Uses and abuses of the concept of

governance

Cynthia Hewitt de Alcantara

It is fair to say that until the later 1980s, can be found, it still implies the existence of a
governance was not a word heard frequently political process: governance involves building
within the development community. Yet today consensus, or obtaining the consent or acquiescit is difficult to find a publication on develop- ence necessary to carry out a programme, in an
ment issues put out by the United Nations, arena where many different interests are in play.
multilateral and bilateral agencies, academics or
The wide applicability of the term, its refprivate voluntary organizations that does not erence to basic problems of political order
rely heavily on its use.
(including efficiency and legitimacy), and its
Why is this the case? How do various lack of any necessary relation to the state have
groups within the development community made it useful to a growing number of partiunderstand the concept of
cipants in the development
governance? What purdebate in the course of the
Cynthia Hewitt de Alcantara is Deputy
poses are served by using
last decade. Thus, for
Director of the United Nations Research
it? In this article, we
example, those who feel
Institute for Social Development
(UNRISD), Palais des Nations, CH 1211
attempt to answer these
strongly that the role of the
Geneva 10, Switzerland. She has recently
questions by exploring
state in economic and
directed a research programme on econsome of the reasons for the
social affairs has grown too
omic adjustment and social change in
new popularity of the term
encompassing and should
Latin America, and played an active role
and considering the way it
be reduced, have been able
in preparing the World Summit for Social
Development. Among her publications
shapes policy in different
to shift part of the disare Real Markets (1993) and Social
development settings.
cussion on public affairs
Futures, Global Visions (1996), both colfrom the realm of governlective works under her editorship.
ment to the much more
The concept of
general field of governance. The relative novelty
governance
of the term good governIn the English-speaking world, governance is ance in international circles has also facilitated
a word that has been used routinely over the attempts to reform state programmes and
course of many centuries to refer to the exercise bureaucracies in many countries through appealof authority within a given sphere. It has often ing to an apparently more technical and less
been employed as a synonym for the efficient political standard than that evoked by calls for
management of a broad range of organizations the reform of the state.
and activities, from the modern corporation
At the same time, many people who may
(corporate governance) or university (the have no strong interest in reducing the range
governance of Vassar College) to the ocean of activities of national governments have found
depths. Although the concept is applied to many the concept of governance useful in dealing
situations in which no formal political system with problems that require joint action in areas
ISSJ 155/1998 UNESCO 1998. Published by Blackwell Publishers, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main Street, Malden, MA 02148, USA.

106

where the state does not or cannot play a leading role. These areas are to be found at many
levels of society, from the most local to the
supranational. Considering problems of governance is relevant in strengthening civic cultures,
promoting voluntary action and thus improving
the societal bases for democracy. It is also
increasingly important in considering how the
international community can construct the institutions required to promote order and justice in
the context of globalization.
In other words, governance like so
many other key concepts in the current development debate is being used by groups of very
different ideological persuasion, for a number
of different and often contradictory ends. To
begin the discussion, let us look first at why
this concept has been adopted so widely by
international financial institutions. They are generally credited with focusing renewed attention
on the concept of governance within the development community in the 1980s, and with supporting their interpretation of the term with a
considerable volume of funding.

The uses of governance for

the international financial
institutions
First, it seems obvious that giving the concept
of governance a prominent place in their analysis of development problems in recent years has
allowed the international lending institutions to
work themselves out of an intellectual and practical dead-end, into which they had earlier been
pushed by their extreme reliance on free-market ideals.
From the late 1970s onwards, the policies
of these institutions were increasingly shaped
by a free-market ideology that easily degenerated into economism: armed with the capacity
to provide or withhold large amounts of desperately needed capital to Third World countries
crippled by debt, lenders insisted on the progressive liberalization of internal markets within
borrowing countries and the elimination of barriers to free trade. Earlier forms of economic
management, based on strategies of national
development that protected local interests from
foreign competition, were subject to strong
criticism.
UNESCO 1998.

Cynthia Hewitt de Alcantara

This shift in policy, within the international

financial community as throughout the OECD
world, was associated with a drive to roll back
the state to reduce its role in economic management and social welfare. To a greater or
lesser extent in each country, social democratic
ideals were progressively replaced by a faith in
the market; and the long-held view that the
direction of the economy should be determined
through a process of political negotiation gave
way to the view that politically-induced distortions were responsible for most of the
economic problems of the developed and
developing nations.
There was a period during the 1970s and
1980s when an extreme belief in the primacy
of economics prevailed in international lending
institutions. This position, transmitted to borrowing governments, relegated political and
social issues to a secondary status within the
development debate or precluded them altogether. But the market has always been a political and social construction. And as the experiment in free-market reform progressed, it
became abundantly clear that no economic project was likely to succeed unless minimum conditions of political legitimacy, social order and
institutional efficiency were met.
This lesson was driven home by experiences
with economic reform in Africa and Latin America, and by the enormous challenges created during the disintegration of the Soviet Union and
the consequent transition from command-driven
to capitalist economies in Eastern Europe and
the Commonwealth of Independent States. It was
also eventually reinforced by debate over the
reasons for success in rapidly growing Asian
economies, which could hardly be considered
paragons of free-market development.
The concept of governance proved
extremely useful at this point, because it
allowed the international financial institutions
(and the donor community in general) to retreat
from economism and to reconsider crucial social
and political questions related to the agenda of
economic restructuring. Furthermore this could
be done without overly antagonizing governments that are generally quite reluctant to have
lenders give advice on sensitive questions of
internal politics and administration.
Organizations like the World Bank, the
regional development banks and the Inter-

Uses and abuses of the concept of governance

national Monetary Fund have no mandate to

take up political questions; in fact, their statutes
expressly forbid them to do so. Yet the kind
of restructuring required to create a framework
for smoothly functioning modern markets has
eminently political implications. (Here we need
only think of issues ranging from attacking corruption in public administration to designing
new labour-management relations or reforming
the judicial system.) Although these issues fell
well outside the boundaries of concern of traditional lending institutions, they could be central in influencing the success of lending programmes.
By talking about governance rather than
state reform or social and political change
multilateral banks and agencies within the
development establishment were able to address
sensitive questions that could be lumped
together under a relatively inoffensive heading
and usually couched in technical terms, thus
avoiding any implication that these institutions
were exceeding their statutory authority by
intervening in the internal political affairs of
sovereign states.
Institutional economics also assumed a
central importance in the evolution of development thinking at this point, at least partially
because its emphasis on the need to ensure a
proper institutional environment for economic
activity was congruent with the same requirement to treat political issues in technical terms.
Thus efforts on the part of the international
financial and donor community to promote good
governance in the 1990s were usually presented
as elements in a programme of institutional
reform. And students of development problems,
who might in other times with less rigorous
requirements for apolitical expertise have considered themselves social scientists, began with
increasing frequency to refer to themselves as
institutional specialists when they worked for
multilateral agencies.1
It is important to understand that the new
salience of governance issues within the discourse and practice of multilateral lending institutions and donors did not by any means imply
a weakening of commitment to free-market policies. The overall context within which economic
restructuring was promoted among borrowers in
Third World countries, Eastern Europe and the
Commonwealth of Independent States, con UNESCO 1998.

107

tinued to be roughly the same as it had been

before the rediscovery of institutional elements
in market reform. Countries receiving assistance
were required to deregulate and liberalize their
economies, to open their borders to foreign
investment and trade, to keep wages low and
flexible, and to adopt macroeconomic policies
favouring price stability over growth (or
recession over inflation).
Concern for good governance and institutional reform was added onto neoliberal economic programmes, to make them more efficient,
rather than forming part of a new synthesis in
which economics would be affected by social
and political considerations. It is precisely this
characteristic of renewed interest in governance
during the 1980s and early 1990s that explains
many difficulties encountered by borrowing
countries, as they attempted to implement specific initiatives.
Neither did a new emphasis on good
governance include any attempt to change the
modalities of economic policy-making in highly
indebted countries, where international pressure
determined the broad outlines of many fundamental economic decisions. These decisions
continued often to be made in secret not
subject to public debate by members of the
economic cabinet, in consultation with members
of the international financial community. Such
procedures were fundamentally authoritarian
and would never have been accepted by citizens
of the OECD countries, if applied within their
own societies.

Governance, civil society and

democracy
A recent report of the World Bank illustrates
the programmes supported over the past few
years under the heading of good governance.
Resources have been dedicated primarily to
improving public sector management (including
Civil Service reform), strengthening accounting
and auditing practices, supporting decentralization of certain public services, and establishing
the legal and judicial infrastructure consistent
with private enterprise in countries in transition.
In Eastern Europe and the Commonwealth of
Independent States, assistance in privatizing

108

state enterprises has absorbed the bulk of all

resources earmarked for good governance.2
These are programmes designed not only
to shrink the state and make it more efficient,
but also to shift the balance of power in society
from governments and the public sector to private individuals and groups. Within neoliberal
development circles, this kind of institutional
reform came eventually to be identified not only
with good governance but, more ambitiously,
with the promotion of democracy. It was insistently argued that the general thrust of freemarket macroeconomic policy, decentralization
and privatization would open new avenues for
self-reliance, entrepreneurship and participation.
In the process, civil society would be strengthened and equipped to reform unresponsive or
unaccountable governments.
Thus the link between free-market reform,
good governance, democracy and civil society
was strong in the rhetoric of the international
financial institutions. But in fact, the capacity
of multilateral banks to support voluntary
organizations or promote democracy was weak
indeed. Precisely because of the prohibition on
interference in the internal affairs of member
countries, it was difficult to channel funds
towards non-governmental organizations. And
many of the latter in any case wanted nothing
to do with the architects of free-market economic restructuring.
Bilateral agencies of the OECD were, however, able to venture much further into the political sphere and to support many groups within
the civil societies of developing countries. They
were also able to develop an agenda that linked
their provision of aid to the recipient governments record of respecting human rights; and
thus they could increase the likelihood that a
politics of democratization would gain momentum in a number of Third World countries. This
involved various forms of political conditionality whose implications are too complex
to analyse in any detail at this point.
Thus good governance in the developing
world, as promoted by bilateral donors and by
many non-governmental groups based within
the OECD countries (often disbursing donors
funds), took on a much broader meaning than
that routinely granted it by the international
lending institutions; and this proved central to
attempts to improve peoples capacity to
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Cynthia Hewitt de Alcantara

organize and manage their own affairs in a

creative fashion in many Third World countries.
It is not necessary to dwell on the critical
importance of non-governmental organizations
and the reawakening of civil society in the
struggle for democracy that marks the end of
the twentieth century. There is no doubt that
people around the world are involved in a process of rethinking the nature of good government, as well as experimenting more broadly
with new ways to collaborate in many areas of
common concern. Reference to governance in
this context expands the boundaries of discussion and widens the range of alternative
arrangements that can be considered when confronting problems not necessarily amenable to
solution by governments acting alone.
Nevertheless it is important to note that
within influential subsectors of the development
establishment those most committed to freemarket orthodoxy the concept of civil
society (so closely integrated into the discourse
on good governance) has been used in ways
that may very well weaken, rather than
strengthen, the groundwork for democracy. This
is the case, for example, when emphasis on the
importance of civil society has served to draw
false dichotomies between the people and the
state. Then the impression is given that a
strong civil society requires a weak government,
or that the latter automatically oppresses the
former. This is the case in extremely authoritarian environments. But in the rest, employing
an aggressively anti-state discourse to promote
the cause of civil society can simply undermine essential areas of civic responsibility,
based on concepts like the public sphere and
the common good.
Civil society has also been used far too
frequently as a euphemism that hides deprivation and disempowerment. As economic crisis
continues to affect regions like Africa, Latin
America and the Commonwealth of Independent
States, their populations are required to shoulder
enormous burdens. In order to maintain a minimum standard of living, people establish neighbourhood organizations or soup kitchens, or
give their time to local health posts or child
care facilities. This is necessary and deserving
of all the support that more fortunate groups
can provide; in fact, a great deal of foreign
aid, both public and private, has been directed

Uses and abuses of the concept of governance

Chief Adviser of the Sultan of Yogyakarta, Java, in his official robes.

UNESCO 1998.

109

Roger Viollet

110

towards supporting these local initiatives. But

such survival strategies are a necessity, not a
virtue. And it is wrong to suppose as those
of a free-market persuasion often do that a
new and prosperous society can be built upon
the desperate efforts of various groups to deal
with constant risk and penury, in the absence
of any permanent public support.

Governance in extreme cases:

post-war reconstruction
In order for interest groups and voluntary
associations to interact productively, and to
further the well-being of their members, the
existence of an efficient and legitimate government is essential. This point is most vividly
made when one considers situations in which
neither civil society nor the state exists at
all that is to say, following long and cruel
conflicts that tear a society to shreds.
In Bosnia, Liberia or Rwanda, the United
Nations, bilateral donors and non-governmental
development organizations confront social disintegration in its most extreme form. Neighbours
have killed neighbours; families have been torn
apart; the political and administrative capacity
of the state has largely been destroyed. Structures of authority and legitimacy must be rebuilt
from the ground up, and from the top down.
Here the analysis of old and new forms of
governance takes on particular importance.
And the impossibility of recreating a civil
society without also recreating a state could
not be clearer.
How is the concept of governance used
by the development community in the context
of post-conflict reconstruction? Unfortunately,
the extreme challenges thrown up by these situations, combined with the fragmented nature of
the international response, make for weak and
often contradictory programmes. Since basic
problems of governance within the international peace-keeping and humanitarian community itself have often not been resolved
before intervention takes place, it would be
unrealistic to expect that these problems can
routinely be resolved on the ground, within wartorn societies.
In such situations, it is particularly easy to
see the contradictions inherent in many
approaches to governance within the inter UNESCO 1998.

Cynthia Hewitt de Alcantara

national development community. The extreme

openness of the concept of governance its
general reference to problems of consensusbuilding, participation and management, outside
the necessary confines of the state should
serve the useful purpose of reminding outsiders
involved in reconstruction that different
societies have different approaches to problems
of political order. Yet in the desperate race to
re-establish a functioning government, there is
little time to consider such subtleties. Standard
models of political institution-building are proposed and supported models that may prove
workable over the longer term, but often do
not.3
The recommendation to strengthen civil
society, while important, cannot easily be followed at such times. In fact, civil society in
any post-conflict setting is likely to contain a
fair number of torturers, arms dealers and drug
runners, as well as people battered by long
exposure to violence and ethnic hatred. Furthermore, channelling resources from donors to certain groups a highly political act in any
society is particularly charged with implications for the future balance of power in a
situation of economic and political collapse.
An enormous effort to understand and
involve local people is required, when operating
within these political minefields, to avoid
imposing inadequate models of institutional
reform on prostrate countries. The international
community rarely has the capacity to make this
effort. Neither does it seem to have the capacity
in most cases to adapt the prevailing model of
economic restructuring to the requirements of
wartorn societies. A frequent characteristic of
international peace-keeping and reconstruction
programmes has been the tendency to insist on
rebuilding the local economy along standard
free-market lines, including commitments to liberalization and deregulation that are not congruent with the immediate needs of the population.4

Governance, globalization and

supranational organization
Up to this point, brief reference has been made
to five areas of development theory and practice
in which the concept of governance or good
governance currently plays a central role: the
attempt to withdraw from the dead-end of econ-

Uses and abuses of the concept of governance

omistic thinking (while still managing to discuss

social and political issues in relatively technical
terms); the attempt to shift power from public
to private sectors, reducing the role of the state
and increasing that of civil society; the need to
deal with requirements for administrative and
institutional reform within the public sector of
Third World countries, without appearing to
intervene too deeply in their internal affairs; a
new insistence on democratization and human
rights; and the terrible challenges confronted in
situations of post-conflict reconstruction.
There is a final area in which the concept
of governance is particularly central to the
development debate in the 1990s, and that is
within discussions on globalization and supranational organization.
Precisely
because
governance suggests creating structures of
authority at various levels of society, within the
state and outside it, above the state and below
it, the term is proving indispensable in coming
to grips with transnational processes that require
a creative institutional response.
With rapidly advancing liberalization of
world finance and trade, relentless technological
change and growing ease of communication
among people in the most disparate parts of the
world, a new world economy and society are
under construction. But who will participate in
their governance, and how? Although nation
states still play a dominant role, and are likely
to continue to do so, their actions are fundamentally constrained by the workings of global markets in which large corporations and private
financial interests exercise great power. If these
captured markets are to be regulated for social
ends or even, more modestly, to promote
economic stability and limit the inefficiencies
associated with rampant speculation, new international institutions must be created and old
ones reformed. At the same time, the promotion
and protection of basic human rights around the
world requires new global initiatives, as does
any serious effort to redress trends towards a
deepening polarization of life chances within
and among countries. Peace-making, peacekeeping and the broader challenge of maintaining world order in a period of extremely
rapid and chaotic change, will all depend in the
years to come on creating workable international arrangements for managing and preventing conflict.
UNESCO 1998.

111

Global governance is the phrase now

used to highlight these imperatives and to
mobilize people from around the world in the
search of useful alternatives. Reference to the
concept permits consideration of institutional
innovations in many spheres of activity (within
traditional international organizations and outside them), involving novel combinations of
actors (grassroots activists, businesspeople, academics, civil servants, among others) from different political, social and cultural environments. Attempts can be made to link individuals
and institutions at various levels of society
(local, regional, national and international), to
deal with particular global problems in ways
that would not ordinarily be considered when
thinking of global government, rather than
global governance.5
This is not the place to review the range
of proposals currently being tabled as part of the
effort to reform already existing international
institutions and create new ones.6 It is important
to note, however, that the longer-term success
or failure of efforts to promote more efficient
and democratic institutions within Third World
countries often associated with good governance agendas depends to a significant extent
on the capacity of the international community
to resolve broader issues of global governance
in an effective manner. Badly regulated (or
unregulated) systems of global finance, sharply
fluctuating commodities prices, unresolved debt
crises, inability to halt rapacious environmental
practices or control a competitive race to the
bottom of the international wage scale conditions like these quite obviously do not provide
an enabling environment within which institutional reform stands a good chance of success
in the developing world.7 There is a systemic
aspect to promoting good governance at all
levels of world society that simply cannot be
ignored.

The contradictions of good

governance: some examples
from Latin America
Recent Latin American experience can be used
to illustrate some of the problems that arise
when elements of a good governance agenda
are implemented at the national level, partially
in response to international pressures, while the

112

global economic context is unstable and the

international institutional setting remains unresponsive to the needs of the majority of the
population in these regions. Under such circumstances, there is a frequent risk that institutional
reform will falter, as it weakens or destroys old
structures without effectively contributing to the
construction of a more democratic, efficient and
stable alternative.
In most Latin American countries, the
growing demand for political and administrative
restructuring (expressed both by internal and
external forces) comes at a time when the levels
of living of the majority of the population have
fallen drastically. Over the past decade or more,
recurring economic crises, austerity programmes
and unresolved indebtedness have deepened
poverty within large segments of society. Therefore it is not surprising that the vision of good
governance guiding many people within Latin
American civil society incorporates demands
not only for more effective political participation, but also for the reactivation of local
economies and the protection of disadvantaged
groups. This, however, generally runs counter
to the immediate requirements of economic
stability, as they are defined by private investors, official creditors and donors.
Unable to deal effectively with these contradictions, the international financial and donor
community has concentrated on the more limited goal of promoting public sector reforms.
Over the past decade, Latin American bureaucracies have therefore been destructured and
restructured to an extent that would be inconceivable in the context of modern OECD countries. Ministries of education, health, finance,
regulatory agencies and public service
enterprises have undergone round after round
of reorganization. Some successes have been
registered; but in many cases, the reform process has simply weakened efficiency and morale. A marked decline in public sector wages
only adds to a general sense of uncertainty and
foreboding, among employees as well as among
other citizens who depend on these institutions
for services. All of this makes it at least temporarily harder for governments to accomplish the
normal tasks of public administration, and thus
to merit the respect of their populations.
The growing tendency to channel development assistance directly to non-governmental
UNESCO 1998.

Cynthia Hewitt de Alcantara

organizations, thus bypassing the state, also

affects the capacity of some contemporary Latin
American states to govern. For example, there
are parts of the region in which external funding, delivered directly to local non-governmental organizations, gives groups in national
civil society a greater capacity to provide
health services than that of the national government. This may induce popular participation in
service provision, and it may even improve the
quality of existing programmes. But it increases
dependence on outside sources of funding that
are often not sustainable, and it weakens public
sector institutions.
Meanwhile Latin American society is
caught up in a process of institutional change
that goes far beyond the level of formal institutional reform usually associated with the discourse of good governance. The long economic crisis has been accompanied by disturbing
social trends: high and persistent unemployment, a decimated middle class, growing social
polarization, a rising rate of child labour and
falling school attendance in some strata, a sharp
increase in kidnapping and violent crime.
Powerful drug syndicates are gaining greater
control of economic and political life. Corruption is rampant. This does not augur well for
the future.
Good governance would clearly be furthered by a change in the prevailing economic
orthodoxy and a resolution of the debt crisis
that continues to prevent economic recovery in
most Latin American countries. In other words,
creating more effective systems of authority and
regulation within the global economy, and providing a new stimulus to economic growth in
depressed regions, would seem to be a necessary precondition for the survival of democracy
in the region.

Concluding comments
In future, if the discourse on governance is to
open new opportunities for resolving the current
crisis of livelihood and governability in Latin
America (and in a number of other parts of
the world), it seems necessary to move in the
following directions:
away from the search for standard blueprints
of good governance, applicable anywhere,
and towards encouraging the creativity and

Uses and abuses of the concept of governance

originality of people in concrete social settings;

away from the technification of institutional
reform and towards a more open dialogue on
the needs for change in specific institutions
and programmes;
away from a tendency to draw unrealistic
lines between state and civil society, and
towards greater efforts to strengthen the public sphere and to reward contributions to the
common good. This might be considered
a new attempt to develop a discourse of
citizenship;
away from the preference for analysing institutional reform and macroeconomic policy
separately, and towards a more explicit recognition of the necessary interrelation between
these spheres; and

113

away from the artificial separation of governance issues between national and international levels.
Many within the development community
are contributing to such changes. But the overwhelming power of the multilateral banks and
donors in setting policy priorities and managing
economic crises in a number of regions of the
world makes it especially necessary for the
theory and practice of these institutions to
evolve towards a greater recognition of the complexity of an effective good governance
agenda. Reform of this agenda, so that it incorporates a democratic and socially responsible
economic philosophy, deserves serious consideration.

Notes

1. For interesting examples of this

trend, see the special issue of
World Development, vol. 24, No. 9,
September 1996, dedicated to
Implementing Policy Change.
Institutional specialists also
analyse inter-actor linkages which
might more traditionally be referred
to as social relations.
2. World Bank, Governance: The
World Banks Experience,
Executive Summary, 1994, p. 1.
3. For an analysis of the
Cambodian case, see P. Utting, ed.,
Between Hope and Insecurity: The
Social Consequences of the
Cambodian Peace Process, Geneva:
UNRISD, 1994.
4. The Salvadoran peace process is
especially relevant in this regard.

UNESCO 1998.

See E. Wood and A. Segovia,

Macroeconomic Policy and the
Salvadoran Peace Accords, World
Development, vol. 23, No. 12,
December 1995, pp. 207999.
5. For alternative visions of global
governance, and the alliances that
might sustain new forms of
transnational collective action, see
R. Falk, On Humane Governance:
Towards a New Global Politics,
Cambridge: Polity Press, 1995.
6. Some of these proposals can be
found in the 1992 Human
Development Report (New York:
UNDP); the report of the
Commission on Global Governance
(Our Global Neighbourhood),
Geneva, 1995; For a Strong and
Democratic United Nations: A
South Perspective on UN Reform,

Geneva: South Centre, 1996; and

various issues of the journal Global
Governance, published by Lynne
Rienner on behalf of the Academic
Council on the United Nations
System and the United Nations
University.
7. For a useful collection of essays
on this subject, see R. Culpeper and
C. Pestieau, eds, Development and
Global Governance (Ottawa:
International Development Research
Centre (IDRC) and the NorthSouth
Institute) 1996.