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p. 4 of 34 BACK | NEXT Executive Summary Introduction Good governance defined The elements of good governance Accountability Participation Predictability Transparency Interlinkages among the elements of governance The Bank’s concern with governance quality The Bank’s approach to governance issues Promoting the elements of good governance in Bank operations The Bank’s modalities for enhancing governance in DMCs Resource implications Reporting arrangements

Governance: Sound Development Management

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The elements of good governance

A number of multilateral organizations (e.g., the United Nations Development Programme [UNDP] and the Organisation for Economic Cooperation and Development [OECD]) have reflected on the elements of good governance, and on their relation to development. As the ethos and experience of these organizations vary, so, too, do their perceptions of what constitutes good governance. Insofar as the Bank is concerned, though, it is the approach taken by the World Bank—drawn from its global experience with project and adjustment lending—that is the most relevant. The World Bank’s interest in governance stems from its concern with the effectiveness of the development efforts it supports. From this perspective, sound development management, in the broadest sense of the phrase, is critical for ensuring adequate returns and efficacy of the programs and projects financed, and for the World Bank’s underlying objectives of helping countries reduce poverty and promoting sustainable growth. Hence, the World Bank’s emphasis in recent years has shifted from its own interventions to the overall country context (i.e., the governance climate) within which those interventions take place. In doing so, it has been guided by the nature of its operations and the opportunities for action that these offer. Accordingly, the key dimensions of governance identified by the World Bank are (i) public sector management, (ii) accountability, (iii) legal framework for development, and (iv) transparency and information.

The Bank also regards governance as synonymous with sound development management. It therefore relates governance to the effectiveness with which development assistance is used, the impact of development programs and projects (including those financed by the Bank), and the absorptive capacity of borrowing DMCs.⁶

Accordingly, like the World Bank, the Bank, too, is concerned directly with the manner in which the public sector is managed in DMCs, and with the legal framework for development. However, in formulating an analytical framework for addressing governance issues, the Bank prefers to draw a distinction between, on the one hand, elements of good governance and, on the other, the specific areas of action (e.g., public sector management) in which they could be promoted or their existence enhanced. In line with this reasoning, and building upon the approach of the World Bank, the Bank has identified four basic elements of good governance: (i) accountability, (ii) participation, (iii) predictability, and (iv) transparency.

The following sections consider briefly the relevance of the four elements of good governance to the development process.⁷

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