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A few days ago, Dani Rodrik opened an interesting discussion with his post "How the financial crisis has killed the governance reform agenda."  Basically what he says is that "we need to downplay the role of improved governance as a causal mechanism for economic growth." 

His main argument is that the financial crisis in the US did not only undercovered issues of capture and corruption in this country -as Simon Johnson and Dani Kaufmann have argued- but also showed that it is possible to be corrupt and rich at the same time.  Based on this evidence and on his previous belief that the causal relation between governance and growth was never proofed to be strog, he concluded that even though governance reform is a good thing to do, it should not be confused for a growth strategy.

Dani Kaufmann, who has previously blogged on the financial crisis and governance, answered Dani Rodrik's post by saying that "the fact that there may have been corruption in the US in no way undermines the case for good governance being a powerful driver of development…" 

He argues that although the US has underperformed on issues of state capture and legal corruption, there are many other developing countries that rate worse, and that other governance issues such as bribery and embezzlement are not endemic. Finally he says that "a byproduct of the current crisis is that it has become a useful excuse to turn a blind eye on major pending longer term reforms to improve governance and corruption control in many corners of the world."

 It is true though that the debate about the causal relation between governance and growth is open and far from reaching final conclusions -and even when evidence suggests its existence, the trasmission mechanisms from good governance to growth remain unclear. This makes more relevant the analysis and diagnosis of what aspects of governance matter the most for growth -under local and more specific circumstances.   There is an agreement that the times of cookie-cutter approaches for the governance reform agenda are over.  Instead, a country-oriented approach provides the best chances to effectively link the governance reform agenda to a country's growth strategy.