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p. 31 of 34 BACK | NEXT Executive Summary Introduction Good governance defined The elements of good governance The Bank’s concern with governance quality The Bank’s approach to governance issues Promoting the elements of good governance in Bank operations Building governance capacity Participatory development processes Legal frameworks Information openness The Bank’s modalities for enhancing governance in DMCs Resource implications Reporting arrangements

Governance: Sound Development Management : Promoting the elements of good governance in Bank operations

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Information openness

Disclosure of information

Information flows between the government and the private sector contribute greatly to the efficiency of market-oriented economies. Since the actions of governments are considered in the risk calculations of private enterprises, the latter value accurate information about government regulations and decisions. Publicly available knowledge also reduces information asymmetry between lenders and borrowers, thereby moderating interest rates to a commensurate extent. Governments, too, must have access to reliable information from the private sector, as an aid for effective economic decision making. The principal barrier to such information flows from the private sector is fear of opportunistic behavior by government officials. A cooperative, rather than adversary, relationship between government agencies and their constituencies helps the two-way exchange of information, facilitating constructive decisionmaking. Governments can also help private firms by supplying market intelligence as a public service (especially useful to exporters and small businesses, which may initially find it too costly to make the necessary investment in information).

The ready availability of high-quality information brings many advantages. Openness and competition are mutually reinforcing. Institutions that facilitate dialogue between regulator and regulated serve as safeguards against corruption, since open participation in rule making is the most effective oversight of all. At the same time, the civil service is insulated from the pressures of powerful firms and individuals. Thus, two-way information flows between the private and public sectors not only ensure transparency, but also contribute to accountability, participation, and predictability. As in the case of legal reform, the Bank will serve as a clearinghouse for knowledge on best practice within the region and elsewhere, and will assist, upon request, in the evaluation of different consultative mechanisms.

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