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Polity quality – how does governance affect poverty?

Patterns of governance vary widely across countries. To what extent can different types of governance be identified as pro-poor? An Institute of Development Studies working paper examines the relative efficiency of national political economies in converting national material resources into human development (longevity, education and literacy) for their citizens. The more dependent a state is on the mass of its citizens for financial resources, the more likely it is to use scarce material resources to promote human development and reduce poverty.

Patterns of governance vary widely across countries. To what extent can different types of governance be identified as pro-poor? This paper first identifies the various ways in which political factors might affect the incidence or rate of reduction in poverty. One measure of government commitment to poverty reduction has not been explored: the efficiency of national political economies, relative to one another, in converting a given volume of national material resources (GNP per capita) into human development for their citizens. This measure is labelled RICE (relative income conversion efficiency). The paper reports on statistical analysis of the factors that explain variations in RICE between countries:

Some determinants of RICE are technical and logistical. High population density is associated with high RICE scores, because it is easier and cheaper to provide health and education services to densely-clustered populations. Location in West Africa is associated with low RICE scores. This probably reflects a difficult natural environment, which is highly conducive to diseases.
The most widely used measures of good governance, that in fact reflect the concerns of international investors and lenders, are strongly associated with low RICE scores.
Governments that are dependent on their own citizens for financial resources – rather than on mineral wealth or aid - appear more effective at converting material resources into human development.

Policy implications:

Conventional measures of good governance are inadequate and misleading from the perspective of those concerned with poverty reduction. The governments that score well according to those measures are not effective at using scarce resources to boost mass welfare. To rank developing countries according to quality of governance, clarity about what is being measured is essential. What is ‘good governance’ from one perspective might be ‘bad governance’ from another.
States dependent on the mass of their citizens for financial resources are more likely to treat citizens relatively well and to govern well. Governments that are too dependent on mineral wealth or aid are unlikely to be very committed to effective poverty reduction.

Source(s):
‘Polity Qualities: How Governance Affects Poverty’ IDS Working Paper #99 Institute of Development Studies, Brighton by Mick Moore, Jennifer Leavy, Peter Houtzager and Howard White (1999)

Funded by: DFID (Escor)

id21 Research Highlight: 24 January 2001

Further Information:
Mick Moore or Howard White
Institute of Development Studies
University of Sussex
Brighton BN1 9RJ
UK

Tel: +44 (0)1273 606 261
Fax: +44 (0)1273 621 202 / 691 647
Contact the contributor: M.Moore@ids.ac.uk

Institute of Development Studies (IDS), UK

Contact the contributor: H.White@ids.ac.uk

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