While most people agree that governance contributes to positive economic and social outcomes, it is rare to find rigorous, systematic and comprehensive governance assessments. This briefing paper, published by the Overseas Development Institute, synthesises current thinking on the relationship between governance and development and aid effectiveness. Use of improved assessment approaches would contribute to more effective aid interventions, benefiting poor people in developing countries and satisfying taxpayer concerns in donor countries about the cost of aid.
Governance consists of more than a narrow focus on government. It relates to the public realm where state, economic and societal actors interact to make decisions. Cross-country evidence indicates that better governance contributes to improved investment and growth rates. More effective government, bureaucracy and rule of law contribute to better economic performance and the personal and economic well-being of citizens.
The main arenas of governance are civil society, political society, government, bureaucracy, economic society and the judiciary. The practice of good governance includes adherence to the universal principles of participation, fairness, decency, accountability, transparency and efficiency. Assessing the status of governance in a developing country poses challenges that are very different from other socio-economic issues. First, there are few objective or ‘hard’ indicators. Second, governance remains a sensitive issue, making it difficult to collect data.
Governance assessments suffer from a number of shortcomings, including:
- A lack of reliable, valid and comparable data on key governance concerns.
- Inadequate information-gathering by donors on a country’s current situation; lack of focus on reforms that are politically feasible.
- Insufficient linkage of assessment results to aid allocation and country programming.
A team of researchers have developed a new, systematic approach to generating comprehensive assessments that stresses accuracy and legitimate data collection. The approach adopts a set of universal principles and focuses on key arenas of the political process. It solicits the views of local experts and stakeholders, generates qualitative as well as quantitative information and is independently managed.
To develop more independent, rigorous and detailed governance assessments, donors should:
- Solicit input from local stakeholders during the assessment process and develop local capacity to conduct such assessments.
- Orient the level and type of aid according to specific country contexts.
- Improve the clarity of both assessment findings and donor-recipient agreements so as to avoid the start-stop approach to aid.
- Support the maintenance of government, private sector and civil society accountability to local stakeholders in spite of aid assistance.
- Increase coordination among donors.
- Be realistic about the time it takes for governance constraints to be overcome.
