Good Governance Essays

Good Governance Essays Good Governance Essay Good Governance Essay Governance is defined here; as the dynamic interaction between people, structures, processes and traditions that support the exercise of legitimate authority in provision of sound leadership, direction, oversight, and control of an entity in order to ensure that its purpose is achieved, and that there is proper accounting for the conduct of its affairs, the use of its resources, and the results of its activities. Good governance is an indeterminate term used in development literature to describe how public institutions conduct public affairs and manage public resources in order to guarantee the realization of human rights. [1] Governance describes the process of decision-making and the process by which decisions are implemented (or not implemented). [1] The term governance can apply to corporate, international, national, local governance [1] or to the interactions between other sectors of society. In international affairs, analysis of good governance can look at any of the following relationships:[3] between governments and markets, between governments and citizens, between governments and the private or voluntary sector, between elected officials and appointed officials, between local institutions and urban and rural dwellers, between legislature and executive branches, and between nation states and institutions. The varying types of comparisons comprising the analysis of governance in scholastic and practical discussion can cause the meaning of good governance to vary greatly from practitioner to practitioner. [3] Reform and standards : Three institutions can be reformed to promote good governance: the state, the private sector and civil society. [6] However, amongst various cultures, the need and demand for reform can vary depending on the priorities of that countrys society. [7] A variety of country level initiatives and international movements put emphasis on various types of governance reform. Each movement for reform establishes criteria for what they consider good governance based on their own needs and agendas. The following are examples of good governance standards for prominent organizations in the international community. IMF The International Monetary Fund declared in 1996 that promoting good governance in all its aspects, including by ensuring the rule of law, improving the efficiency and accountability of the public sector, and tackling corruption, as essential elements of a framework within which economies can prosper. [8] The IMF feels that corruption within economies is caused by the ineffective governance of the economy, either too much regulation or too little regulation. [8] To receive loans from the IMF, countries must have certain good governance policies, as determined by the IMF, in place. 8] UN The United Nations emphasizes reform through human development and political institution reform. [9] According to the UN, good governance has eight characteristics. [1] Good governance is[1]: Consensus Oriented Participatory following the Rule of Law Effective and Efficient Accountable Transparent Responsive Equitable and Inclusive World Bank The World Bank is more concerned with the refor m of economic and social resource control. [9] In 1992, it underlined three aspects of society which they feel affect the nature of a countrys governance:[9] 1. ype of political regime; 2. process by which authority is exercised in the management of the economic and social resources, with a view to development; and 3. capacity of governments to formulate policies and have them effectively implemented. The concept of good governance has gained significant attention in the world and especially in Pakistan in the last decade. Since there are few theoretical studies on this issue in Pakistan, this paper analyzes the impact of some significant macroeconomic variables on good governance using time series data for empirical analysis. In this paper, democracy, economic openness, population size, peace years, unemployment, exchange rate, budget deficit, life expectancy and educational levels are considered the major macroeconomic determinants of good governance. We have employed the concept of stationarity to solve the by using Augmented Dickey Fuller (ADF) test. By conducting the time series regression analysis, we found that the stated variables are affecting the degree of good governance according to their levels. Good governance has gained significant attention in the world especially in the last decade. In recent years, good governance has attracted the attention of economists, political scientists, lawyers, politicians, national institutions, and institutions of World Bank and IMF. Since some empirical and theoretical controversies have been found on the concept and importance of good governance but it can be considered as a prerequisite for economic growth and development (Kaufmann and Kraay, 2002 and 2003). Governance can also be seen as the instrument of the effectiveness of a society’s institutions. If the institutions are appropriate and effective, the outcome should be good governance (Duncan 2003). Governance is the instrument of political, economic and administrative authorities to manage a nations affairs. It is the diverse mechanisms, processes, relationships and institutions through which residents of country and groups communicative their benefits, exercise their rights and obligations and arbitrate their differences. In good governance countries, the working condition is generally more favourable for providing protection and guarantees for investors. Good governance is therefore a compartment of governance, wherein public capital and problems are managed effectively, efficiently and in response to vital needs of society. Effective elected forms of governance rely on public participation, accountability and transparency. There is an increasing amount of research on the factors that lead to good or bad governance in the world. Good governance creates a good environment for investment, including investment in people, and leads to higher income, reduces poverty, and provides better social indicators. According to UNDP, governance can be worked out as economic, political and administrative authorities to manage a countrys affairs at all levels. It joints the systems, processes and institutions, through which residents and groups articulate their interests, put into affect their legal rights, meet their obligations and mediate their differences. More modern studies have pointed out that face-to-face interactions, trust and partnership within voluntary associations enhance the capacity of people to work together. By helping residents to overcome combined action problems, trust and membership in voluntary associations are recognized as important factors in building the basis for responsive governance (Putnam 1993, 2000). World Bank has described the concept of good governance in various dimensions such as rule of law, government effectiveness, regulatory quality and control of corruption. These dimensions cover the whole society and economic sectors of the economies. As a matter of fact, this study will locate the variables that have more effect on these dimensions. Governance has engaged all concerns of society and economic operators for economic development but it is also considered as a fundamental element to be incorporated in the development strategy. Nonetheless, having its importance, differences also exist in respect of hypothetical formulations, policy prescriptions and conceptualization of the subject itself. Researchers have different ideology convictions due to which its formulation differs in different areas. Policy analysis stand empirically on the historical research of governance gives distinction to government failures to deliver, leading to propositions for downsizing or rightsizing, while policy prescriptions for good governance take an evolutionary observation of the matter questioning relevance of public sector management of certain activities in a changed context. Good governance is the term that symbolizes the paradigm shift of the role of governments. Unfortunately, this wide reaching and internationally imperative claim have not been sufficiently proved empirically in Pakistan. To fill this gap in the literature, this study aims to analyze the determinants of good governance in Pakistan. Thus, the hypothesis tested in this analysis is given as follows: â€Å"how do higher levels of social and economic variables in Pakistan contribute to better governance. † Since the major objective of this study is to analyze the factors that affect the good governance in Pakistan, the paper is organised as follows. Section II explores the conceptual and theoretical framework of good governance. Section III presents the brief literature review on good governance. Data and methodological issues are addressed in section IV. Section V presents the results of an econometric model and discussion. Conclusion and policy implications are given in the last section. II. Conceptual Framework of Good Governance From 1990s, the idea of good governance as an instrument for sustained development and poverty alleviation has gained widespread acknowledgment, especially among international organizations. Local concerns over what would later be labelled good governance had long been represent in all regions of the world. However, during the Cold War, much importance was not given to good governance but after it when structural adjustment programme was failed to overcome the economicproblems of many countries and objectives were not achieved then the need of good governance was realized to implement these policies. This problem was faced mostly in developing countries where policies were effectively prepared but not implemented properly due to bad governance. Good governance is also pointed out as one of the targets of the Millennium Development Goals (MDGs), an agenda for poverty alleviation and sustainable development. At the Sixth Session of the Committee on Development Policy (CDP), promise to good governance and how to improve the progress were one of the agenda. Governance has been defined as the organization of society by the people, or as the use of authority to manage a countrys affairs and assets. It has to be noted, however, that there has hardly been consented as to its foundation meanings, and as to how it could be implemented in practice. Less clarity in the meanings of the term governance becomes noticeable when its historical evolution is considered. The concept achieved distinction in donor discourse around 1990, after the end of the Cold War. The World Bank was the first donor institution to implement the concept of good governance as a condition for lending to developing countries. In the start, centre of attention was rather political and on the improvement in the quality of public sector institutions. By the mid-1990s, international donors thinking of good governance had extended to include the concept of transparency, accountability, and participation. This addition was due to financial crises started in the last of 1990s, and for improvement of governance and stability of international financial institutions. Good governance can be identified with the following features: i. Good governance is mutually supportive and cooperative relationships between government, society, and the private sector. The nature of relationships among these three characters, and the need to make stronger viable system to facilitate interactions,assume critical importance. ii. Good governance is defined as control of all, or some combination of, the following elements: contribution, transparency of decision-making, accountability, rule of law, predictability. iii. Good governance is normative in origin. The values that provide the foundation for governance are the values postulated by the defining characters and institutions. This last point needs special consideration and attention. If donor-conceptualized standard of good governance were insisted upon, it would imply an insistence that Western-derived standards of manner be adopted in non-Western cultural environment. Scholars have also raised the problem of possible contradictions and trade-offs among the elements, for instance, economic growth, labour conditions, civil liberties, and the protection of the environment. The standards of good governance applied on the national, global and corporate environments would serve the goals of poverty alleviation and sustainable development.