EDEN BUILDING TO STOCK EXCHANGE

Published: 12:29 AM, 07 July 2019

Good governance and doing business

M S Siddiqui

The concept of "governance" is not new. It is as old as human civilization. Simply put
"governance" means: the process of decision-making and the process by which decisions are
implemented (or not implemented). Recently the terms "governance" and "good governance"
are being increasingly used in development literature.Good governance has 8 major
characteristics.

It is participatory, consensus oriented, accountable, transparent, responsive, effective and

efficient, equitable and inclusive and follows the rule of law.The Cambridge Dictionary refers to it
as 'the way that organizations or countries are managed at the highest level, and the systems
for doing this'.

The concept of governance defines the manner in which power is exercised in the. management
of a country's economic and social resources for development (World Bank. 1992). It is also
defined as 'the useof political authority and exercise of control over a society and the
management ofresources for social and economic development'.

The concept of public good governance became rather significant inthe early 1990s 'when
international aid agencies realized that poor governance acrossmany developing countries was
a major obstacle to their economic development'.The WB in its working paper defines
governance as a neutralconcept, meaning 'the political direction and control exercised over the
actions of themembers, citizens or inhabitants of communities, societies and states'.

WB highlights the idea that thereare some dimensions of governance that appear to affect
economic performance such as accountability, openness and transparency, and the rule of law.

All these aspects of governance affect economic development, including quality of the business
environmentthrough their influence on fiscal integrity, on predictability, and on the creationand
maintaining of a business environment focused on economic performance.

WB stated that six newaggregate indicators of governance were defined, such as 'voice and
accountability','political stability and lack of violence', 'government effectiveness', 'regulatory
quality' 'rule of law' and 'corruption'. It suggested that effective governmentsshould properly
answer to citizen needs, promote politically neutral managers,and develop a framework of pro-
business policies. However, there is a major issue that still remains a subject of controversial
debates andthis issue deals with the most adequate indicators that should be used to capture
correctlythe quality of corporate governance.
Government is one of the actors in governance and many dimensions of governance 'only the
extent to which governments are accountable, respect democratic rights as well as refrain from
imposing burdens on business have a statistically significant influence'. (Neumayer,
2002).Governance is approached as a new public management that should make the difference
between government and governance i. e. 'less government and more governance' (Osborne
and Gaebler 1992). The acts of government are meant to serve the interest of the general
population and the cooperation between public and private sectors is crucial for ensuring the
good of the society.

Despite the differences indefining the concept of governance, one central common element in
all these conceptualGood governance has become a topic of great interest for both scholars
and public policy organizations since good governance influences economic prosperity. Good
governance must necessarily ensure a framework of good rules that enhance ease for doing
business that are meant to enhance the predictability of economic interactions between various
contractual partners.

Good Governance leads to a transparent environment for conducting public affairs, being a
promoter of free market policies, justice, and the rule of law. The effects of good governance
are, no doubt, felt on the business and economic environment. Good governance implies fair
regulatory frameworks, accountability, and transparent policy making, all these factors having
direct influences on economic activity.

The effects of good governance are felt on the business and economic environment. Good
governance implies fair regulatory frameworks, accountability, and transparent policy making.
These factors have direct influences on economic activities of a country. Good governance must
necessarily ensure a framework of good rules that clearly establish rules that are meant to
enhance the predictability of economic interactions between various contractual partners.

The public and private sectors are depending on each other to activate efficiently and to achieve
their objectives, therefore the public sector should facilitate, through an appropriate regulatory
framework and control of corruption, the effectiveness of the business sector. Private sector
outputs could provide a basis for the public sector to serve the economic health of a country and
its population.

In this context, the ease of doing business must represent an issue of major concern for
government and the public sector, and one of the major interests of government should be more
accessible business regulations and regulatory processes, given the relevance of business
environment outputs for the public sector.

Good governance as conceived by the World Bank, the United Nations Development
Programme (UNDP), the Organization for Security and Co-operation in Europe (OSCE), the
United States Agency for International Development (USAID) and other donor agencies consists
of two major dimensions: political and economic (see figure 1). The political dimension can be
broken down into four key components: government legitimacy; government accountability;
government competence; and rule of law (human rights).

The economic dimension also has four components: public sector management; organizational
accountability; rule of law (contracts, property rights); and transparency (including freedom of
information). This does not encompass all aspects of the concept of governance, but provides a
framework for discussion. As the following section points out, initiatives to develop
measurements of governance have been selective in the choice of dimensions and concepts.

The business environment seems to be positively affected by the good governance. According
to Çule and Fulton (2013) the influence of governance over the business environment is given
by the supposition that an economy with a moderate level of bureaucracy, a high concern for
legislative compliance, and good instruments for controlling corruption is expected to create and
maintain a business environment that stimulates economic performance.

There is no doubt that the public and private sectors are depending on each other to activate
efficiently and to achieve their objectives, therefore the public sector should facilitate, through an
appropriate regulatory framework and control of corruption, the effectiveness of the business
sector. Private sector outputs could provide a basis for the public sector to serve the economic
health of a country and its population.

In this context, the ease of doing business must represent an issue of major concern for
government and the public sector, and one of the major interests ofgovernment should be more
accessible business regulations and regulatory processes, given the relevance of business
environment outputs for the public sector.

Bangladesh is gradually heading for market economy although our mind set of both citizen and
the politicians and bureaucrats are historically against private sector. The 7th Five year plan had
forecast of gradually transform of economy with an investment of 78% from private sector. The
role of private sector is not much discussed in Bangladesh rather this is not encouraged in our
society. But the public and private sector is complementary to each other.

The writer is a legal economist

Email: mssiddiqui2035@gmail.com