The background and context of the concept of ‘good governance’ can be traced back to the ongoing aid and overseas development policies of developed countries. These policies have three important features. First one is the aim of aid policies has been to initiate and promote market friendly and open competitive economic policies. This policy was personified in the conditionalities of structural adjustment lending started during 1980s. During 1990s, two further features have been added to structural adjustment policies. These are support for democratisation and improvement of human rights records, and insistence on ‘good governance’.
The concept and meaning of governance was initially problematised by the World Bank in its document titled “Governance and Development” published in 1992. In this document, the concept of ‘good governance’ was equated with the idea of ‘sound development management’, and it was defined as “the manner in which power is exercised in the management of a country’s economic and social resources for development”. As quoted by Mohit Bhattacharya, three distinct features are identified in the conceptualisation of ‘good governance’. These are “(a) the form of political regime, (b) the process by which authority is exercised in the management of a country’s economic and social resources and (c) the capacity of governments to design, formulate and implement policies, and in general to discharge government functions”. Since the first aspect falls outside the Bank’s mandate, the second and third are the focus aspects of governance.
The key dimensions of the World Bank’s ‘governance’ are “electoral democracy, transparency, accountability, public sector management (in relation to capacity and efficiency), and the legal framework for development (the protection of human rights and assurance of safety and security to citizens)”. The World Bank, from its study about conditions of governance in the Third World, identified some symptoms of “poor governance”. These are “the failure to make a separation between public and private, thereby facilitating the appropriation of public resources for private gains, the failure to establish a predictable framework of law and government conducive to development, excessively regulatory rules which impede the functioning of markets, misallocation of resources following from priorities not consistent with development and non-transparent decision-making”.
The World Bank considered that economic, human and institutional developments are important in bringing about sound development management. The conditionalities of good governance, as summed up by the World Bank is that governance is a continuum, and not necessarily unidirectional, it does not automatically improve over time. Citizens need to demand good governance. Their ability to do so is enhanced by, literacy, education, and employment opportunities. Governments need to prove responsive to these demands. All though lenders and aid agencies and other outsiders can contribute resources and ideas to improve governance, for change to be effective, it must be rooted firmly in the societies concerned and cannot be imposed from outside.
However, what is in controversy over the Bank’s governance agenda is its strategies to realise this. Since the World Bank’s agenda is basically intended to de-politicise society and development, it cannot offer reliable solutions to the problems of governance. It could be identified through the evaluation of Bank’s governance agenda in terms of its implications for the role of state and understanding of the concept of development.