Good governance and market

By Erica Reed,2014-06-13 19:15
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Good governance and market

    * Extracted from Azmat and Coghill ( 2005): Azmat, Fara, and Ken Coghill. 2005. Good Governance and Market-Based Reforms: a Study of Bangladesh. International Review of Administrative Sciences

    (4): 625638. 71

2005 IIAS, SAGE Publications (London, Thousand Oaks, CA and New Delhi)


    Market-based reforms have been a dominant phenomenon of the last three decades adopted by both developed and developing countries in varying proportions. These reforms originated internally in developed countries but in developing countries they have been imposed by external aid agencies, mainly the World Bank and IMF through their structural adjustment programmes linked with conditionality (Peters, 2001: 2). The outcome of these reforms in the developing countries has been mixed and ranges from considerable success to disappointment (World Bank, 2002). In most cases the reforms have not yielded many of the expected outcomes that the rhetoric had promised.

    The external aid agencies have linked the failure of the reforms to the lack of good governance in developing countries. After being used for the first time by the World Bank in 1989 to characterize the crisis in Sub-Saharan Africa as a crisis of governance, the term good governance is recently increasingly used among the donors as both objective and a condition of the development assistance strategy for the developing countries (Santiso, 2001: 35). Good governance has been an agenda advocating pro-market

    reforms, i.e. redirecting the role of the state from rowing to steering and including

    private sector and non-governmental organizations (NGOs) as various forms of partnership in public governance (Brinkerhoff, 2003: 105). These reforms have changed the traditional notion of governance from being synonymous with government to encompass the integration of public, private and civil society organizations. Good governance has now become a process that is more inclusive, democratic and participatory than in the past with the state no longer the sole actor in making decisions and delivering services although it remains of central importance. However, in developing countries good governance has emerged in response to the concerns over aid

    ineffectiveness and the pervasive effects of corruption that prompted the World Bank and IMF to revisit their traditional approaches to policy reforms (Santiso, 2003: 6). The approaches used to revisit good governance in developing countries remain strikingly similar to those used to promote economic reforms representing just an extension in the conditioning of aid from the economic realm to the political arena (Santiso, 2001: 3).

    Although the importance of governance in promoting development and alleviating poverty is universally accepted, measuring the quality of governance has been until recently an elusive challenge. A new set of public sector governance indicators covering

almost 200 countries from the period 19962002 has been recognized as an effective

    measurement tool across the world (World Bank Press Release, 2003). These indicators focus on six dimensions which include: (a) voice and accountability; (b) political stability and absence of violence; (c) government effectiveness; (d) regulatory quality; (e) rule of law; and (f) control of corruption (Kaufmann et al., 2003: 89). These indicators have

    made it clear that good governance is not solely the domain of the public sector. Rather, it depends on the relationship and cooperation between different spheres of governance, i.e. public, private and civil society (Coghill, 2003: 3)….[626]

    Good governance is not the exclusive domain of public sector; it actually requires balancing and managing the changing relationship between the state, markets and civil society. Governments are now working increasingly in partnership with business and civil society, particularly in establishing an appropriate institutional and policy framework (OECD, 2001: 87)…. The challenge for the government therefore is to rethink the partnership and overcome its drawbacks to enhance its effectiveness so that the NGOs could take a lead role in educating, training and creating awareness within the private sector and farmers about business ethics, benefits of corporate social responsibility and promote a code of ethics and standards. In addition, NGOs could also play a greater role in demanding transparency, accountability and fairness and capacity building on behalf of the state to enforce compliance…. [635-6]

    the first priority for the government is to improve governance. Civil society organizations and the private sector could help the government promote good governance by monitoring the states exercise of power and broadening citizens

    participation in public policy-making and capacity-building. Civil society organizations could also force the government to be transparent and accountable by publicizing acts of wrongdoing, corruption and violation of law, and also advocate on behalf of the poor farmers who are being cheated. On the supply side, civil society could share much of the role of the state in providing training to the private sector and farmers about business ethics and creating awareness among them. With some of the world-renowned and successful NGOs …. In short the potential of the market-based reforms could be fully exploited if all three spheres of governance, i.e. the state, the private sector and civil society, work together effectively to promote good governance in a participatory approach. [636]

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