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Democracy, Good Governance, and Economic Development


The institutional deficit that characterizes so many developing and transitional countries-weak and arbitrary governance, weak protection of civil liberties and inadequate regulatory and legal framework to guarantee property rights; enforce contracts, and reduce the transaction costs-deprive these countries of needed productive investment and economic growth. Improving the quality of governance is essential for economic development. What types of policies and institutions have the most positive and measurable effects on improving governance? What kinds of institutional arrangements are associated with economic growth and poverty reduction? Research shows that democracy influences economic growth. Specifically, secure private property rights that give incentives to individuals to be productive, institutionalization of the rule of law, especially constraints against executives, and electoral mechanisms that give citizens the ability to evict the “rascals” are essential to promoting growth. Thus, an obvious corollary is that democratization and decentralization without simultaneous strengthening of property rights and the rule of law may not always lead to effective democratic governance.

Finally, the governance deficit is a problem not only in weak and failed states. Many functioning states also face challenges to effective governance. To reverse this process and consolidate good governance and the rule of law requires building state capacity. In Linz and Stepan’s pithy observation, “democracy is a form of governance of a state. Thus, no modern polity can become democratically consolidated unless it is first a state.” Effective state capacity means that the institutions of governance are meritocratically organized and rule-based. This enhances the state’s ability to deliver public services, maintain a degree of regulatory oversight, enforce rules and regulations, and maintain social order. The experience of the East Asian newly industrializing nations vividly underscores this. East Asia’s “development states” played a crucial role in both growing the economy, while dramatically cutting poverty levels.
Like the “top-down” authoritarian East Asian developmental states, building effective democratic states means strengthening the states’ formal powers embodied in the executive and legislative branches so that they are able to translate diverse partisan preferences into effective policy options-either through majority rule or the establishment of viable coalitions. However, unlike the erstwhile East Asian states, it also means putting in place the rule of law with transparent standards, a fair electoral system that represents all stakeholders, and representative political parties that effectively convey citizen preferences. After all, markets cannot be expected to work effectively in the absence of political stability and the rule of law. Given their “adaptive efficiencies,” democratic regimes are indispensable because they can create an enabling environment for the market to function, besides providing more responsive and accountable governance. Such logic goes against the core tenet of neoliberalism, which alleges an incongruity between the state and the market. Although neoliberalism justifiably sought to reduce the stifling role of the interventionist state and to broaden the role of markets, it is now recognized that the so-called “minimalist state” proposed by neoliberals creates its own problems by further enervating the already acute problems of governance. Indeed, in their eagerness to reduce the scope of the state, policymakers in many places have inadvertently weakened the capacity of the states to do even the most basic things that all states have to do, such as enforce rules or protect property and individual rights. Therefore, if “too much state” resulted in the problem of etatism (that is, excessive regulation, economic mismanagement, and rent-seeking behavior) “too little state” inevitably creates an institutional deficit, spawning poor governance. Therefore, if the various statist and predatory states were part of the problem, representative democratic states can be part of the solution.

Decentralization and Good Governance

Concern about the arbitrary powers of central governments have led some to advocate a decentralized federal form of democratic governance. Although the economic and political arguments for decentralization have conspicuously converged, there is no consensus as to what precisely “decentralization” should entail in practice. Since, in most cases, decentralized systems of government have three different levels of government (a national level, a regional level, and a local level), in general, decentralization implies devolution of power (which may include the transfer of resources, responsibilities for public services, or decision-making authority) away from the central government to political and administrative jurisdictions below the center. For some, this means the transfer of authority and responsibility for public activity from the central government to “subnational,” or the provincial- or state-level governments. To others, it is devolution to district, municipal, and other local government-including the lowest possible rung of local government. To still others, it is devolution to quasi-independent organizations, and to ancillary local community-based self-governing organizations and NGOs.
The belief that local self-governing institutions operating within the overall framework of a democratic federal arrangement will lead inexorably to political stability and act as a catalyst to economic incentives is not new. In his celebrated Democracy in America, Alexis de Tocqueville argued that a vibrant and robust civil society was the foundation of early nineteenth-century America’s democratic success. In Tocqueville’s view, American democracy was sustained by the richness and diversity of its voluntary associations-from religious groupings to business and commercial associations. These independent and active civic associations served as an important bulwark against the negative effects of centralization by keeping in check the dictatorial tendencies of the state. In recent decades, the conspicuous failure of centralized and bureaucratic statism to deliver on either political stability or sustained economic growth, not to mention the egregious human-rights record of many, created disillusionment with all forms of top-down technocratic and managerial governance and calls to roll back the state. It also led to renewed interest in decentralized forms of democratic governance.

Clearly, democracy is strengthened when its formal representative institutions are supplemented by vibrant and participatory civic associations.
Decentralized governance can help revitalize associational life, long stifled under various forms of centralized and authoritarian rule. It can help give voice to the traditionally excluded and marginalized constituents, enhance civic pride, broaden participation, and improve administrative functioning and accountability. In an important comparative study of the performance of decentralized governments in Bangladesh, the Indian state of Karnataka, Côte d’Ivoire, and Ghana, Crook and Manor note that, in all four cases, decentralization helped to improve public accountability (for example, in Karnataka, it significantly improved the attendance of school teachers), as well as the speed and quality of official response to local issues and needs. Similarly, participatory budgeting, undertaken since 1989 by Brazil’s Workers’ Party in municipalities it controlled, allowed poor residents to improve their lives. The experiment which began in Porto Alegre, a city of roughly one million residents, gradually spread throughout the 1990s until it included about one hundred municipalities under the Brazilian Workers’ Party control in 2000. The participatory budgeting, by including poorer neighborhoods (thus reversing the existing trend), allowed residents to see that resources and spending priorities were fairly allocated and to monitor program implementation.

For Indian tourists travelling by land:- 72 hours (-ve) C-19 report, CCMC form and Antigen Test at entry point

For Indian tourists travelling by land:- 72 hours (-ve) C-19 report, CCMC form and Antigen Test at entry point

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Information for Indian tourists travelling by land:- 72 hours (-) C-19 report, CCMC form and Antigen Test at entry point
Information for Indian tourists travelling by land:- 72 hours (-) C-19 report, CCMC form and Antigen Test at entry point
Information for Indian tourists travelling by land:- 72 hours (-) C-19 report, CCMC form and Antigen Test at entry point