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Governance and Development

Governance and Development

The current role of theory, policy and practice

Michael Chibba

Governance matters have been an integral part of societies since the dawn
of civilisation, and especially so with respect to what values, ethics and
rules of conduct and justice should be upheld, how societies should be
organised, and who should hold power and authority. Ancient scriptures,
which typically cast a wide net, were the first to address such matters.
Over the centuries, a very long list of philosophers – including, Confucius,
Kautilya, Aristotle, Rousseau, Adam Smith and Karl Marx – have also left
their mark on the subject. However, this paper focuses on governance and
development since 1991 – when the Soviet Union collapsed and commu-
nism with it – as it marked an important opportunity for departure from
the status quo.
But what does one mean by governance? The term governance does not
carry a universally accepted definition. In its broadest form, governance is
portrayed with respect to the state and society – quite apart from the nar-
row field of corporate governance. I view governance as encompassing two
key but overlapping dimensions. The first refers to all aspects of the way
a nation is governed, including its institutions, policies, laws, regulations,
processes and oversight mechanisms. The second dimension is its cultural
and ideological setting, for governance is perceived and shaped by values,
culture, traditions and ideology.
Within this broad context, the purpose of this paper is to discuss the
current role of theory, policy and practice at the intersection of governance

Michael Chibba is Managing Director and Board Member of the International Centre for
Development Effectiveness and Poverty Reduction, and, concurrently, Director and Practice
Leader of Canadian International Development Consultants.

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and development. Accordingly, this paper is organised into three main

parts. In the first, the theoretical basis of the governance and development
nexus is outlined. The second part focuses on governance policy with
respect to the early policy shift, various fundamental aspects of enhanced
governance, three highlighted reviews of relevant literature and several
key current issues. The third and final part begins with a discussion of
what influences and guides governance in practice, following which the
reviews and current issues raised in the policy discussion are revisited.
In addition, the case of Botswana, which is often cited as exemplary of
enhanced and stellar governance in Africa, is highlighted with reference
to relevant weaknesses and lessons learned.

Theories of governance and development

There are several theories of governance and development emanating
from various disciplines in the social sciences, as well as from interdisci-
plinary perspectives. Thus, several schools of thought (loosely defined)
already exist, as well as others that are emerging. However, this part of the
paper outlines relevant theoretical perspectives or theories advanced by
leading academic economists.
The three main economic schools of thought on the role of governance
in development (with several sub-schools of thought within each school)
are: (1) the ‘successful society’; (2) the governance for growth school,
which has recently emerged as (what I call) the ‘cautionary school of gov-
ernance for growth’; and (3) the ‘social order’ school.
The first school of thought centres around shaping the governance and
development agenda with a focus on key features and characteristics of a
‘successful society’ – in other words, what key aspects of governance in
developed countries should be mimicked, emulated or adapted by devel-
oping countries. Bloom et al.’s (2004) survey of the major theories of govern-
ance with respect to economic development (and with special reference to
Asian countries) suggests that the successful society possesses the following
key characteristics in terms of ‘good governance’ and exemplary economic
development: (1) competitiveness – that is, the successful nation is com-
petitive, and one of the main issues in this respect is the various ways that
governments can facilitate the competitiveness of firms and industries; (2)
strong institutions and rules-based conduct – as effective­, adaptable, stable,

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rules-based and accountable institutions are crucial for successful devel-

opment; and (3) social capital – for actions to facilitate competitiveness
and build strong institutions occur within a social context. Furthermore,
these pivotal aspects of governance require three conditions to facilitate
economic development: clear definition of roles for institutions and other
players; responsiveness of governance arrangements to existing conditions,
plus adaptability to change; and a consistent focus on the public interest.
Importantly, this way of thinking about governance and development also
results in the pursuit of broad-based governance interventions or reform.
The second school of thought, which I have referred to as the ‘caution-
ary school of governance for growth’, emerged from research that showed
a link between good governance and economic growth (for example, see
Knack & Keefer 1995; Easterlin 1996; Hausmann et al. 2004) – that is,
countries with ‘good’ governance have higher rates of economic growth
in comparison to those with poor governance. Indeed, for many econo-
mists and political economists, therefore, the main theories of governance
and development are found in the interpretation of the dynamics of the
relationship between governance and economic growth. Furthermore,
not only are growth and increases in per capita income viewed by some
academics as the raison d’être of development, but enhanced governance
is viewed to be at the heart of the development puzzle. One leading aca-
demic economist has even declared that ‘good governance is development
itself. Combine it with material well-being, and we attain the Nirvana of
advanced societies’ (Rodrik 2008).
In recent years however, the literature on the pursuit of governance for
growth has increasingly taken a cautionary tone, highlighting risks, pitfalls
and limitations. This shift reflects the myriad of problems encountered
by developing countries in the pursuit of governance for growth. Another
possible reason is that the validity of this theory was open to question in
the face of generally widespread positive rates of economic growth during
the few years immediately preceding the current international financial
and economic crises. Interestingly, Rodrik (2008) offers a measured and
cautionary conclusion to his recent paper on governance by noting that
economists have little to say about ‘good governance’, but much to con-
tribute to the governance for growth agenda.
Another example of this cautionary approach is Acemoglu’s recent argu-
ments, which generally fall within this same school of thought. Acemoglu

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(2008) argues that the link between enhanced governance and governance
for growth is neither clear-cut nor can it be confidently pursued as a policy.
He offers five additional recommendations that are essentially cautionary
points (directed in the first instance to World Bank economists): (1) there
is no general recipe for improving institutions; (2) the pitfalls of policy
reform should be avoided, and the political economy constraints should be
recognised; (3) policies can create new and potentially dangerous political
constituencies; (4) public goods are indispensable; and (5) openness and
transparency are important.
The third school of thought – and perhaps the most creative, robust
and interesting theory on the overall subject – is provided by North et al.
(2008). They divide the world’s 200 countries into two parts: 175 countries
with 85% of the world’s population have a social order that first appeared
about ten millennia ago, and exists to this day in various forms or stages
that are part of the ‘natural state’ (which replaced the primitive or first
social order). The remaining 25 countries, representing about 15% of the
global population, are characterised by the third social order, which first
emerged in a few societies at the end of the eighteenth and beginning of
the nineteenth centuries – the ‘open access’ society.
There are at least three other key points to the thesis presented by
North et al. (2008). First, social order is maintained through the interplay
between competition, institutions and beliefs. Second, with respect to the
transition to open access, the historical and institutional context is impor-
tant, but the specific details of change and the specific institutions that are
the agents of change differ across societies. Therefore, they believe that
modern economics fails to understand that interventions and proposed
reforms supported by international organisations must conform to existing
beliefs about economic, social and cultural systems in the natural state
(i.e. the developing country) to be appropriate and successful. Failure to
recognise this produces new institutional forms that are less effective than
the ones they replace; and specifically because the broad prescriptions
that mimic the open access orders are prescribed, including less regulatory
control, absence of monopolies, more secure property rights and improved
provision of public goods such as education, and more complete markets
(North et al. 2008). Third, institutions and organisations help to reduce the
threat of violence and disorder. It is these key insights that are central to
this thesis on governance, development and social order.

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However, the common feature in these three schools of thought is that

institutions do matter. Yet, the profound differences in each theory also lie
in the perspectives on, as well as the context and approach to, institutions,
societies and the dynamics of development progress.

Policies on governance and development

The policy shift
Although the neoliberal ideology gradually emerged in the late 1980s and
early 1990s, with its good governance and free-market agenda, the first
clear official policy shift on governance matters in international develop-
ment was announced in 1996 through a seminal address at the Annual
Meeting of the World Bank and the International Monetary Fund (IMF),
which placed good governance and tackling corruption as priority issues
(World Bank 1996). However, while the World Bank Group (WBG) was
an early leader, the critical turning-point occurred at the United Nations
(UN) in the year 2000. The Millennium Development Goals (MDGs)
were adopted by UN member nations for political and politico-economic
reasons – that is, as a result of the interaction between political and eco-
nomic forces that shaped the MDGs. And this form of global consensus
provided a major boost to governance as a central aspect of development.
To be sure, the neoliberal ideology also played a contributory role in
the shaping and adoption of the MDGs, especially for the largest donor
nations (the United States and Britain in particular). As a result, the
major international development institutions – multilateral and bilateral
development organisations – along with many of their partners (govern-
ments in particular) have officially embraced governance matters as a key
policy and strategic thrust. In addition to the WBG, the United Nations
Development Programme (UNDP) has governance as one of its core
areas of focus (UNDP 2007), the United Kingdom’s Department for
International Development (DFID) has placed governance at the centre
of its work (DFID 2006), and developing countries are de facto includ-
ing governance as a critical dimension of development policy. On the
advocacy, human rights and oversight fronts, several non-governmental
organisations (NGOs), such as Transparency International and Oxfam, are
also engaged in influencing policy on governance. Governance policy and
advocacy have also had an impact on donor agencies themselves and, in

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recent years, an office of institutional integrity has been created in many

international organisations, including the WBG, the Asian Development
Bank and the Inter-American Development Bank.

Enhanced governance: concepts, principles and framework

In this paper the general term ‘enhanced governance’ denotes any and
all endeavours to improve governance, including ‘good governance’ and
‘good enough governance’ – though each of these two specific terms will
continue to be used sparingly, and only where appropriate.
What are the reasons offered from the policy perspective in support
of an agenda for enhanced governance? In addition to the ideological,
strategic, politico-economic and political reasons, advocacy by the interna-
tional community – led by donor governments and the major international
development institutions – centres on the potential benefits of enhanced
governance. The potential benefits are trumpeted to span a broad scope of
areas in development, including sustainable development, human rights,
human development, poverty reduction, economic growth, education,
reform of public institutions, inclusive development (economic, social and
political), and improved functioning of markets. The World Bank (2006a,
2007), for example, argues that a large body of research shows that, in the
long term, enhanced governance is associated with a broad scope of indi-
cators of developmental progress. This stance is generally also advanced
by all international organisations with reference to research findings and
discussion (policy-driven, academic, empirical and anecdotal) on specific
aspects of governance. For example, good economic management and aid
contribute to growth (Burnside & Dollar 1998); fiscal decentralisation can
promote enhanced governance (Huther & Shah 1998); efficient and effec-
tive institutions matter (Rodrik 2007); and reforming public institutions
can strengthen governance (World Bank 2000, 2003). Thus, enhanced
governance is suggested to be at the heart of economic, social and political
progress. Kofi Annan, the former UN Secretary General, stated the follow-
ing on the subject:
World leaders themselves, at the 2005 UN World Summit, agreed that good
governance and the rule of law at the national and international levels are
essential for sustained economic growth, sustainable development and the
eradication of poverty and hunger. (UN 2006)

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Meanwhile, the guiding principles for engaging in governance work

emanate from a particular institution’s mandate, vision and goals. The
major players in the international development community generally
agree, whether explicitly or implicitly (see, for example, UN 2006; UNDP
2006; DFID 2007; World Bank 2008a), on ten such principles.

1. Poverty reduction and MDGs – enhanced governance is crucial to the

fight against poverty and it is a core endeavour in the efforts to achieve
the MDGs.
2. Overarching role – governance plays an overarching role in develop-
ment and requires, inter alia, adequate accountability and transparency
mechanisms, the rule of law, gender equality policies and protection of
human rights.
3. Country ownership – the primary responsibility for improving govern-
ance should rest with the country.
4. Obligation – the international development community has an obli-
gation to assist through advocacy, technical assistance (TA), capacity
building, promotion and facilitation services, sharing of good practices,
and through broad-based collaboration.
5. Stakeholder participation – all stakeholders (especially government,
business, international organisations and civil society) should be
systematically engaged in governance matters at all levels – global,
national and local.
6. Institutional strengthening – country policies and systems should be
strengthened, not bypassed.
7. Harmonisation – a harmonised and coordinated approach to develop-
ment planning and interventions at the national, regional and global
levels is both desirable and required.
8. Monitoring and evaluation (M&E), and results-based management
(RBM) are also essential.
9. Democracy – especially democratic institutions and holding of fair
elections – is an important overarching dimension of enhanced
10. Civil society, the media and the private sector – for example, civil
society watchdogs, freedom of press, good corporate governance and
freedom of information – should be an integral part of the governance
and development agenda.

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These guiding principles have the underlying assumption that there is a

pre-eminent system of governance – or at least key components of it – that
should be universally applicable.
The general contours of what constitutes an appropriate governance
framework are also being advanced by international organisations. The
Global Monitoring Report (World Bank 2007) suggests that an appropri-
ate governance framework assists in incorporating and systematising the
guiding principles towards a governance system that, in essence, has
three parts – how governments make things happen, how checks and bal-
ances in institutions hold government accountable, and how citizens are
engaged as an active part of the governance process. Thus, it is assumed
that the establishing or strengthening of a parliamentary system of govern-
ance, setting up of independent oversight agencies, ensuring that a sound
judicial system is in place, and governmental accountability and transpar-
ency are essential to a system of checks and balances in institutions to help
sustain enhanced governance. For international organisations, the main
interlocutors are in government, both donor and recipient governments,
and in other international organisations. This context also assumes that
citizens, with the help of others (for example NGOs), ensure effective
accountability, given that citizens select political leaders who, within an
ideological and political platform, are responsible for setting and pursuing
the goals and objectives of governance systems.
In terms of theory, this policy sphere resembles the main thrust of
the ‘successful society’ school with its prescriptions for a broad scope of
governance interventions. However, key policies at the World Bank and
other international development institutions are driven by the ideological,
politico-economic, political and operational context within which these
institutions operate, and this is influenced to a large extent by the leading

Selected reviews: concept and policy on enhanced governance and

Over the past two decades, a few researchers, practitioners, academics
or other professionals have conducted reviews of literature on enhanced
governance and development. I have selected three such reviews to shed
further light on the conceptual and policy aspects of the discussion.

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One of the early reviews was by Leftwich (1994), who stated that the
ideological basis of the ‘good governance’ agenda was an expansion of the
neoliberal approach. His interpretation of the concept of ‘good govern-
ance’ was that it has three aspects: (1) the systematic aspect, which means
a democratic capitalist regime of a minimal state; (2) the political aspect,
which is defined by a democratic mandate, and includes features such as
free and regular elections and checks and balances on power, ideally in
the image of developed country governments; and (3) the administrative
aspect, with a focus on an independent, accountable, efficient and open
public service. Furthermore, his main argument is that enhanced gov-
ernance is, first and foremost, a function of state character and capacity.
Finally, within this context, Leftwich criticises the World Bank’s approach
to enhanced governance for its narrow administrative point of view as
‘naïve and simplistic’.
The review by Ayeni (2000) explored the subject from an ideological
and agenda-setting perspective, also with special attention to the meaning
of good governance, though with respect to its relevance and applicability
to development in Africa. Ayeni’s views are at the intersection of poli-
tics, economics and public administration. Importantly, he criticises the
neoliberal agenda’s democratic values and strong market orientation as
perhaps not appropriate to the African context, especially with respect to
‘the practical issues of design and implementation’ of good governance in
Africa where societies are fundamentally different from those in the West.
He laments the fact that ‘yet apparently contemporary good governance
literature purports to finally have discovered how society can best be gov-
erned’ when centuries of addressing this question have been ultimately
unsuccessful in finding a globally acceptable formula. He concludes that
measures to enhance governance cannot be imported, and that they should
be a product of the local environment (values, institutions, structures).
The recent work of Grindle (2004, 2007) avoids the ideological debate
by implicitly accepting the neoliberal ideology, and instead focuses on
issues of strategy and an operational framework for ‘good enough govern-
ance’ – that is, in lieu of what is perceived as a broad and unmanageable
menu for good governance pursued by international institutions and donor
governments. Grindle further suggests that particular interventions can be
assessed by looking at the context for change and by analysing the impli-
cations of the content, albeit with focus on certain political, operational­

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and technical issues. Grindle is on the right track here; however, her
work overlooks some key ‘real world’ aspects of the nexus that are also of
fundamental importance in practice (see below for an elaboration of this

Five key current issues

Directly related to the guiding principles and governance framework out-
lined above are some of the key current issues that are being advanced
in the policy arena of the nexus, and in the resulting enhanced gov-
ernance agenda. These key issues include: (1) broad-based interven-
tions and reform; (2) M&E and measurement of governance indicators;
(3) development­ performance and aid effectiveness; (4) decentralisation;
and (5) economic­ policy formulation and management. Let us now turn to
each of these issues.
To begin with, one important defining issue is whether broad-based
governance reforms are appropriate and effective from a developmental
viewpoint. In general, broad-based governance reforms are viewed as
part of the ‘successful society’ school of thought. Arguably, for ideologi-
cal, institutional and operational reasons various bilateral and multilateral
organisations – especially, national aid agencies, international and regional
financial institutions, and UN agencies – pursue a broad-based reform
agenda. Another way of looking at this key issue is that the dominant
thinking at these institutions (sometimes referred to as an orthodox
approach) is that since good or sound institutions facilitate growth, broad-
based institutional reforms are therefore necessary. However, critics of this
orthodoxy – such as Leftwich (1994) and Fukuyama (2008) – argue that
a narrow administrative viewpoint that focuses on institutional reform as
the main entry point to development is flawed as it ignores other pivotal
aspects of the development and governance nexus. While this orthodoxy
appears to be very slowly undergoing a metamorphosis, it has a limited
scope for change as the Bretton Woods-era governance constraints remain,
guided by the prevailing institutional mandate and related principles of
Another key current policy issue is M&E of governance interven-
tions and measurement of indicators of governance (i.e. metrics). This
issue is also seen as a necessary policy and programming thrust by many
international institutions to raise awareness, strengthen administrative

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systems, monitor the quality of governance, and to gauge the impact of

interventions. Critics abound on this front as well. Some observers – such
as Jan Jabes (2002), a former governance division director of the Asian
Development Bank – have noted that the main drawback to governance
indicators is that they ‘become an end in themselves’ and that they offer
little in terms of practical utility to promote development. Others suggest
that governance policy should not be donor driven. Instead, it should focus
on the solutions (through appropriate policies and action) that can best
emanate from the developing countries themselves and through the work
of social scientists, journalists and others knowledgeable about the intrica-
cies of their societies (Fukuyama 2007a). There are also many who point
to the fact that governance indicators are costly to compute, and that they
are methodologically lacking (for example, see ODI 2003). Lastly, even
strong proponents of governance indicators, such as Kaufmann (2004),
have lamented the lack of political will in enhanced governance interven-
tions, as ‘powerful vested interests conspire against the concrete sustained
progress essential for development’ and that this cannot be ignored in
addressing the subject. Notwithstanding, M&E and metrics are important
policy tools for donors to justify the allocation of substantial funding to
development assistance and to report on the effective use of funds to their
constituencies. As such, M&E and metrics are politically driven issues that
have a broad base of donor support, and that find meaning in operations,
management, and research and theory.
The third key issue – and one that is a directly related area of policy
interest for reasons similar to those advanced for M&E and metrics – is
governance to enhance development performance and aid effectiveness
(including, orientating overall aid allocations to reflect governance con-
siderations). The early proponents, the European Union nations, have
had a system in place for several years. Other donors are also looking at
ways to address this issue in a balanced way. Not surprisingly, however,
the Overseas Development Institute’s (ODI’s) research on this matter
concludes­ that none of the donors does rigorous and transparent govern-
ance assessments, and there is no strong link between governance assess-
ment, aid allocation and country programming, despite the inclusion of
governance assessments in comprehensive country evaluations (ODI
2006). Meanwhile, as with M&E and metrics, the policy interest in this
area continues to be sustained for reasons other than economics per se.

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Decentralisation is also a key policy issue in development, but one that

is increasingly being pursued by both donors and developing countries,
to bring governance closer to the people through devolution of central
authority and administration. In addition, decentralisation is viewed by
certain proponents as a means to promote inclusive development and,
thus, to tackle key issues of poverty and inequality.
Is decentralisation a silver bullet? As a policy for enhanced govern-
ance and development, decentralisation can be a double-edged sword.
The potential advantages of decentralisation include: division of power
between central and local authorities, political inclusiveness as broad-
based participation by citizens is facilitated, strengthened implementation
(attributable to a greater scope for knowledgeable decision making at the
local level), harnessing of potential efficiencies in the governance and
administrative system, and employment of a complementary approach to
tackle poverty and inequality. The disadvantages are just as diverse and
numerous. Difficulties in forming cohesive and coherent national policies,
greater scope for corruption, potentially weaker management, devolution
of services judged to be non-essential – hence with no real change in the
status quo – are some of the many disadvantages.
In ‘Decentralization of governance and development’ Pranab Bardhan
(2002) reaches the conclusion that politics (specifically, changes in exist-
ing power structures within communities) and inclusive development
are central to effective decentralisation. In some respects, this is obvious,
and further it can be said that this has been the case in many societies for
centuries. Nonetheless, Bardhan does (appropriately) caution that decen-
tralisation is also politico-economic in nature, and much more remains to
be done in this area in terms of research and shaping effective policies.
Others (such as Hadenius et al. 2003) suggest that, as a policy, democratic
decentralisation also necessitates that effective channels of communica-
tion are established between the central and local authorities, as well as
among the local bodies themselves, as ‘meaningful participation requires
informed citizens who have the capacity for taking joint action’. Finally,
the press and local civil society are seen as important to ensure a modicum
of oversight.
Economic policy formulation and management is the fifth area of
current interest in this paper. However, it has been an area of focus in
governance matters for over a century, and it is currently of special policy

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interest because of the global financial and economic crises. By definition,

economic policy formulation and management also have a central role to
play in addressing issues of growth, poverty reduction and inequality in
developing countries. Asia, for instance, has eight of the 12 countries in
the world that have experienced sustained high economic growth for at
least the past three decades (Commission on Growth and Development
2008), where the chosen paths to governance and development are ‘home
grown’, and where the state plays a pivotal or leading role (Chibba 2008c,d).
Examples include China, Malaysia, Indonesia and Korea. In recent years,
India and Vietnam have also joined this high-growth group.
There are six main dimensions to the current interest in enhanced gov-
ernance in economic policy formulation and management: macroeconomic
policy generally, and monetary policy in particular; financial sector gov-
ernance; fiscal policy; political economy; market- and technology-based
interventions; and culture and socioeconomics.
Monetary policy governance has traditionally been ignored with respect
to its role in enhanced governance matters. But, as the Botswana case
outlined below illustrates, it is a fundamental part of the governance and
development nexus, and it should be given priority to tackle the inher-
ent and damaging flaws that are usually present in this area of the nexus.
Financial sector governance, as the current global financial crisis amply
illustrates, is also a core area of the nexus; and, for developing countries,
it has direct implications with respect to the need for extreme caution in
embarking on a financial sector liberalisation programme, including capital
market liberalisation (see, for example, Stiglitz et al. 2006). Meanwhile, fis-
cal policy, which is often weak in addressing inclusive development issues,
especially poverty and inequality, demands a rethink and retooling that
orientates governance – even if the status quo with respect to top-down
planning is maintained – towards pursuing an aggressive policy and strat-
egy on inclusive development, such as that currently espoused by Asian
nations through inclusive growth and ‘growth plus’ strategies. With respect
to political economy – as cases such as South Africa’s Black Economic
Empowerment programme and its sector charters on finance and min-
ing illustrate – it offers a context for embarking on fundamental changes
to the status quo. There has been much said and written on these pro-
grammes (mostly within South Africa, but the debate has recently spilled
into the international arena) and they do offer insights and lessons, at the

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very least, in the use of political economy to further an inclusive develop-

ment alternative (for discussions on this, see Chibba 2008a, 2008b, 2008d,
2009a, 2009b). On a totally different track, market- and technology-based
interventions offer complementary and incremental approaches to address
poverty; and this also underscores the need for appropriate regulations and
oversight for enhanced governance. Finally, culture and socioeconomics
bear heavily on governance and development matters, and especially on
the success or failure of economic policy formulation and management, as
indeed each of the other four dimensions bears testimony to this fact.

Where do we stand?
In sum, and first and foremost, theory has a rather modest and peripheral
role to play in the policy arena. This conclusion on the role of theory in
policymaking on governance for economic development is also voiced by
Acemoglu (2008, p. 2) who notes that,
academic research progresses slowly and according to its own dynamics, which
often reward ideas that are contrarian even if they have limited empirical rel-
evance. Only ideas that have withstood the test of time will one day become
relevant for the policy sphere.

Second, despite the findings on the link between enhanced governance

and economic development, robust and widely applicable evidence on
the governance and development nexus is lacking as there is no one size
fits all. There is also no consensus on what policies or policy mix is best
for developing countries. Indeed, several scholars and observers have and
are challenging the enhanced governance policy and agenda. Goldsmith
(2007), for instance, challenges the validity of governance reform (as a
catalyst) for development. Through close analysis of specific governance
reforms and economic turning-points in several countries, he concludes
that international development agencies have underestimated the time
and political effort required to change governance, and overestimated the
anticipated economic impact.
Third, as this review thus far also illustrates, beyond the setting of goals
(such as the MDGs) and agreements on metrics and management strate-
gies (such as RBM and advocacy), there are no universally acceptable
concepts, solutions, resolutions and approaches. For, ultimately, govern-
ance policy is driven by ideology and other factors, especially politico-

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economics­, politics, and the institutional and cultural context within which
it is perceived, advocated and pursued.

Governance and development in practice

What guides and influences practice?
What is the state of governance in practice? As highlighted above, ideol-
ogy along with a host of other factors, including politico-economics, insti-
tutional development, politics and management/administrative capability,
provide the overall setting for governance in practice. Until recently, the
neoliberal ideology was advanced pre-eminently by the US, but with
important support from a few other nations. The channels of transmission
were policies and interventions that focused on democratic governance
and market fundamentalism, and this provided the raison d’être for the
pursuit of the governance and development nexus in practice. Indeed, in
practice, the neoliberal model has been implemented through key thrusts
that include metrics of development performance and aid effectiveness,
decentralisation, and a wide range of economic policy management issues
and programmes encompassing topics such as privatisation, liberalisation
of trade, financial sector reform, capital market liberalisation, inclusive
growth and strengthening democratic institutions (e.g. parliamentary
democracy and elections). In addition, it is worth noting that, in practice,
the scope and extent of an institution’s governance work in the develop-
ment field is also limited, inter alia, by its mandate, principles of engage-
ment, operational policies and available resources. Taken together, this
presents an extremely challenging mission for international organisations,
donor governments, and to recipients of aid, that an enhanced governance
agenda – that is, a broad good governance agenda, or a good enough gov-
ernance one – cannot adequately tackle in practice.
Indeed, the operational and implementation challenges are immense.
To begin with, the mandate of each institution or agency actively engaged
in governance and development work is specialised to the extent that aid
on governance matters contributes to inconsistency and lack of cohesive-
ness in related development operations. For example, the IMF’s role in
governance matters is limited largely to policies and interventions that
can have a macroeconomic impact; the World Bank’s articles of agreement
essentially bar it from engaging in anything political in nature (though it

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has policy- and practice-based interventions to get around this to a rather

limited extent through operations support, analytical work and policy dia-
logue, as is the case with public-sector reform projects and programmes
that assist in strengthening democratic institutions); while the UNDP is
engaged in areas that are decidedly comprehensive and include economic,
social, environmental and political aspects (for example, parliamentary
development, electoral systems and processes, justice and human rights).
Moreover, while the principles of good governance are laudable, in prac-
tice however, they are essentially donor driven, technocratic, and not pro-
found in terms of the complexity involved in establishing a meaningful set
of globally (or even nationally) acceptable principles and objectives that,
importantly, the developing countries find to be appropriate and realistic
(for example, see Fukuyama 2007a, 2007b; Odugbemi & Jacobson 2008).
Apropos, and with special reference to funding levels, the UNDP and the
World Bank are the leaders in supporting the practice of governance. The
UNDP’s governance work involved US$1.4bn in TA expenditures, or
nearly 46% of all of its TA, in 2005. Thus, it claims to be ‘the leading donor
globally in providing support for strengthening public sector management
spending in all practice areas’ (UNDP 2006).
Meanwhile, the World Bank (2008b) states that its overall ‘support for
governance and rule of law was US$3.8bn … [and] this comprised 15.5%
of total Bank lending in 2006–2007’. Clearly, these institutions are bank-
ing on the expectation that such massive levels of funding will yield the
necessary results in the short to medium term, even if any survey of rel-
evant literature will show that there is very limited evidence to support
such high levels of funding for governance interventions, regardless of the
overall or specific mandate involved.
Within this challenging context, the World Bank (2006b) has noted that
‘in spite of improvements [in governance] in a number of countries, there
have been a similar number of countries where deterioration has taken
place’. This is a mild admission of the fact that the current approaches to
the overall subject are not working as well as had been anticipated.
Governance in practice is also influenced by the bargaining power, and
national goals and plans of developing-country partners. Countries that
are small and/or poor, failed states or those that are geopolitically impor-
tant to donor governments (especially in the case of bilateral aid) and/or
to major stakeholders of international organisations, can be persuaded

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to follow the governance and development agenda prescribed to them.

Annual programming missions of multilateral and bilateral organisations
serve as the forum for determining the scope, depth and type of projects
to embark upon at the country, regional and global levels, and provide the
opportunities to these organisations to promote and press their viewpoint
and agenda.
In practice, the policy orthodoxy also ignores the fact that, for the major-
ity of developing countries, especially Asian countries and emerging mar-
ket economies (EMEs) – and particularly for those that have a very long
history on governance matters – certain traditional governance values and
structures are still relevant today. For example, the legacy of Confucian
values in East Asian countries – including China, South Korea, Taiwan
and Singapore – includes the fact that constraints on the free market are
defended on the basis of Confucian principles, including the state’s obliga-
tion to promote and secure the basic material welfare of its people, and for
the overall good of society (for a useful discussion on this, see Bell 2006).
Given such a context, it is unrealistic to assume that a modern or Western
ideology – and for many, an alien one – is going to change the values, deci-
sion making and practices that have a long history and tradition and hence
are steeped in a rich cultural, institutional and social fabric that is well
integrated in society. Indeed, a traditional framework and context that col-
lectively serves as the driving force not only in the shaping of governance
policies and plans but also in everyday practices, cannot be ignored. That
several Asian countries have charted their own course on governance and
development matters with impressive results that few countries can match
in recent history is profound testimony to this view. Nevertheless, many
of these countries (despite considerable progress in poverty alleviation
over the past two decades), have also seen high levels of poverty persist
over time, as well as rising inequality. As a result, these countries have
adopted new policies and strategies to address such problems. The current
focus is on an inclusive growth policy and strategy that seeks to achieve
high sustainable growth and inclusive development through the creation
of broad-based economic opportunities to better spread the fruits of sus-
tained economic progress among a country’s population (Ali & Zhuang
2007; Chibba 2008d).

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Revisiting the selected reviews

The three policy reviews discussed earlier are worthy of a brief revisit
from the practice perspective. First, Leftwich’s clear political analysis and
candid criticism of the neoliberal ideology and the World Bank’s narrow
and administrative perspective on governance and development policies
(and accompanying agenda), as well as his argument that enhanced gov-
ernance is a function of state character and capacity, have been validated
and vindicated under the current global financial and economic crises, as
well as (arguably) from the viewpoint of some of today’s leading scholars
in the social sciences. Economists such as Keynes and Galbraith, among
other gurus of modern economics, have long theorised and advocated the
role of the state to be pivotal in ensuring responsible economic policy
formulation and management, and prudential governance. And Stiglitz
is well known for his criticism of the neoliberal ideology and the World
Bank’s approach, inter alia, to governance and development.
In Ayeni’s review, his conclusion that governance is a product of the local
environment – or that it cannot be imported – also rings true in practice,
especially in view of the approach taken by several emerging economies
in Asia. While Grindle’s (2004, 2007) strategic emphasis on context and
content is to be applauded, it fails in the final analysis for lack of a com-
prehensive view that also encompasses ‘real world’ factors, such as culture,
socioeconomic conditions and institutional biases. These critical factors of
governance and development in societies are essentially overlooked by
Grindle in favour of a limited operational perspective. The importance of
‘real world’ conditions and related factors in development plans, policies
and programmes is also highlighted by others (see, for example, Myrdal
1968, and a recent publication by Odugbemi & Jacobson 2008). On the
whole, judged from both policy and practice perspectives, Grindle’s
research, analysis and recommended strategy for ‘good enough govern-
ance’ has the following limitations: (1) focus on primarily international aid
interventions and implicit endorsement of the neoliberal ideology; (2) fail-
ure to adequately integrate the pivotal role of values, norms, traditions and
other cultural and socioeconomic aspects of governance and development;
(3) treatment of the subject as a largely operational and technical matter;
and (4) the content-related factors are both misjudged (in terms of scope)
and underestimated (with respect to relevance and depth).

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The five key current issues

The five key issues introduced earlier under the policy perspective – viz.
broad-based interventions and reform, M&E and metrics, aid effective-
ness, decentralisation and economic policy formulation and management
– will now be revisited from a practice perspective.
Broad-based interventions and reforms – driven as they have been by
ideology, institutional mandate and politics, and politico-economics – have
been promoted, funded and assisted by international development insti-
tutions. This approach has largely been a failure as it assumes that one
size fits all, in the sense of emulating or adapting interventions based on
what works in ‘successful societies’. As several scholars and experts have
argued, this orthodoxy has resulted in an inherent institutional flaw in the
approach to policies and practices on the governance and development
interface. For example, Acemoglu (2008) takes the tone of a stern lecture
that focuses on the pitfalls and drawbacks of World Bank engagement
on governance matters. Although there are indications that the World
Bank is currently tempering its approach to specific national conditions,
broad-based interventions still remain the modus operandi on governance
matters. Given the current global financial and economic crises, and the
demise of neoliberalism (at least the market fundamentalism part of it),
and the rising role of mixed economy models of governance and economic
development, retooling of the World Bank approach is clearly necessary.
In addition, as suggested earlier, unless the leading international develop-
ment organisations offer a stronger role and voice to developing countries,
especially EMEs, the governing mandate and modus operandi will not
change. After several years of lobbying by EMEs, there are signs that
such changes may soon materialise at both the World Bank and the IMF
(World Bank 2009). But will the anticipated metamorphosis be significant
and deep enough?
Regarding the second key current issue, the theory and practice of
M&E and related metrics has advanced significantly over the past two
decades. However, the relevant theoretical foundations are largely still
in their infancy; meanwhile practice continues to be driven by the ideo-
logical, political and politico-economic context of donors and international
organisations. Importantly, progress in M&E of governance matters has
been most problematic, with little to offer with respect to tangible results
beyond the prima facie level. This is due in part to the very concept and

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scope of enhanced governance as these matters are also inherently ethno-

centric. Thus, governance matters as a whole are a highly contested aspect
of societies and they are usually accompanied by lobbying and competi-
tion in the search for what is best for a particular society, given contextual
constraints. Moreover, even when there is a modicum of agreement on the
subject, there is often a lack of consensus on what is considered essential
or worthy of being monitored, evaluated, and measured from the poten-
tially immense agenda with which institutions and experts are confronted.
‘Good enough governance’ was proposed by Grindle in response to this,
but its inherent flaws and limited relevance render the concept and strat-
egy impractical. In addition, the reliability of data on measurement of the
quality of governance in developing countries is questionable, and also
largely experimental in nature. And, as governance metrics are viewed as
a technical matter without giving due attention to various other pivotal
factors highlighted thus far, the findings from surveys and evaluations
offer very limited real or practical value beyond a specific project or pro-
gramme’s operational framework. Thus, the value, utility and success of
governance interventions are suspect. Indeed, despite the laudable inten-
tions to promote enhanced governance by the international community, it
is worth reiterating that the World Bank (2006b) recently concluded that
there has been no significant change (based on selected and preferred
governance indicators) in the overall quality of governance in the world.
This outcome, given the major push by several international organisations
to improve governance around the globe, is worrisome to some observers
and suggests, to others, that perhaps the focus of the debate and action on
governance matters is indeed misjudged and misplaced. Several observ-
ers of governance matters (for example, see Fukuyama 2007b) have
concluded that rather than look at average ratings for democracies or how
governance is faring at the country level, concrete solutions must be found
to structure democratic institutions to support development results and
to sustain democratic governance, as lack of sustainability of governance
interventions and reforms is as much a problem as ‘successfully’ introduc-
ing governance reform. In short, M&E and metrics are essentially treated
as technical and management issues within a societal and developmen-
tal context. Thus, factors such as politico-economics, ideology, politics
and culture in developing countries – what I refer to as the ‘contextual

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dynamics’­ of governance for development within a particular country, or

contextuality, in short – are essentially overlooked in practice.
From the perspective of donors (institutions and nations), development
effectiveness is the broader issue behind M&E, RBM and aid effective-
ness. Again, the reality in the field is often overlooked. For example, frag-
mentation of aid compounds the problems encountered in practice as it
manifests itself, inter alia, in inconsistent application, and introduction of
externally driven criteria and modus operandi, when neither the capacity
to assess and absorb the aid, nor the prerequisite conditions for implemen-
tation (often) exist. As a result, to donors, fragmentation of aid, and related
problems of planning and coordination, retard the effectiveness of govern-
ance interventions in practice. In recent years, new and concerted efforts
by bilateral and multilateral organisations, and by member nations of the
Organisation for Economic Co‑operation and Development (OECD), have
resulted in some modest successes in specialised areas, though the overall
problem remains. For instance, harmonisation in the use of M&E and
RBM terminology by development partners in 2002 was facilitated by the
OECD’s Development Assistance Committee (OECD 2002). Yet, during
the same year, a comprehensive assessment of seven donors (bilateral and
multilateral) determined that there was ‘little evidence of any agreement
on how to evaluate democracy and governance interventions’ (emphasis
added, Crawford & Kearton 2002). Nonetheless, the move towards a com-
mon methodology for evaluation has come a long way in the last few years,
in line with some very limited advances in evaluation approaches and
measurement or estimation of impact, especially at the project level. On
the whole, this key current issue of governance and development is driven
mostly on the basis of donor politics and aid management matters. The
other half of the problem is that contextuality, as defined above, continues
to play a limited role in governance matters when it requires a pivotal role
to successfully engage in interventions.
As discussed under governance policy, decentralisation to enhance
governance systems is a favoured approach of both donors and devel-
oping countries, and it is increasingly being promoted and introduced
through projects and programmes. Field research and analysis, however,
offer mixed results on its efficacy and desirability to achieve given goals
and objectives. In their survey of decentralisation in India, Bolivia and
South Africa, Hadenius et al. (2003) found that, in each of these countries,

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democracy at the local level was enhanced as political inclusion had taken
place – that is, segments of society previously excluded in political life had
benefited from decentralisation and are now included in the process. In
addition, they found that decentralisation has also resulted in ‘profound
changes in public policy’. In Bolivia, a redistribution of public resources to
the local level has been accomplished; in India, a comprehensive and suc-
cessful land reform programme has been implemented in the state of West
Bengal, and corruption has been curtailed; and in South Africa, the decen-
tralisation programme, which is only a few years old, requires integrated
development plans to be drawn up by local governments in an inclusive
development manner (that is, with participation by all groups, including the
poor), and this appears to be taking place. On the other hand, the authors
also argue that the drawbacks to these programmes are equally significant.
Nonetheless, such empirical evidence (even if exploratory in nature) from
actual field work on decentralisation and development is sparse. Moreover,
numerous obstacles to successful implementation surfaced in practice for
reasons such as poor programme design, the downside to the politics of
decentralisation, and the lack of adequate readiness of the political and
bureaucratic systems to introduce and/or sustain decentralisation. At this
juncture, it is useful to be reminded that there are inherent limitations to
the validity and applicability of evidence-based research from these (and
indeed all) developing countries: ‘the drawbacks of evidence-based policy
include the fact that it is often country-specific or site-specific (hence, it
is not widely applicable); and second, that it takes a long time for it to be
accepted’ (Chibba 2008a). In essence, the double-edged sword problem
raised earlier is evident in practice as in decentralisation interventions it
is the contextual dynamics that often determine the success or failure of
interventions. Surveys of decentralisation and development conducted in
the last few years, as well as the work of others who have studied this sub-
ject with reference to a specific aspect of it (such as human development,
service delivery or poverty reduction), would certainly concur with this
conclusion (see, for example, Jutting et al. 2005; Chaudhury & Devarajan
2006; Fritzen & Lim 2006). Nevertheless, decentralisation continues to be
a fundamental part of the governance and development agenda in many
countries, though it is largely exploratory in nature in most cases.
Finally, economic policy formulation and management is another criti-
cal area of the nexus. The collapse of the neoliberal model of governance

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and economic policy management has several lessons to offer. First, that it
was a utopian paradigm to begin with, as evidenced by the current global
financial and economic crises. Indeed, in practice, markets do not natu-
rally self-correct for errors, biases and externalities; second, markets do not
necessarily allocate resources efficiently (hence the need for regulations
and governance); and, third, markets are innately driven by self-interest
and not necessarily to serve the public interest. Fourth, the premise that
a single model of governance and development can apply to all circum-
stances and contexts is fundamentally flawed, for there is no universally
acceptable stellar model of governance for all societies, no less for the
formulation, applicability and management of economic policies. Gunnar
Myrdal (1968), a Nobel Laureate in economics, reached a similar conclu-
sion in Asian Drama: An Inquiry into the Poverty of Nations. Fifth, as with
the other key current issues, contextuality is a powerful determinant of
the outcome and impact of interventions. In this regard, I shall now turn
to the Botswana case study, which serves as a case in point.

The Botswana case

Botswana is often viewed as exemplary of good governance in Africa (for
instance, see Stiglitz 2002a, 2002b; Iimi 2006; Kaufmann et al. 2006; Rodrik
2007; Acemoglu 2008). But recent field research and related findings and
analysis (Chibba 2007, 2008b, 2008c, 2009a, 2009b) challenge this conclu-
sion, and suggest that the conditions for enhanced and stellar governance
in Botswana are lacking in several critical areas, including: inclusive devel-
opment, institutional policymaking and implementation, sectoral planning
and development, and economic policy formulation and management.
These weaknesses are most evident with respect to, inter alia:

• monetary policy’s long-term failure to achieve its main objectives of

achieving a low, sustainable and predictable rate of inflation
• the continued inability of the government to diversify the economy
(which is essentially one-industry based)
• the fact that, despite three decades of robust economic growth (averag-
ing around 9% annually), progress has not been inclusive as poverty is
widespread and inequality is severe – i.e. the Gini coefficient is 0.63
(IMF 2008) where 1.0 denotes absolute inequality and 0 represents
perfect equality

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• HIV/AIDS rates, which continue to be among the highest in the world

• the rule of law, which is arguably slipping – as evidenced, for example,
by the fact that crime (especially robbery and theft) is increasingly a
problem in urban areas
• government procurement, which is not transparent
• land ownership, which is saddled with a tribal system
• increasing absence of competitiveness in markets – for example, ease of
entry into certain markets is cumbersome, inefficient and anti-competi-
tion, and
• weak transparency and accountability at the sectoral and institutional

In other words, these weaknesses emanate from the following key areas:
(1) weak governance, as noted above, in areas such as institutional poli-
cymaking, land ownership, public-sector agency governance, monetary
policymaking, government procedures and the rule of law; (2) related
methodological weaknesses of assessing governance interventions; (3) the
inherent biases and limitations of the chosen or preferred approach to
governance matters (that is, the status quo); (4) the failure to consider the
multifaceted developmental context, including politico-economic, socio-
economic and cultural factors – such as mores, including the ‘no matata’
(worry-free) attitude, which play a pivotal role in many governance and
development matters; (5) a large informal sector that accounts for an esti-
mated one-third of the national economy; and (6) a system of governance
that tries to balance both foreign ideologies and goals of democratic gov-
ernance on the one hand, and local values, systems, traditions and related
goals, on the other – unfortunately, it fails to accomplish either of these
goals successfully. Instead, for example, as argued by Good and Taylor
(2008), Botswana has a ‘minimalist democracy’.
Given these overarching weaknesses, the following lessons and con-
crete policy/programme prescriptions are recommended to improve gov-

1. Inclusive development at the economic/financial, social and institutional

levels is required to facilitate enhanced and inclusive decision making,
democratic governance in public-sector agencies (e.g. at the Central
Bank), and inclusiveness in social and economic programmes (e.g. the

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Citizen Entrepreneurial Development Authority, as well as the Local

Enterprise Authority, both public agencies, have failed to curb rent
seeking by the elite and the well connected).
2. Transparency and accountability to enhance decision making (e.g. in
monetary policymaking, government procurement and in ensuring a
competitive environment for business) through the adoption of demo-
cratic governance structures and decision-making processes at public
institutions (especially, at arm’s length institutions, parastatals and in
decentralised bodies entrusted with the responsibility to oversee budg-
etary programmes).
3. Rule of law enhancements (to address increasing levels of urban crime,
tackle corruption in local government and promote competition in the
marketplace) by facilitating and nurturing a competitive market envi-
4. Consideration of cultural and socioeconomic factors in decision mak-
ing and implementation – these are indispensable to any governance
intervention in Botswana (indeed the long-term failure of Botswana’s
monetary policy is partially attributable to its failure to integrate non-
technical considerations such as culture, traditions and values in govern-
ance matters – see Chibba 2007).

Finally, as this case illustrates, the contextual dynamics are important,

for governance in practice does demand consideration of a comprehensive
scope of developing-country factors – including technical and management
issues at the operational level, politico-economic forces at play in virtually
all governance and development matters, and the role of ideology, values,
traditions and socioeconomic factors that are central to public, private and
social affairs. Put differently, if both the required knowledge and effective
policies to address governance and development matters are not brought
to bear in the formulation of policy and in the design and implementation
of governance interventions, the resulting agenda is likely to be unsuc-
cessful. A related point is that the current state of the governance and
development nexus suggests that too much attention is being paid by the
leading organisations in the international community to policies that focus
on principles, frameworks, strategies, metrics and other such issues, and
not enough to what is relevant, what is the right approach and what works
in the real world (that is, in the developing-country context). This bias

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and flaw is carried forward into practice. As such, it is arguably the single
most important weakness in the international development agenda on
governance. The five current governance issues that were discussed above
show ample proof of this. Indeed, focusing on what is relevant to a specific
development context, or what can conceivably work in the real world, can
help to better frame policies and also assist in designing and implementing
appropriate interventions.

Concluding remarks
This review and analysis of the current role of theory, policy and practice
in governance and development suggests that there is no universally
applicable stellar model or approach to the subject.
Another revealing conclusion that has surfaced is that the relevant
theories of governance and development have a remarkably limited role
to play in shaping policy and practice. Indeed, theory is largely employed
in metrics, advocacy, and in research and analysis.
Finally, perhaps the single most important problem in policies and
practices on governance for development is the failure to ensure that the
contextual dynamics found in each developing-country setting are not


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