Governance First

WHAT IS GOOD GOVERNANCE?
From United Nations Economic and Social Commission for Asia and the Pacific
(UNESCAP)
Recently the terms "governance" and "good governance" are being increasingly used in
development literature. Bad governance is being increasingly regarded as one of the root
causes of all evil within our societies. Major donors and international financial
institutions are increasingly basing their aid and loans on the condition that reforms that
ensure "good governance" are undertaken.
This article tries to explain, as simply as possible, what "governance" and "good
governance" means.
GOVERNANCE
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). Governance can be used in several
contexts such as corporate governance, international governance, national governance
and local governance.
Since governance is the process of decision-making and the process by which decisions
are implemented, an analysis of governance focuses on the formal and informal actors
involved in decision-making and implementing the decisions made and the formal and
informal structures that have been set in place to arrive at and implement the decision.
Government is one of the actors in governance. Other actors involved in governance vary
depending on the level of government that is under discussion. In rural areas, for
example, other actors may include influential land lords, associations of peasant farmers,
cooperatives, NGOs, research institutes, religious leaders, finance institutions political
parties, the military etc. The situation in urban areas is much more complex. Figure 1
provides the interconnections between actors involved in urban governance. At the
national level, in addition to the above actors, media, lobbyists, international donors,
multi-national corporations, etc. may play a role in decision-making or in influencing the
decision-making process.
All actors other than government and the military are grouped together as part of the
"civil society." In some countries in addition to the civil society, organized crime
syndicates also influence decision-making, particularly in urban areas and at the national
level.
Similarly formal government structures are one means by which decisions are arrived at
and implemented. At the national level, informal decision-making structures, such as
"kitchen cabinets" or informal advisors may exist. In urban areas, organized crime
syndicates such as the "land Mafia" may influence decision-making. In some rural areas
locally powerful families may make or influence decision-making. Such, informal
decision-making is often the result of corrupt practices or leads to corrupt practices.
Click to Enlarge
Figure 1: Urban actors
GOOD GOVERNANCE
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. It assures that corruption is minimized, the views of minorities
are taken into account and that the voices of the most vulnerable in society are heard in
decision-making. It is also responsive to the present and future needs of society.
Figure 2: Characteristics of good governance
Participation
Participation by both men and women is a key cornerstone of good governance.

Participation could be either direct or through legitimate intermediate institutions or
representatives. It is important to point out that representative democracy does not
necessarily mean that the concerns of the most vulnerable in society would be taken into
consideration in decision making. Participation needs to be informed and organized. This
means freedom of association and expression on the one hand and an organized civil
society on the other hand.
Rule of law
Good governance requires fair legal frameworks that are enforced impartially. It also
requires full protection of human rights, particularly those of minorities. Impartial
enforcement of laws requires an independent judiciary and an impartial and incorruptible
police force.
Transparency
Transparency means that decisions taken and their enforcement are done in a manner that
follows rules and regulations. It also means that information is freely available and
directly accessible to those who will be affected by such decisions and their enforcement.
It also means that enough information is provided and that it is provided in easily
understandable forms and media.
Responsiveness
Good governance requires that institutions and processes try to serve all stakeholders
within a reasonable timeframe.
Consensus oriented
There are several actors and as many view points in a given society. Good governance
requires mediation of the different interests in society to reach a broad consensus in
society on what is in the best interest of the whole community and how this can be
achieved. It also requires a broad and long-term perspective on what is needed for
sustainable human development and how to achieve the goals of such development. This
can only result from an understanding of the historical, cultural and social contexts of a
given society or community.
Equity and inclusiveness
A society’s well being depends on ensuring that all its members feel that they have a
stake in it and do not feel excluded from the mainstream of society. This requires all
groups, but particularly the most vulnerable, have opportunities to improve or maintain
their well being.
Effectiveness and efficiency
Good governance means that processes and institutions produce results that meet the
needs of society while making the best use of resources at their disposal. The concept of
efficiency in the context of good governance also covers the sustainable use of natural
resources and the protection of the environment.
Accountability
Accountability is a key requirement of good governance. Not only governmental

institutions but also the private sector and civil society organizations must be accountable
to the public and to their institutional stakeholders. Who is accountable to whom varies
depending on whether decisions or actions taken are internal or external to an
organization or institution. In general an organization or an institution is accountable to
those who will be affected by its decisions or actions. Accountability cannot be enforced
without transparency and the rule of law.
CONCLUSION
From the above discussion it should be clear that good governance is an ideal which is
difficult to achieve in its totality. Very few countries and societies have come close to
achieving good governance in its totality. However, to ensure sustainable human
development, actions must be taken to work towards this ideal with the aim of making it
a reality.
Country Data Report for ALBANIA, 1996-2007
This Data Report provides a summary of the six aggregate governance indicators, together with all of the publicly-available disaggregated data on
which the aggregate indicators are based. The underlying data as well as methodological issues are described more fully in "Governance Matters
VII: Governance Indicators for 1996-2007" (June 2008).
The Report displays the country's performance for all available years between 1996 and 2007 in six governance dimensions: i) Voice &
Accountability, ii) Political Stability and Lack of Violence/Terrorism, iii) Government Effectiveness, iv) Regulatory Quality, v) Rule of Law, and vi)
Control of Corruption. Each page shows the country's percentile rank on one of the six governance indicators. Percentile ranks indicate the
percentage of countries worldwide that rate below the selected country. Higher values thus indicate better governance ratings. The graph also
reports the margins of error displayed in the line charts by dashed lines, and corresponding to a 90% confidence interval. This means that there is a
90 percent probability that governance is within the indicated range.
Underneath the line charts, the Report also displays data from all the underlying sources used for that indicator. Individual ratings have been
rescaled to run from 0 (low) to 1 (high). These scores are comparable over time and across countries since most individual measures are based on
similar methodologies over time. Scores from different individual indicators are not however directly comparable with each other since the different
data sources use different units and cover different sets of countries. The data from the individual indicators are in fact further rescaled to make them
comparable across data sources before constructing the aggregate governance indicators. To find out more about each source/organization click on
the provided links. More information about each of the underlying organization/source can also be found in Appendices A and B of the Governance
Matters VII paper.
Relevant links:
www.govindicators.org
www.worldbank.org/wbi/governance/
Disclaimer
The data and research reported here do not reflect the official views of the World Bank, its Executive Directors, or the countries they represent. The WGI are not
used by the World Bank Group to allocate resources or for any other official purpose.
Page 1
ALBANIA, 1996-2007
Aggregate Indicator: Voice & Accountabillity
100
90
80
Percentile Rank
70
60
50
40
30
20
10
0
1996 1998 2000 2002 2003 2004 2005 2006 2007
Individual Indicators used to construct Voice & Accountability

Code Source Website 1996 1998 2000 2002 2003 2004 2005 2006 2007
AEO OECD Development Center African Economic Outlook http://www.oecd.org/dev/aeo .. .. .. .. .. .. .. .. ..
AFR Afrobarometer http://www.afrobarometer.org .. .. .. .. .. .. .. .. ..
BTI Bertelsmann Transformation Index http://www.bertelsmann-transformation-index.de/ .. .. .. 0.58 0.58 0.76 0.76 0.76 0.76
CCR Freedom House Countries at the Crossroads http://www.freedomhouse.org .. .. .. .. .. .. .. .. ..
EIU Economist Intelligence Unit http://www.eiu.com .. .. .. .. .. .. .. 0.50 0.50
FRH Freedom House http://www.freedomhouse.org 0.39 0.42 0.45 0.56 0.58 0.57 0.59 0.58 0.58
GCS World Economic Forum Global Competitiveness Survey http://www.weforum.org .. .. .. .. .. .. 0.41 0.41 0.40
GII Global Integrity Index http://www.globalintegrity.org/ .. .. .. .. .. .. .. .. ..
GWP Gallup World Poll http://www.gallupworldpoll.com .. .. .. .. .. .. .. 0.24 0.24
HUM Cingranelli-Richards (CIRI) Human Rights Database http://www.humanrightsdata.com 0.50 0.75 0.50 0.88 0.88 0.88 0.75 0.75 0.75
IFD IFAD Rural Sector Performance Assessments http://www.ifad.org .. .. .. .. .. 0.60 0.62 0.56 0.64
IPD Institutional Profiles Database http://www.cepii.fr/ .. .. .. .. .. .. .. .. ..
LBO Latinobarometro http://www.latinobarometro.org .. .. .. .. .. .. .. .. ..
MSI IREX Media Sustainability Index http://www.irex.org .. .. .. 0.44 0.50 0.50 0.57 0.60 0.55
OBI International Budget Project Open Budget Index http://www.internationalbudget.org/ .. .. .. .. .. .. 0.24 0.24 0.24
PRS Political Risk Services International Country Risk Guide http://www.prsgroup.com 0.58 0.67 0.71 0.67 0.75 0.75 0.83 0.83 0.79
RSF Reporters Without Borders Press Freedom Index http://www.rsf.org .. .. .. .. 0.94 0.89 0.87 0.83 0.78
VAB Vanderbilt University Americas Barometer Survey http://www.lapopsurveys.org .. .. .. .. .. .. .. .. ..
WCY Institute for management & development World Competitiveness Yearbook http://www.imd.ch .. .. .. .. .. .. .. .. ..
WMO Global Insight Business Conditions and Risk Indicators http://www.globalinsight.com .. 0.25 0.38 0.50 0.50 0.44 0.50 0.50 0.56
Page 2
ALBANIA, 1996-2007
Aggregate Indicator: Political Stability and Absence of Violence
100
90
80
Percentile Rank
70
60
50
40
30
20
10
0
1996 1998 2000 2002 2003 2004 2005 2006 2007
Individual Indicators used to construct Political Stability and Absence of Violence

AEO OECD Development Center African Economic Outlook http://www.oecd.org/dev/aeo .. .. .. .. .. .. .. .. ..
BRI Business Environment Risk Intelligence Business Risk Service http://www.beri.com .. .. .. .. .. .. .. .. ..
DRI Global Insight Global Risk Service http://www.globalinsight.com 0.87 0.73 0.46 0.48 0.48 0.50 0.75 0.82 0.82
HUM Cingranelli-Richards Human Rights Database & Political Terror Scale http://www.humanrightsdata.com 0.56 0.65 0.56 0.58 0.63 0.65 0.73 0.65 0.65
IJT iJET Country Security Risk Ratings https://worldcue.ijet.com/tic/login.jsp .. .. .. .. .. 0.25 0.25 0.25 0.50
MIG Merchant International Group Gray Area Dynamics http://www.merchantinternational.com .. .. .. .. .. .. .. .. ..
Page 3
ALBANIA, 1996-2007
Aggregate Indicator: Government Effectiveness
100
90
80
Percentile Rank 70
60
50
40
30
20
10
0
1996 1998 2000 2002 2003 2004 2005 2006 2007
Individual Indicators used to construct Government Effectiveness

ADB African Development Bank Country Policy and Institutional Assessments http://www.afdb.org/ .. .. .. .. .. .. .. .. ..
ASD Asian Development Bank Country Policy and Institutional Assessments http://www.adb.org/ .. .. .. .. .. .. .. .. ..
BPS Business Enterprise Environment Survey http://www.worldbank.org/eca/governance .. .. 0.34 0.51 0.51 0.51 0.63 0.63 0.63
EGV Brown University's Center for Public Policy http://www.insidepolitics.org/egovt06int.pdf .. .. .. 0.34 0.28 0.26 0.28 0.24 0.28
PIA World Bank Country Policy and Institutional Assessments http://www.worldbank.org NA NA NA NA NA NA 0.53 0.55 NA
Page 4
ALBANIA, 1996-2007
Aggregate Indicator: Regulatory Quality
100
90
80
Percentile Rank
70
60
50
40
30
20
10
0
1996 1998 2000 2002 2003 2004 2005 2006 2007
Individual Indicators used to construct Regulatory Quality

EBR European Bank for Reconstruction & Development Transition Report http://www.ebrd.org 0.47 0.50 0.50 0.50 0.56 0.64 0.64 0.64 0.64
HER Heritage Foundation Index of Economic Freedom http://www.heritage.org 0.50 0.50 0.50 0.60 0.60 0.60 0.70 0.65 0.70
Page 5
ALBANIA, 1996-2007
Aggregate Indicator: Rule of Law
100
90
80
Percentile Rank
70
60
50
40
30
20
10
0
1996 1998 2000 2002 2003 2004 2005 2006 2007
Individual Indicators used to construct Rule of Law

FRH Freedom House http://www.freedomhouse.org 0.38 0.29 0.42 0.46 0.46 0.42 0.46 0.50 0.50
HER Heritage Foundation Index of Economic Freedom http://www.heritage.org 0.50 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30
HUM Cingranelli-Richards (CIRI) Human Rights Database http://www.humanrightsdata.com 0.50 0.50 0.50 0.50 0.00 0.00 0.50 0.00 0.00
QLM Business Environment Risk Intelligence Financial Ethics Index http://www.beri.com .. .. .. .. .. .. .. .. ..
TPR US State Department Trafficking in People report http://www.state.gov/g/tip/rls/tiprpt .. .. 0.00 0.50 0.67 0.67 0.67 0.67 0.33
Page 6
ALBANIA, 1996-2007
Aggregate Indicator: Control of Corruption
100
80
Percentile Rank 60
40
20
0
1996 1998 2000 2002 2003 2004 2005 2006 2007
Individual Indicators used to construct Control of Corruption

BTI Bertelsmann Transformation Index http://www.bertelsmann-transformation-index.de/ .. .. .. .. .. 0.40 0.40 0.40 0.45
FRH Freedom House http://www.freedomhouse.org .. 0.00 0.25 0.33 0.29 0.29 0.29 0.33 0.33
GCB Transparency International Global Corruption Barometer Survey http://www.transparency.org .. .. .. .. .. 0.62 0.62 0.52 0.58
PRC Political Economic Risk Consultancy Corruption in Asia http://www.asiarisk.com/ .. .. .. .. .. .. .. .. ..
QLM Business Environment Risk Intelligence Financial Ethics Index http://www.beri.com .. .. .. .. .. .. .. .. ..
Page 7
Good Governance against Good
Government?
Tuesday 2 March 2004 by Rémy HERRERA
Since the beginning of the 1990s, the major international organizations, first and foremost
among them International Monetary Fund (IMF) and the World Bank, have been
lavishing upon their member countries recommendations for "good governance".
However, the definitions of this term and, along with them, its substance, have varied
noticeably from one institution to another, preventing the formulation of a precise legal
definition - particularly since governance can also be global, corporate…
Within the framework of its loans and "oversight" operations, the IMF seeks to promote
good governance covering "all aspects of the conduct of public affairs". Applicable in
countries benefiting from its technical aid, and closely associated with its anti-corruption
fight, the IMF code of good governance aims to make economic policy decisions more
transparent, to make available a maximum of information regarding public finances, to
standardize audit procedures and, more recently, to "combat the financing of terrorism" .
According to the World Bank, the governance of "client countries" should "go beyond the
dysfunctioning of the public sector (the ’symptom’) to help these countries adopt the
reforms" designed to improve public resource allocation mechanisms, "the institutional
development of state, the processes of formulation, choice and implementation of
policies, and the relations between citizens and their government". If the UNDP links
good governance to sustainable human development, the Asian Development Bank
emphasizes private sector participation, whereas the Inter-American Development Bank
stresses the strengthening of civil society, the OECD accountability, transparency,
efficiency and effectiveness, economic forecasting and the primacy of law, the EBRD
human rights and democratic principles, etc. In spite of the vagueness of the concept and
of the normative judgement criteria involved, the goals formulated by these organizations
are quite clear and convergent: what is at stake is the shaping of states’ policies to create
those institutional environments most favorable to the opening up of the countries of the
South to globalized financial markets.
Good Governance vs Good Government
The official line in this matter is, of course, that of the IMF. For its purposes, good
governance consists essentially of "deregulating the exchange, trade and price systems",
of "limiting ad hoc decision making and preferential treatment of individuals and
organizations" and of "eliminating direct credit allocation" by the state. It is clear that
reaching these is indissociable from pursuing neo-liberal economic policies and the social
model that is the ultimate purpose of their implementation. This strategy, which has been
imposed since the beginning of the 1980s upon the majority of the countries of the South
(structural adjustment plans, deregulations, privatizations, free movement of capital, etc.),
has brought in its wake, in every domain and on every continent, the proof of its failure.
As a reflection of the hegemonic power of finance -to wit of the major owners of capital,
especially United States capital-, neo-liberalism is not a development model, but a
domination model. Its social disasters, its human dramas are too well known to need to be
cited. Its new ideological anti-state dogma, good governance, can thus only be seen as an
inversion of good government. In any event, the aim is not the development of
democratic participation of individuals in decision-making processes, nor the respect of
their right to development, but state-sponsored market deregulation, in other words
reregulation by the brute forces of capital on a world-wide scale.
Confronted with economic neo-liberalism’s impossibility of managing the crisis of the

world system and with the refusal of the international organizations to acknowledge the
urgency of finding an alternative that might impose upon capital’s dynamic of expansion
limits independent of its drive for maximization of profit, good governance can only
intensify its criticism of "the state failures". Civil servants are not only accused of "rent
seeking"; what is henceforth called into question is their own capacity to manage public
affairs, especially in the indebted countries of the South, and to build and sustain "decent"
institutions -not so much for people, but for capital. Nevertheless, the coincidence of
moralizing rhetoric about the responsibility of states (to which, alone, all errors are
imputed) and discurses about the irresponsibility of their agents (when it is not their basic
decency that is being questioned) is nothing other than a legitimizing of the ultra-liberal
option of abandoning the regalian prerogatives of state, which in some cases goes so far
as to delegate national defense, to substitute a foreign currency for the national one, or
privatize the tax collection…
Whence this striking paradox, inherent in good governance, of calls going out from the
international organizations to national governments that these latter adopt, indeed
"appropriate", neo-liberal economic policies imposed from without while the globalized
financial markets dispossess these states of their sovereignty and insinuate themselves
into the countries’ ownership structure of capital. Managing the state apparatus of the
South directly from the center of the world system, while neutralizing their state power
by stripping them of all prerogatives and reducing to a minimum their margins of
maneuver, would this not be, in the final reckoning, the secret of ideal governance? What
democracy could public authorities pretend to when they limit the exercise of national
sovereignty to the opening up of and liberalization of markets, to the payment of
dividends on foreign investment, and to the repayment of the foreign debt?
In such circumstances, we can only be disquieted by the "public-private partnerships for

development" initiatives launched by the Secretary General of the United Nations, and in
particular by the setting up of the Global Compact. This moral pact concluded between
the United Nations and big business intends, officially, "to give to the globalized market
a human face" by taking care that a core of "shared values and principles" relative to
human rights, labour legislation and the protection of the environment be observed by
transnational corporations. In reality, this all too risky deal allows these firms to make
United Nations institutions dependent on corporate financing and to use the public and
universal UN "label" for their own private purposes.
The IMF: Bad Governance Model?
The IMF’s insistence on good governance, which has become one of the conditions of aid
to countries in the South and of relief from their foreign debt, reveals the progressively
greater politicization of its interventions and the drift of its missions into areas beyond
those encompassed in its mandate. Its oversight of macro-economic policies and of the
private-sector-activities environment, confidence in which is supposed to constitute the
sine qua non of sustained growth, applies henceforth to "all aspects" of all state
institutions, including the nature of the political regime, which is required to be as
transparent as possible. The question that one must then ask is whether this body enforces
with equal single-mindedness, regarding its own modus operandi, the standards it
imposes upon the South. If the IMF is to be believed, the answer would be affirmative:
guidelines are in place to assure ethical behaviour and to prevent the corruption of its
personnel, a professional ethics counselor is on the scene, and so on… Nonetheless,
numerous facts converge to suggest that the IMF is today a model of bad governance.
Democratic and impartial institutions, the diffusion of information to the public,

transparency in decision-making procedures, the participation of all actors, free and fair
elections, efficient management of resources, expert competence in assessing situations,
accountability, integrity, respect for human rights, etc. should be some of the hallmarks
of good governance. How does the IMF measure up to this?
i. In this institution, where the weight of a member is a function of its monetary

contributions, the United States alone disposes of the right of veto over all major
decisions.
ii. In spite of recent progress, still limited in scope, the availability of documents drafted
by the IMF is subjected to considerable restrictions. iii. The negotiations that it is
involved with remain obscure and, for the most part, shrouded in total secrecy.
iv. The scope of its interlocutors is extremely limited (mainly finance ministers and
central bank authorities), although it has been slightly broadened in recent years (industry
heads, for example), but no attempt is ever made to involve or consult through any
democratic process the people affected by its policies. v. As consensus is the usual
method of decision-making, only exceptionally are programs submitted to a vote. vi. The
structural adjustment policies have turned out to be totally ineffective in resolving
domestic and foreign imbalances and have even contributed to causing and propagating
financial crises.
vii. Its experts are subjected to no evaluation procedure regarding the general pertinence
of their recommendations, much less regarding the appropriateness of such
recommendations to the needs and expectations of the people they affect.
viii. The very quality of the work done by the Fund, compared with what is available in
academic literature, is questionable.
ix. The anti-corruption rhetoric does not prevent the financing -and with full knowledge
of the results- of regimes that are notoriously corrupt. x. Many of the countries that
receive its financial aid have been criticized for their systematic violation of human
rights.
The Necessity of Transformations for Development and Democracy
Our purpose here is not only to aim our criticism at the dominant body of the
international financial institutions -whose reform is demanded from all quarters and
amounts to basic common sense. It is, also and especially, to stress that the failures of the
IMF in its support of the interests of creditors and transnationals bespeaks the failure of
global governance imposed by the G7, under the leadership of the United States, as a way
of getting the world system out of its crisis. The hallmarks of good governance will be
sought for in vain as long as the structural obstacles that prevent the vast majority of the
countries of the world from exercising their right to development and to democracy have
not been removed. Today more than ever it is obvious that economic neo-liberalism must
be abandoned, that the debt problem must be solved, that the dominant role of financial
speculation must be ended and that the activities of the transnationals, which are so much
the cause of the current system of unequal exchanges, must be checked.
What, then, are the indispensable transformations that must be carried out to construct a
democratic world, assuring the peoples of the world better living conditions and an
effective participation in the making and implementation of the decisions that affect their
lives? Any discussion of this challenge must take into account the following points:
i. modification of the rules of market access and of financial and monetary systems,
which implies a total rethinking and remaking of the IMF, the World Bank and the WTO;
ii. the creation of a system of taxation and income redistribution on a world-wide scale,
both more ambitious and more coherent than a "Tobin tax"; iii. an end of the regulation
of the world system by war, with demilitarization of the planet and peace keeping;
iv. the reinforcement and democratization of the UN, conciliating the rights of individuals
and peoples, political and social rights, universalism and cultural diversity;
v. collective management of natural resources, to be used in the service of all peoples,

and respect for the environment.
Such are, in our opinion, the sine qua non requisites of dynamic civil societies, of
sovereign and authentically democratic states, of autonomous regionalizations reinforcing
the positions of disadvantaged countries within the world system, but also the requisites
of the realization of the purpose of human rights, in their individual as well as in their
collective dimensions: food, health, lodging, education, security rule of law, justice,
equality…
Rémy HERRERA (CNRS, France)

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WHAT IS GOOD GOVERNANCE?

Figure 1: Urban actors

Good governance has 8 major characteristics. It is participatory, consensus oriented,

Participation by both men and women is a key cornerstone of good governance.

Equity and inclusiveness

Effectiveness and efficiency

Accountability is a key requirement of good governance. Not only governmental

Individual Indicators used to construct Voice & Accountability

Individual Indicators used to construct Political Stability and Absence of Violence

Individual Indicators used to construct Government Effectiveness

Individual Indicators used to construct Regulatory Quality

Individual Indicators used to construct Rule of Law

Individual Indicators used to construct Control of Corruption

Good Governance vs Good Government

Confronted with economic neo-liberalism’s impossibility of managing the crisis of the

In such circumstances, we can only be disquieted by the "public-private partnerships for

Democratic and impartial institutions, the diffusion of information to the public,

i. In this institution, where the weight of a member is a function of its monetary

The Necessity of Transformations for Development and Democracy

v. collective management of natural resources, to be used in the service of all peoples,

Rémy HERRERA (CNRS, France)

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