Thursday, 25 October 2012

Is the Governance Agenda Going Anywhere?



It is about two decades since the international community formed a consensus that ‘bad governance’ was a major development issue and a significant cause of low rates of economic growth in developing countries? The immediate trigger was the collapse of the Soviet bloc. This both undermined the credibility of the statist alternative to market-oriented liberal democracy and removed the need for the Western liberal democracies to compete with the Soviet Union for ‘client’ governments in the global South. There was a high degree of confidence that ‘West is best’ and ‘West knows best’.

Aid donors and the international community began to promote their vision of ‘good governance’ with self-assurance. That vision did not exactly fit into a ‘one size fits all’ formula. But the core elements were always liberal democratic. Better governance would follow when states became more democratic, more accountable, more transparent, and more bound by the rule of law.

‘Good Governance’ – a major change in our approach to development or just a brief interlude ‘in the history of hot air’?

I recall posing that question at the London School of Economics in the early-1990s. Twenty years later, the answer is still unclear. The emphasis on governance has lasted longer than I expected, and has taken deeper roots. However the equation of good governance with the liberal democratic model was never sufficiently plausible to stick in the long term.

What then has stuck? Arguably, it is the idea that developing countries have significant governance problems in the classic, Hobbesian sense of the term: weak capacity to organise the effective provision of collective goods and services, from roads and drug regulation through to human security and acceptable forms of dispute resolution and justice. It follows that governance is a legitimate component of development policy and development studies. What does not follow is the assumption that poor governance is particularly associated with poor countries. That did not seem an outrageous claim 20 years ago. Today it is clearly wrong.

‘Poor Governance’ and the troubled economies of the ‘old West’

One of the more prominent themes in the governance debate in the next few years is likely to be some rather energetic pointing of fingers by people from the global South at the poor quality of governance – especially economic governance – in what we used to call the West. Two decades ago, the West thought that it knew and practised the best recipes for promoting economic growth. True that parts of East Asia were also doing very well economically while using rather different recipes. But those experiences were still in dispute, and could possibly be pigeonholed as special cases. How different the world looks today.

Most of the economies of the old West are in deep trouble. They are close to stagnant. Most of the rest of the world is still growing. But rates are decelerating, dragged down in large part by mediocre performance of the old West. And that in turn owes a great deal to bad governance: to the inability of the governments of the old West to prevent pressure group and electoral politics from undermining economic performance. The governments of Europe and the United States first allowed their policies to be unduly influenced by special interests in the financial sector. Then, in trying to deal with the fiscal and economic consequences of the 2008 financial crisis, they are struggling hard to mobilise the political support needed to raise more revenue from the wealthy; to reflate without scaring the bond markets; to avoid generalised protectionism; and to cooperate to maintain confidence that there will not be a major fiscal-cum-banking collapse in Europe.

From the perspective of Europe or the United States, this hesitation and uncertainty may look like the price that has to be paid for national level sovereign democracy. From China or some parts of the old South, it looks like a serious governance failure with global consequences – and not so different from the consistent economic policy failures in Africa in the 1970s and 1980s that helped pave the way for the emergence of the governance agenda.

At that point, many African governments failed to provide an environment conducive to the foreign investment they so badly needed. Today the West badly needs Chinese investment, especially in large scale infrastructure, and the global economy really needs China to invest in the West. Is the current bidding war among American politicians to scare off potential Chinese investors any more justifiable or rational than Africa’s fears of American transnationals back in the 1970s? Was it really sensible of President Obama to block the recent attempt by wily Chinese investors to steal America’s natural resources by setting up a wind farm in Oregon?

If governance concerns do disappear from the development agenda, it will mainly be because of their roots in the Western countries that are now so conspicuously unable themselves to practice what they used to preach to others.

But let us assume that we can de-link the governance and development agenda from its embarrassing historical origins, and continue to find receptive audiences for the argument that all countries, rich and poor, North and South, face severe governance challenges? Thinking of poorer countries in particular, where will the governance agenda go? Let us start with how it has changed.

The governance agenda: my observations from the last 20 years

  • Attempts to find some wonderful new phrase, concept, or framework to define or dominate the field have failed. There are many such attempts. In a recent blog I critiqued a relatively modest one: the effort to insert the fuzzy notion of ‘political settlements’ as a useful way of thinking about problems of peacemaking and fragile states. A far less modest example is the endeavour by Douglas North and associates to reorganise our understanding of states and political power through the language of ‘closed’ and ‘open access orders’ and a relabelled version of deeply discredited modernisation theory (See North, D. C.,et al.). Equally immodest is the claim that the impartiality of government is the key to good governance – as if other things really were secondary, and the ‘impartiality’ of government were a realistic objective. (See B.Rothstein and J. Teorell). 
  • There has been real progress in appreciating the role of political elites in all political systems. That is not a fact that most of us relish. But it is reality. Many early variants of the governance agenda were imbued with a naive notion of how easy it might be to install authentic electoral democracies and other ‘advanced practices’ in countries effectively ruled by elites. I recall the enthusiasm of a staffer from a big international development bank about a decade ago as he explained to me his organisation’s planned governance targets for Bolivia. They included an annual figure for the number of prominent public figures who would be tried and found guilty of corruption.
  • The most important single contribution to the governance debate may be Dani Rodrik’ s suggestion that we need mentally to separate form (the shape of institutions and the ways in which they operate) from function (the things they do). Liberal democratic ideas focus more on governmental processes (forms) than on policy outcomes (functions).
  • Most of the enduring critiques of the original governance agenda – and there are plenty of them – have been broadly practical and oriented to its direct policy relevance. Does it accurately capture the type of governance that was practiced in the now-rich countries when they were much poorer? (See IDS Bulletin 24.1: Good Government?). Does it not lead aid donors to demand excessively wide-ranging reforms of recipient governments, with limited evidence of their likely short-term efficacy? (See Merilee Grindle). The governments of many poor countries are struggling with quite distinct problems, such as very high proportions of young people in their populations. Should their governance institutions and practices not reflect this? (See Matt Andrews). Should we not be thinking more of Working with the Grain by building on and developing existing governance institutions in poor countries, rather than trying to re-model them to fit more closely to an abstract ideal?
  • The fifth observation is that, despite the considerable resources that have been directed at developing governance indicators - especially the World Bank's World Governance Indicators - we still do not have a set that either (a) are widely accepted for their core validity or (b) are practically useful for policy purposes.

Is the governance agenda going anywhere?

It is still a little early to say. We do not have vast progress to report for two decades of work. But it is important to bear in mind that political science historically has had little data to work with, and that this is now changing. More effort is being put into collecting consistent data series on political phenomena of all kinds. Perhaps it will yield some juicy fruit. In the meantime, we cannot go too far wrong if we put our research efforts into limited, tangible policy issues. If we do not become practically more useful, we may find no one is listening.

4 comments:

  1. I am interested in your fifth observation about governance indicators. How would you address the two points you raised. That is, how do you go about developing governance indicators that are widely accepted for their core validity? Also what would practically useful indicators look like? What information would they provide?

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    1. Mick Moore says:

      Postro,
      I would be really happy if I could answer even one of your questions. In reality, I can answer none of them.

      I can give a view about where we went wrong with governance indicators. As it happens, it is not just the wisdom of hindsight. I was sceptical at the time they were being developed.

      The first mistake was to move too quickly toward a set of indicators for all/most countries when the data were not available. The second was the attempt to aggregate measures of a wide range of things, like accountability, civil liberty, the quality of the public service, the control of corruption, into a single indicator on which countries could be compared – on the assumption that all good things always tend to go together. The third mistake was not to make it much clearer early on that there was no statistical or historical basis for the suggestion or claim that higher scores on the governance indicators were likely to lead to faster rates of economic growth.

      What should we do now? I would give up on the idea of producing a single indicator on which countries could be compared. I would put more effort into producing better indicators, based on better data, of some important dimensions of government. I am not sure what these would be. We already have quite good measures of democracy at national level. Better measures of different dimensions of theaccountability of government might be a good way to go next.

      What do you think?
      Regards,
      Mick

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  2. Hey Mick, I agree with your points above. Since there is so much disagreement on what constitutes "democracy" perhaps it makes sense to provide valid and reliable measures of variables that may be fundamental to democracy -- things like press freedom, laws that limit executive power, etc. -- and then let individuals pick which indicators they aggregate into an overall measure of democracy. This does not mean that individuals' custom aggregate scores will be valid, but at least it will take care of the problem of not being able to agree on what "democracy" is.

    As far as tying "democracy" to economic growth I think we need better and more extensive data to prove this. Rwanda, for example, has done pretty well economically despite having what many see as an autocratic ruler in Kagame.

    My firm is working on addressing all of the issues you raised with a new project (www.democracyticker.com). I'd be happy to continue our conversation further as we develop the dashboard.

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  3. agree with the stance of World Growth which states Green misuse of ‘prior consent’ on land use will limit economic growth in developing countries. I believe development projects are necessary in building a better world but resourses in 3rd world countries should be used through proper laws and involvement of the locals, government and ngos

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