The puzzle of good governance<\/p>\n
By Satish Mishra<\/p>\n
JAKARTA (JP): The considerable literature on the role of
\ninstitutions in development suggests that we are far from being
\nable to define an ideal universal institutional structure or
\nincentive which helps define \"good governance.\"<\/p>\n
Finding the right mix of rules and institutional changes that
\nmight suit a given society at a particular stage of their
\ndevelopment is perhaps the most critical challenge. Working out
\nthe feasibility approximating a preferred set of institutions in
\nany particular setting is another.<\/p>\n
Given that both market and political institutions have
\ndeveloped in advanced market economies over decades, even
\ncenturies, it is not immediately apparent that good institutional
\nstructures, like good production technologies, might be adopted
\nat will. Is lateness in institutional reform an asset or a
\nliability?<\/p>\n
Works such as that by Landes on technological dissemination,
\nand of Huntington on the changing patterns of identity and social
\norganization all suggest that establishing a structure of good
\ngovernance might not be as easy as it seems.<\/p>\n
As Landes notes, \"Good government is not there for the
\nwanting, or even for the knowing. It is not an act of will or
\nfiat. It will not come about because someone appoints good
\ncounselors, even good economists.\"<\/p>\n
He adds that it takes time to create an effective bureaucracy
\nand \"to establish a commitment to a larger national identity and
\npurpose.\"<\/p>\n
European countries took centuries to do this, Landes writes:
\n\"New nations have tried to establish a whole panoply of
\ninstitutions in a matter of years or decades.\" It is no accident,
\nhe says, \"that the success stories of East Asia are of relatively
\nhomogeneous societies with a strong sense of historical and
\ncultural identity\".<\/p>\n
Institutional reform is therefore riddled with uncertainties
\nand pitfalls. There is no clean slate. There are no ideal models.
\nThere might even be active resistance to what is perceived as the
\nimposition of external cultural values and norms on an
\neconomically weak trading partner.<\/p>\n
Good governance and institutional reform by their nature go
\nbeyond the competence of economists and technocrats. Often the
\n\"right\" answer is rooted not in the technical solution to an
\nallocation or a transaction cost problem, but in consensus
\nbuilding.<\/p>\n
This involves not being right, but making sure that the
\ncommunity as a whole arrives at a shared common view of what
\nconstitutes acceptable standards or ethics or probity.<\/p>\n
What does all this imply for policy? First, there is a need to
\nrecognize the limitations of governance related reform both in
\nterms of scale and timing. Second, one should avoid straining the
\nanalytical link between specific institutional arrangements and
\neconomic performance.<\/p>\n
Certain types of institutions, such as democracy, can act as
\nboth an ends as well as an instrument. One does not need to find
\na fool-proof link between democracy and economic growth to be
\nable to support the creation of a democratic political system.<\/p>\n
Third, attention needs to be paid to the sequencing problems
\nin institutional reform. Where interdependence of institutions
\nrequires simultaneous changes in several bodies, an effective
\nstate will still be needed to prevent coordination failure and
\nsolve free-rider problems.<\/p>\n
Thus even when the end point of institutional reform is to
\npromote private-public partnerships the state might still emerge
\nas a key facilitator of this reform.<\/p>\n
Fourth, one should avoid overloading the governance agenda by
\nsetting manageable priorities. In crisis situations this implies
\nfocusing on those aspects of institutional reform where the
\ncorrelation with a given economic output is the strongest.
\nCorruption is one clear candidate.<\/p>\n
Promoting and building consensus on an equitable sharing of
\nthe costs of economic crisis and reform is another. Fifth, given
\nthe fuzziness of the terrain, it is important to lower
\nexpectations of immediate gains from governance reform on the one
\nhand and refrain from setting strong governance conditionalities
\non the other.<\/p>\n
Both these approaches are likely to be counterproductive by
\nsetting up political resistance to institutional reform. This
\nwill make the future task of searching for an appropriate
\nstructure of governance even more difficult than it already is.<\/p>\n
The writer is the chief economist of the United Nations
\nSupport Facility for Indonesian Recovery (UNSFIR). The views
\nreflected in this article are strictly personal and should not be
\nattributed to UNSFIR or any of the UN organizations.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/the-puzzle-of-good-governance-1447893297",
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