES IN THE LITERATURE


As noted at the outset of this article, there is no clearly agreed definition of governance today.
One group of writers treats governance as activities by traditional governments, whereas another
would put the focus on actors outside of governments. There is, moreover, serious disagreement
as to the scope of the term: Does governance refer to the means by which these different social
actors seek to regulate behavior, or does it encompass the ends that they seek to accomplish? This
article has covered a vast amount of literature spanning three different definitions of the term,
but even so, there are domains (for example, corporate governance) that have not been covered.
It is hard not to agree with Offe (2009) that the term governance needs to have some “conceptual
boundaries” placed around it.
Nonetheless, the different uses of “governance” have stimulated important debates, which
point to the need for further research. The first concerns the analytical separation of state quality
or capacity from democracy and observance of human rights. As noted above, many observers
include the latter as intrinsic components of good governance, as in the commonly used phrase
democratic governance. Both the WGIs and governance measures like those developed by
Rotberg (2015) include democratic accountability as a component, and democracy measures like

98 Fukuyama
PL19CH06-Fukuyama ARI 21 March 2016 21:5

those of the Varieties of Democracy project include state quality. Many contemporary policy
initiatives seeking to improve the quality of governance and to combat corruption assume that
the two endeavors are mutually supportive. For example, the Open Government Partnership and
the Extractive Industries Transparency Initiative assume that more transparency (that is, freedom
of information via a variety of media) and accountability (the ability of citizens to discipline their
governments based on that information through an electoral process) will reduce corruption and
improve government quality. However, the rise of Singapore, China, and other countries with au-
thoritarian governments raises the possibility that this fusing of democracy with state quality might
obscure some very important questions. An alternative literature suggests that democracy and state
quality may develop independently, or worse, that the advent of greater democratic participation
may actually harm bureaucratic performance. Historically, modern impersonal Weberian states
appeared in many authoritarian societies, often under the pressures of military competition and
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struggles for national survival. Fukuyama (2014), following Shefter (1993), notes that expansion of
the franchise prior to consolidation of a modern state has often produced widespread clientelism
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and a decline in state quality in countries including Greece, Italy, and the United States. Many
contemporary observers suggest that Singapore and China can achieve a level of good governance
sufficient to produce positive development outcomes while remaining authoritarian states (see,
e.g., Magaloni & Kricheli 2010, Bell 2015). This is possible, of course, only if the meaning of
governance is restricted to effective public administration. The literature relating democracy to
state quality is at this point far more rudimentary than is the literature relating democracy to
economic growth, development outcomes, and the like (but see Møller & Skaaning 2014).
The other broadly used meaning of the term governance, namely, government-like services
provided by organizations outside of the traditional state, points to two gaps where much more
research is needed. First, we need much better empirical data on the shift. As noted above, despite
the huge qualitative literature describing the rise of governance without government, there is still
an overall lack of aggregate quantitative data on the extent to which this has occurred, and the
impact of the shift on the lives of citizens. The problem gets even worse at an international level,
where we find virtually no reliable cross-country data on the outsourcing of government services.
A second large gap in the literature concerns the normative issue of how we are to regard the
shift away from traditional democratic government. Democratic theory over the past two centuries
has elaborated a system of accountability based on a set of formal institutions in which citizens
elect legislators and presidents, who then delegate responsibility for government action through a
hierarchy of bureaucracies and different levels of government. This hierarchical system has come
under considerable suspicion and criticism over the years; as noted above, the right has tended to
favor privatization or the outsourcing of government functions to the private sector, whereas the
left has supported greater participation in government affairs by NGOs.
But does democratic accountability actually increase under conditions of governance without
government? In a traditional hierarchical government, if an agent acts corruptly or is responsible
for a policy failure, there is a clear formal chain of accountability that could lead to the problem
being fixed. It is not so clear how accountability works, however, in a world in which public policies
are implemented by a host of shadowy networked actors operating in parallel (or perhaps even at
cross-purposes) with one another. A government agent has (in theory at least) one clear principal
to which he or she is upwardly accountable. Most for-profit and nonprofit actors, in contrast,
have alternative principals other than the government to which they are answerable—private
corporations have shareholders, and NGOs have other types of stakeholders. Indeed, there is a
large question with regard to NGO accountability: How does one know whether an organization
purporting to speak on behalf of, for instance, indigenous peoples or the environment is actually
doing so? Does the entire universe of organized interest groups, both private and nonprofit, amount

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to a democratic public to which democratic governments need to be answerable, sometimes in


preference to the signals they are getting through more traditional mechanisms such as elections?
Or do these interest groups actually distort representation by overweighting certain kinds of well-
organized elites? And if one does not accept the legitimacy of interest aggregation through political
parties and other traditional mechanisms, what alternative channels are more legitimate? Should
public opinion expressed through social media like Facebook and Twitter displace traditional
channels of accountability? None of these issues have received adequate theoretical treatment.
The two apparently opposed meanings of governance—on the one hand, governing without
government, and on the other, traditional state-based public administration—are in fact linked.
Part of the reason for the shift in the locus of governance to nonstate actors has to do with perceived
failures of traditional public administration to “deliver the goods.” It is not clear at this juncture
if that failure is simply a passing trend that will be corrected by more and better research into
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effective public administration leading to public sector reform, or rather is an inevitable feature
of modern governments. Given that states perform certain core functions for which no adequate
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nonstate substitutes have been found (see Bell & Hindmoor 2009), we should hope that the latter
is not the case. The belief that government is unfixable will otherwise lock us into an equilibrium
where poor-quality government becomes a self-fulfilling prophecy.

DISCLOSURE STATEMENT
The author is not aware of any affiliations, memberships, funding, or financial holdings that might
be perceived as affecting the objectivity of this review.

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www.annualreviews.org • Governance 105


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Annual Review of
Political Science
Contents Volume 19, 2016

Democracy: A Never-Ending Quest


Adam Przeworski p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 1
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Preference Change in Competitive Political Environments


James N. Druckman and Arthur Lupia p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p13
Annu. Rev. Polit. Sci. 2016.19:89-105. Downloaded from www.annualreviews.org

The Governance of International Finance


Jeffry Frieden p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p33
Capital in the Twenty-First Century—in the Rest of the World
Michael Albertus and Victor Menaldo p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p49
The Turn to Tradition in the Study of Jewish Politics
Julie E. Cooper p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p67
Governance: What Do We Know, and How Do We Know It?
Francis Fukuyama p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p89
Political Theory on Climate Change
Melissa Lane p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 107
Democratization During the Third Wave
Stephan Haggard and Robert R. Kaufman p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 125
Representation and Consent: Why They Arose in Europe
and Not Elsewhere
David Stasavage p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 145
The Eurozone and Political Economic Institutions
Torben Iversen, David Soskice, and David Hope p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 163
American Exceptionalism and the Welfare State: The Revisionist
Literature
Monica Prasad p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 187
The Diplomacy of War and Peace
Robert F. Trager p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 205
Security Communities and the Unthinkabilities of War
Jennifer Mitzen p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 229

v
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Protecting Popular Self-Government from the People? New


Normative Perspectives on Militant Democracy
Jan-Werner Müller p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 249
Buying, Expropriating, and Stealing Votes
Isabela Mares and Lauren Young p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 267
Rethinking Dimensions of Democracy for Empirical Analysis:
Authenticity, Quality, Depth, and Consolidation
Robert M. Fishman p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 289
Chavismo, Liberal Democracy, and Radical Democracy
Kirk A. Hawkins p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 311
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Give Me Attitudes
Annu. Rev. Polit. Sci. 2016.19:89-105. Downloaded from www.annualreviews.org

Peter K. Hatemi and Rose McDermott p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 331


Re-imagining the Cambridge School in the Age of Digital Humanities
Jennifer A. London p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 351
Misunderstandings About the Regression Discontinuity Design in the
Study of Close Elections
Brandon de la Cuesta and Kosuke Imai p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 375
Nukes with Numbers: Empirical Research on the Consequences of
Nuclear Weapons for International Conflict
Erik Gartzke and Matthew Kroenig p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 397
Public Support for European Integration
Sara B. Hobolt and Catherine E. de Vries p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 413
Policy Making for the Long Term in Advanced Democracies
Alan M. Jacobs p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 433
Political Economy of Foreign Direct Investment: Globalized
Production in the Twenty-First Century
Sonal S. Pandya p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 455
Far Right Parties in Europe
Matt Golder p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 477
Race as a Bundle of Sticks: Designs that Estimate Effects of Seemingly
Immutable Characteristics
Maya Sen and Omar Wasow p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 499
Perspectives on the Comparative Study of Electoral Systems
Bernard Grofman p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 523
Transparency, Replication, and Cumulative Learning: What
Experiments Alone Cannot Achieve
Thad Dunning p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 541

vi Contents
PL19-FrontMatter ARI 31 March 2016 22:27

Formal Models of Nondemocratic Politics


Scott Gehlbach, Konstantin Sonin, and Milan W. Svolik p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 565

Indexes

Cumulative Index of Contributing Authors, Volumes 15–19 p p p p p p p p p p p p p p p p p p p p p p p p p p p 585


Cumulative Index of Article Titles, Volumes 15–19 p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 587

Errata
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Annu. Rev. Polit. Sci. 2016.19:89-105. Downloaded from www.annualreviews.org

at http://www.annualreviews.org/errata/polisci

Contents vii
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