MG^2 “Maximum Governance – Minimum Government”

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The creation of a bigger government to drive development that would lead to improved governance is a myth as we’ve seen around the world. Whereas good governance being important for development and growth needs no validation. In the former case, the benefits of growth largely accrue to an elite few which benefits from mis-governance, and they would ensure the continuation of mis-governance for their benefit and hence overall growth in the economy will impede.

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Based on a research program of the World Bank, the Worldwide Governance Indicators (WGI) capture six key dimensions of governance (Voice & Accountability, Political Stability and Lack of Violence, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption). WGIs of all the six dimensions for Sri Lanka for 2013 are a sad state. The individual numerical scores are all in the negative range. Regulatory quality and Rule of Law have moved from positive in 2002 to negative in 2013 and should continue to decline in 2014.

If governments are willing to reform they could use these findings for policy reforms. The growing recognition of the link between good governance and successful development, as empirical evidence suggests, has stimulated demand for monitoring the quality of governance in countries over time. However, politicians who want bigger governments, to support corruption and fraud would dispute these findings, as biased and unfair.

Daniel Kaufmann and Aart Kraay in their research publication, ‘Growth Without Governance, have concluded “Per capita incomes and the quality of governance are strongly positively correlated across countries. We propose an empirical strategy that allows us to separate this correlation into: i) a strong positive causal effect running from better governance to higher per capita incomes, and ii) a weak and even negative causal effect running in the opposite direction from per capita incomes to governance. The first result confirms existing evidence on the importance of good governance for economic development. The second result is new and suggests the absence of “virtuous circles” in which higher incomes lead to further improvements in governance”. The second result suggests that governance improvements will not take place automatically as the development process unfolds; no automatic virtuous circle can be counted upon.

One possible explanation cited in the research, for the negative feedback from per capita incomes to governance is the phenomenon of state capture. Where the fruits of income growth largely accrue to an elite which benefits from mis-governance. The results from the BEEPS survey pointed to a high prevalence of state capture in the transition economies, such as Moldova, Russia, Ukraine and Azerbaijan. Sri Lanka was well on its way to probably top this list, if not for Lady democracy smiling on this nation on January 8, 2015.

To continue Sri Lanka’s march to development automatic improvements in governance cannot be expected. Instead substantial and ongoing interventions to improve governance are required In order to design governance and institutional reform strategies. Citizens of the country get another chance on 17 August to strengthen the hand of ‘good’ and to defeat the actors and forces of mis-governance. In the developed world, the educated understand democracy and respect the rights of all citizens to live in peace and with dignity. Hope so will our people, for a better future!

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About surenraj

“Views expressed are my own”
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