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Good governance is needed for rapid sustainable development

Published by Newsweek on 1998-12-01

The international investmentalists who gathered last week at the World Economic Forum's India Summit in New Delhi rued the country's continuing political uncertainty. But they seemed even more preoccupied with the "R" word--reform of progress-stifling economic policies. The Forum's managing director, Claude Smadja of Switzerland, glumly suggested that India needed to show more seriousness in liberalizing its economy if it wanted to attract more foreign capital than the relatively paltry $2.6 billion expected for 1998. "India should have reforms either by compulsion...or by strategy," Smadja told hundreds of businessmen, development doyens and diplomats--the new brahmin caste of the developing world--who fretted over the fraying domestic economic picture. Unless reforms were accelerated, Smadja said, forget about faster economic growth, more jobs and less social tensions in a land of a billion overwhelmingly poor people.

His subject may have India but the subtext was the sprawling developing world of 127 nations, where policy reforms are largely lagging and where economic growth in 1999 is forecast as feeble at best. However, prescribing "reform" alone isn't going to advance development in poor countries. Developing countries have mostly neglected to strengthen local institutions capable of carrying out--and sustaining--badly needed economic and social reforms. Fifty years after the curtain went up on the great postcolonial development drama (estimated cost: $5 trillion to date in donor support and indigenous spending), most developing countries have failed to fashion a proper balance concerning the role of their public and private sectors, and grassroots communities, in providing social services and economic empowerment to the underprivileged. With few exceptions- such as Costa Rica, Mauritius and Singapore--they haven't come up with what development economists call "a complete response to poverty."

That's, of course, a fancy way of referring to a concept--and condition- that's sorely missing in much of what used to be called the third world, good governance. In India, as in most developing countries, the challenge of economic and social development is directly linked not only to fitful lip-service to shibboleths such as liberalization, usually at the behest of foreign bankers and financial guard-dogs. A more fundamental problem is the reform of instruments of governance.

Those instruments--in all three branches of government--are proving alarmingly inadequate. Law-and-order has broken down in many developing-country cities, and not only in the wake of political meltdowns such as Indonesia's. In the once safe commercial city of Bombay, for instance, daily kidnaping of business executives is common; even midlevel professionals report getting extortion calls from racketeers who often seem to work in collusion with local policemen and politicians. In most developing nations--including India--there's little oversight of judiciaries so that corruption has tainted even judges. Talk to any overseas investor who's dealt with the Indian--or, for that matter, Kenyan--bureaucracy and you will hear embittered tales of bribes demanded and business licenses held up. You will also hear about shoddy or nonexistent infrastructure funded by handsome subventions from the West; you won't hear much about motivated local leadership.

No wonder donors and investors are troubled; developing nations could scarcely be pleased with last week's news that "official development assistance" (ODA) for 1998 would be barely $46 billion, or $5 billion less than the figure for 1997. Granted that donor economies are generally in belt-tightening mode. Still, it makes little sense for donors to yield to the importuning of most developing nations for increased foreign investment and aid because local institutions simply don't have the capacity to absorb such inflows. In India, for example, much of the $400 million received this year from Western donors for family-planning projects lies unused by various states who lack the requisite mechanisms to channel aid to the grassroots in a country where 18 million people--the equivalent of Australia's population--are born each year.

"Good governance" is a touchy--and thorny--issue in the developing world because any prescription is perceived as interference with local sovereignty. But because the issue is going to dominate the development debate in the months and years to come, here are three points that both donors and developing country leaders might do well to consider:

_ Appoint impartial monitors for foreign-aid programs. Developing states can take a cue from the popular sport of cricket, where umpires from third countries officiate whenever there are "test" matches between any two nations. Perhaps organizations such as the Commonwealth Secretariat, ASEAN or the World Bank can create a cadre of monitors who will supervise aid and perhaps even private-sector projects, train local personnel in detecting improprieties in aid expenditure, and develop better accountability and transparency in project management.

_ Improve the quality of local leadership. There's been an appalling deterioration in the quality of legislators, public-administration executives and jurists in many developing nations. In India's Lok Sabha- the Lower House of Parliament--to cite one conspicuous example, more than half the 535 members are reported to have criminal records. Their debates often disintegrate into shouting derbies, with little attention to the quality of legislation. Why not create leadership training programs at community levels in both urban and rural areas, exposing promising young men and women to the ideas and platforms that will surely mushroom in the new millennium--globalization, free-market economics, human rights, gender equity and environmental justice?

_ Enhance the capacity of grassroots institutions. Scores of nongovernmental organizations are sprouting in the developing world. Their leaders often possess innovative ideas for generating local employment, sustaining cottage industries, and protecting the environment; and they yearn for something more than just invitations to glamorous international conferences where they're often showcased as some exotic species to be praised and then packed home. Business leaders and industrialists should offer manpower and other resources to local organizations so that they can better serve their communities in a culturally sensitive manner to promote social and economic development. The voices of thoughtful local leaders, when amplified, can serve as a powerful force in influencing national institutions of policymaking.

Good governance in the developing world must ultimately mean safeguarding and advancing people's human rights, including the right to rise from crushing poverty, and the right to expect that a network of elected officials, businessmen, and grassroots activists will work in tandem for a sustainable common future in the global commons of the coming millennium. That may be too much to ask of today's venal developing-country leaders; but it's a challenge tomorrow's leaders must be summoned to meet.

Pranay Gupte,
Senior Writer and Global-Affairs Columnist

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