Good Governance

Topics: Governance, World Bank, Economics Pages: 7 (1859 words) Published: December 21, 2010
Good Governance
Governance Governance is defined here; as the dynamic interaction between people, structures, processes and traditions that support the exercise of legitimate authority in provision of sound leadership, direction, oversight, and control of an entity in order to ensure that its purpose is achieved, and that there is proper accounting for the conduct of its affairs, the use of its resources, and the results of its activities. Good governance is an indeterminate term used in development literature to describe how public institutions conduct public affairs and manage public resources in order to guarantee the realization of human rights.[1] Governance describes "the process of decision-making and the process by which decisions are implemented (or not implemented)".[1] The term governance can apply to corporate, international, national, local governance [1] or to the interactions between other sectors of society. In international affairs, analysis of good governance can look at any of the following relationships:[3] • between governments and markets,

• between governments and citizens,
• between governments and the private or voluntary sector, • between elected officials and appointed officials,
• between local institutions and urban and rural dwellers, • between legislature and executive branches, and
• between nation states and institutions.
The varying types of comparisons comprising the analysis of governance in scholastic and practical discussion can cause the meaning of "good governance" to vary greatly from practitioner to practitioner.[3]

Reform and standards

Three institutions can be reformed to promote good governance: the state, the private sector and civil society.[6] However, amongst various cultures, the need and demand for reform can vary depending on the priorities of that country's society.[7] A variety of country level initiatives and international movements put emphasis on various types of governance reform. Each movement for reform establishes criteria for what they consider good governance based on their own needs and agendas. The following are examples of good governance standards for prominent organizations in the international community.


The International Monetary Fund declared in 1996 that "promoting good governance in all its aspects, including by ensuring the rule of law, improving the efficiency and accountability of the public sector, and tackling corruption, as essential elements of a framework within which economies can prosper."[8] The IMF feels that corruption within economies is caused by the ineffective governance of the economy, either too much regulation or too little regulation.[8] To receive loans from the IMF, countries must have certain good governance policies, as determined by the IMF, in place.[8]


The United Nations emphasizes reform through human development and political institution reform.[9] According to the UN, good governance has eight characteristics.[1] Good governance is[1]: • Consensus Oriented

• Participatory
• following the Rule of Law
• Effective and Efficient
• Accountable
• Transparent
• Responsive
• Equitable and Inclusive

World Bank

The World Bank is more concerned with the reform of economic and social resource control.[9] In 1992, it underlined three aspects of society which they feel affect the nature of a country's governance:[9] 1. type of political regime;

2. process by which authority is exercised in the management of the economic and social resources, with a view to development; and 3. capacity of governments to formulate policies and have them effectively implemented.

The concept of good governance has gained significant attention in the world and especially in Pakistan in the last decade. Since there are few theoretical studies on this issue in Pakistan, this paper analyzes the impact of some significant macroeconomic variables...
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