Governance, Growth, and Development Decision-making - School of ...

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If standard development advice is wrong, what should developing countries do? How do they get on the path of transition from natural state to open access order? There is no easy answer to this question, no magic bullet. 1 The important insight of our framework is that development advice should take account of the logic of the natural states. In particular, it should focus on where an individual natural state is on the progression of natural states; that is, whether it is fragile, basic, or mature, or on the doorstep. Advice should focus on helping fragile natural states become basic ones; basic ones, mature; mature ones to the doorstep; and, finally, natural states on the doorstep to enter the transition proper. Similarly, advice should focus on institutions and organizations that help reduce the threat of violence and disorder. 1 Nonetheless, we make several suggestions, as we spell out in a bit more detail in our work with Stephen Webb; North, Douglass C., John Joseph Wallis, Steven B. Webb, Barry R. Weingast (2007). Limited Access Orders in the Developing World: A New Approach to the Problems of Development, Policy Research Working Paper 4359, The World Bank, September 16 Governance, Growth, and Development Decision-making
Thinking about Governance Dani Rodrik A deep insight that has emerged out of the disappointments of the Washington Consensus is that successful policy reform is at its core governance reform. Reforms in the areas of, say, trade or fiscal policy require much more than just cuts in tariffs and a balancing of the budget. If you want to achieve lasting change and have a real impact on the behavior of those agents that determine the success of reform, you must change the “rules of the game”—the manner in which trade policy is made or fiscal policy is conducted. This insight, assisted and reinforced by the academic literature on institutions and growth, has in turn produced a new development agenda focused on a broad list of governance reforms. These reforms target a lengthy list of objectives, including reducing corruption, improving the rule of law, increasing the accountability and effectiveness of public institutions, and enhancing access and voice of the citizenry. The agenda is neatly captured and quantified by the Kaufmann-Kraay Governance Indicators data set. Much of this is for the good. In particular, the tilt towards governance has the virtue that it helps shift the focus of reforms towards objectives that are desirable end-goals in and of themselves. The items on the original Washington Consensus agenda were all of instrumental value at best. Playing around with tariff and tax schedules and with the composition of public expenditure is worthwhile only to the extent that it achieves other objectives we really care about: increased growth, reduced poverty, improved equity. By contrast, it would be hard to take issue with the intrinsic importance of improved governance along its various dimensions: rule of law, transparency, voice, accountability, effective government. We might even say good governance is development itself. Combine it with material well-being, and we attain the Nirvana of advanced societies. Dani Rodrik 17
Page 3 and 4: Governance, Growth, and Development
Page 5: TABLE OF CONTENTS Interactions betw
Page 8 and 9: It is also not necessary (and in fa
Page 10 and 11: ments lies with internal dynamics a
Page 12 and 13: has failed. It suffices to say here
Page 15 and 16: Violence and Social Orders: A Conce
Page 17 and 18: orders significantly expand the siz
Page 19 and 20: can be sustained when powerful grou
Page 21: tion, transplanting these instituti
Page 25 and 26: thinking about how to build the rul
Page 27 and 28: tutional prerequisites and one wher
Page 29 and 30: nities. Best-practice institutions
Page 31 and 32: What Do We Know About the Relations
Page 33 and 34: 2. Causal Relationships There is a
Page 35 and 36: The actual impact of democratic ins
Page 37 and 38: growth and stable liberal democracy
Page 39 and 40: According to Huntington, social mob
Page 41: Contributors Douglass North is Prof

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