Is good governance a good development strategy?

This paper shows that while there is a correlation between “good governance” and the level of development (per capita GDP), there is no correlation between good governance and the pace of development (medium-to-long-term growth). This the authors argue is because good governance does not touch the driving forces behind institutional, economic, political and social change.

The authors elaborate and test new concepts to analyse the reality of governance in developing countries. In this way, they identify the governance capabilities that they think developing countries truly need. They argue that:

• good governance does not emerge as a priority for economic take-off. It becomes one later, along with the opening of the social regulation system when a country seeks to converge with developed countries
  
• in non-converging developing countries, the priority is to build capacities for strategic vision and co-ordination among elites.

The authors thus propose a wider definition of governance and new indicators to measure it. The new broader concept of governance, namely “governance for development”, covers the various institutional arrangements that produce confidence among agents depending on the income level of the country and the dynamic of opening up to new actors. This opening up of the regulatory system occurs on the economic level (extending the possibilities of market entry to new actors), on the social level (increased role of merit) and on the political level (democracy).

The authors thus define “good institutions” as those that ensure lasting confidence among agents, and between agents and organisations.