The goal of governance initiatives
should be to develop capacities that are needed to realise development
that gives priority to the poor, advances women, sustains the
environment and creates needed opportunities for employment and
UNDP 1994 Initiatives for Change
The United Nations Development
Programme (UNDP) has been at the forefront of the growing international
consensus that good governance and sustainable human development
are indivisible. And we believe that developing the capacity for
good governance can be - and should be - the primary way to eliminate
poverty. Notions of good governance and the link between governance
and sustainable human development vary greatly, however, both
in academic literature and among development practitioners.
So, what is sustainable human
We define human development as
expanding the choices for all people in society. This means that
men and women - particularly the poor and vulnerable - are at
the centre of the development process. It also means "protection
of the life opportunities of future generations...and...the natural
systems on which all life depends" (UNDP, Human Development
Report 1996). This makes the central purpose of development
the creation of an enabling environment in which all can enjoy
long, healthy and creative lives.
Economic growth is a means to
sustainable human development - not an end in itself. Human
Development Report 1996 showed that economic growth does not
automatically lead to sustainable human development and the elimination
of poverty. For example, countries that do well when ranked by
per capita income often slip down the ladder when ranked by the
human development index. There are, moreover, marked disparities
within countries - rich and poor alike - and these become striking
when human development among indigenous peoples and ethnic minorities
is evaluated separately.
There are five aspects to sustainable
human development - all affecting the lives of the poor and vulnerable:
UNDP focuses on four critical
elements of sustainable human development: eliminating poverty,
creating jobs and sustaining livelihoods, protecting and regenerating
the environment, and promoting the advancement of women. Developing
the capacities for good governance underpins all these objectives.
What, then, is governance?
And what is good governance?
The challenge for all societies
is to create a system of governance that promotes, supports and
sustains human development - especially for the poorest and most
marginal. But the search for a clearly articulated concept of
governance has just begun.
Governance can be seen as the
exercise of economic, political and administrative authority to
manage a country's affairs at all levels. It comprises the mechanisms,
processes and institutions through which citizens and groups articulate
their interests, exercise their legal rights, meet their obligations
and mediate their differences.
Good governance is, among other
things, participatory, transparent and accountable. It is also
effective and equitable. And it promotes the rule of law. Good
governance ensures that political, social and economic priorities
are based on broad consensus in society and that the voices of
the poorest and the most vulnerable are heard in decision-making
over the allocation of development resources.
Governance has three legs: economic,
political and administrative. Economic governance includes decision-making
processes that affect a country's economic activities and its
relationships with other economies. It clearly has major implications
for equity, poverty and quality of life. Political governance
is the process of decision-making to formulate policy. Administrative
governance is the system of policy implementation. Encompassing
all three, good governance defines the processes and structures
that guide political and socio-economic relationships.
Governance encompasses the state,
but it transcends the state by including the private sector and
civil society organisations. What constitutes the state is widely
debated. Here, the state is defined to include political and public
sector institutions. UNDP's primary interest lies in how effectively
the state serves the needs of its people. The private sector
covers private enterprises (manufacturing, trade, banking, cooperatives
and so on) and the informal sector in the marketplace. Some say
that the private sector is part of civil society. But the private
sector is separate to the extent that private sector players influence
social, economic and political policies in ways that create a
more conducive environment for the marketplace and enterprises.
Civil society, lying between
the individual and the state, comprises individuals and groups
(organised or unorganised) interacting socially, politically and
economically - regulated by formal and informal rules and laws.
Civil society organisations are
the host of associations around which society voluntarily organises.
They include trade unions; non-governmental organisations; gender,
language, cultural and religious groups; charities; business associations;
social and sports clubs; cooperatives and community development
organisations; environmental groups; professional associations;
academic and policy institutions; and media outlets. Political
parties are also included, although they straddle civil society
and the state if they are represented in parliament.
The institutions of governance
in the three domains (state, civil society and the private sector)
must be designed to contribute to sustainable human development
by establishing the political, legal, economic and social circumstances
for poverty reduction, job creation, environmental protection
and the advancement of women.
Much has been written about the
characteristics of efficient government, successful businesses
and effective civil society organisations, but the characteristics
of good governance defined in societal terms remain elusive. The
Interrelated, these core characteristics
are mutually reinforcing and cannot stand alone. For example,
accessible information means more transparency, broader participation
and more effective decision-making. Broad participation contributes
both to the exchange of information needed for effective decision-making
and for the legitimacy of those decisions. Legitimacy, in turn,
means effective implementation and encourages further participation.
And responsive institutions must be transparent and function according
to the rule of law if they are to be equitable.
These core characteristics represent
the ideal - and no society has them all. Even so, UNDP believes
that societies should aim, through broad-based consensus-building,
to define which of the core features are most important to them,
what the best balance is between the state and the market, how
each socio-cultural and economic setting can move from here to
UNDP is faced increasingly with
post-crisis situations and disintegrating societies. For them,
the issue is not developing good governance - it is building the
basic institutions of governance. The first step is towards reconciliation
- building society's ability to carry on a dialogue on the meaning
of governance and the needs of all citizens.
Relationships between governance
and human development
Each domain of governance - the
state, the private sector and civil society - has a unique role
in promoting sustainable human development (see box overleaf).
In countries where electoral processes
exist, the state is composed of an elected government and an executive
branch. The state's functions are manifold - among them, being
the focus of the social contract that defines citizenship, being
the authority that is mandated to control and exert force, having
responsibility for public services and creating an enabling environment
for sustainable human development. The latter means establishing
and maintaining stable, effective and fair legal-regulatory frameworks
for public and private activity. It means ensuring stability and
equity in the marketplace. It means mediating interests for the
public good. And it means providing effective and accountable
public services. In all four roles, the state faces a challenge
- ensuring that good governance addresses the concerns and needs
of the poorest by increasing the opportunities for people to seek,
achieve and sustain the kind of life they aspire to.
The state, of course, can do
much in such areas as upholding the rights of the vulnerable,
protecting the environment, maintaining stable macroeconomic conditions,
maintaining standards of public health and safety for all at an
affordable cost, mobilising resources to provide essential public
services and infrastructure and maintaining order, security and
State institutions can also empower
the people they are meant to serve - providing equal opportunities
and ensuring social, economic and political inclusion and access
to resources. But people can be empowered only if their legislatures,
electoral processes and legal and judicial systems work properly.
Parliaments of freely and fairly elected members representing
different parties are crucial to popular participation and government
accountability. Effective legal and judicial systems protect the
rule of law and the rights of all. Open elections mean public
confidence and trust - and so political legitimacy. States should
also decentralise political and economic systems to be more responsive
to citizens' demands and to changing economic conditions.
In developed and developing countries
alike, the state is being compelled to redefine its role in social
and economic activity - to reduce it, reorient it, reconfigure
it. The pressures for change stem from three sources:
The private sector
The state is a big force for development
- but it is not the only one. Sustainable human development depends
in part on creating jobs that provide enough income to improve
living standards. Most states now recognise that the private sector
is the primary source of opportunities for productive employment.
Economic globalisation is fundamentally changing the ways in which
industries and enterprises operate. In many developing countries,
private enterprise must be encouraged and supported to be more
transparent and competitive in the international marketplace.
Equitable growth, gender balance,
environmental preservation, expansion of the private sector and
responsible and effective participation in international commerce
cannot be achieved by the market alone, however. States can foster
private sector development that is sustainable by:
Civil society also has to protect
the rights of all citizens. As the state and the private sector
are being reshaped and their relationships redefined, civil society
is changing in important ways. Unresponsive government and unrelenting
economic and social pressure have undermined some traditional
civil society organisations and strengthened others - and in many
cases forced people to organise in new ways. Civil society is
thus more than just society. It is the part of society that connects
individuals with the public realm and the state - it is the political
face of society.
Civil society organisations channel
people's participation in economic and social activities and organise
them into more powerful groups to influence public policies and
gain access to public resources, especially for the poor. They
can provide checks and balances on government power and monitor
social abuses. They also offer opportunities for people to develop
their capacities and improve their standards of living - by monitoring
the environment, assisting the disadvantaged, developing human
resources, helping communication among business people.
More fundamentally, civic networks
ease the dilemmas of collective action by institutionalising social
interaction, reducing opportunism, fostering trust and making
political and economic transactions easier. Well-developed civic
networks also amplify flows of information - the basis for reliable
political, economic and social collaboration and public participation
of civil society members. These relationships and social norms
make up a nation's social capital.
Civil society organisations do
not always pursue the qualities of good governance. Nor are they
always the most effective development agents. That is why states,
while recognising and protecting the democratic rights of civil
society organisations, must also ensure that the rules of law
and values that reflect societal norms are adhered to. Democratic
institutions, particularly local ones, can be important in ensuring
that all in society have a voice, as well as ensuring that there
are transparent and fair ways to reach consensus.
Like private enterprises, civil
society organisations need adequate capacities to fulfill their
potential. They also need an enabling environment, including a
legislative and regulatory framework that guarantees the right
of association, incentives to facilitate support and ways for
civil society organisations to be involved in public policy-making
Strengthening the enabling environment
for sustainable human development thus depends not only on a state
that governs well and a private sector that provides jobs that
generate income. It also depends on civil society organisations
that make political and social interaction easier and that mobilise
society to participate in economic, social and political activities.
The global context
The transformation from command
to market-oriented economies, the emergence of democratic political
regimes in the former Soviet Union, the rapid development and
global proliferation of new technologies, the pervasive spread
of telecommunications systems, the growing importance of knowledge-based
industries and skills and the continuing integration of the world
economy through trade and investment - all these have created
the foundation for a new age of sustainable human development.
But all carry risks as well. Is it to be a breakthrough or a breakdown?
Changes in the world's economic,
political and social systems have indeed brought unprecedented
improvements in human living conditions in both developed and
developing countries. Consider the profound breakthroughs in communications,
transport, agriculture, medicine, genetic engineering, computerisation,
environmentally friendly energy systems, political structures,
peace settlements. The list goes on.
But these changes also bring
new uncertainties and challenges as the world steps into the 21st
century. Signs of breakdown are everywhere: disintegration of
families; destruction of indigenous societies; degradation and
annihilation of plant and animal life; pollution of rivers, oceans
and the atmosphere; crime, alienation and substance abuse; higher
unemployment; and a widening gap in incomes and capabilities.
Not a pretty picture.
The trend towards globalisation
deserves special attention. It is manifest in the growth of regional
blocs that cooperate in such areas as trade and legal frameworks,
in the power of intergovernmental bodies such as the World Trade
Organization and in the spread of transnational corporations.
Globalisation has profound implications for governance the final
impact of which we cannot yet determine. First is the increasing
marginalisation of certain population groups. Those who do not
have access to the technological/information revolution are in
danger of becoming part of a structural underclass. Second is
the erosion of state sovereignty as transnational bodies increasingly
mediate national concerns and press for universal laws. Third
is the increased globalisation of social and economic problems,
such as crime, narcotics, infectious diseases and the migration
of labour. Finally, international capital and trade are decreasingly
accountable to sovereign states.
Governance can no longer be considered
a closed system. The state's task is to find a balance between
taking advantage of globalisation and providing a secure and stable
social and economic domestic environment, particularly for the
most vulnerable. Globalisation is also placing governments under
greater scrutiny, leading to improved state conduct and more responsible
Because each domain of governance
- state, private sector, civil society - has strengths and weaknesses,
the pursuit of good governance requires greater interaction among
the three to define the right balance among them for sustainable
people-centred development. Given that change is continuous, the
ability for the three domains to continuously interact and adjust
must be built-in, thus allowing for long-term stability. UNDP's
Initiatives for Change recognises that the relationships among
government, civil society and the private sector:
are key determinants in whether
a nation is able to create and sustain equitable opportunities
for all of its people. If a government does not function efficiently
and effectively, scarce resources will be wasted. If it does not
have legitimacy in the eyes of the people, it will not be able
to achieve its goals or theirs. If it is unable to build national
consensus around these objectives, no external assistance can
help bring them about. If it is unable to foster a strong social
fabric, the society risks disintegration and chaos. Equally important,
if people are not empowered to take responsibility for their own
development within an enabling framework provided by government,
development will not be sustainable.
Developing countries must ensure
that everyone can participate in economic and social development
and take advantage of globalisation. They must build a political
system that encourages government, political, business and civic
leaders to articulate and pursue objectives that are centred around
people and a system that promotes public consensus on these objectives.
What role can UNDP play in
We are already doing much. As
of 1995 a third of our resources were allocated for governance.
Ongoing development cooperation in management development and
governance, including cost-sharing, amounts to about $1.3 billion.
Management development and governance allocations vary significantly
across regions. In Africa, the Arab States and Eastern Europe
and the CIS, the largest total contribution (UNDP and cost-sharing)
is allocated to aid management and coordination. Within the Asia
and the Pacific region, however, the largest allocation is for
economic and financial management, while the Latin America and
the Caribbean region tends to emphasize planning and support for
policy formulation. Within global and interregional programmes,
the largest allocations are those dealing with planning and support
for policy formulation, decentralisation and strengthening civil
UNDP policy for governance programming
is driven by three major forces: