Rethinking Good Governance in Developing Economies

Is “Good Governance” the key for sustainable development and poverty eradication? Careful analysis of economic history in Europe and East Asia shows that its theoretical foundations and explanations do not meet reality: While Good Governance might prepare poor countries to integrate themselves into global markets, they will not experience substantial growth and poverty reduction. Political realities in developing countries are complex, including diverse factions of competing patron-client networks. Hence, reform, instead of cutting states towards a perceived mirror image of Western democracies, should aim to build institutions that enable leaders to introduce changes that transform failing states into “developmental states”.