Don't rush to dismiss governance, it'll come back to haunt you

Noted Le Monde economic journalist Eric Le Boucher recently wrote that the sustained growth over several decades of East Asian economies with poor democratic governance, such as China, signals the demise of the values of democracy and humanism that the West inherited from Classical Greece and developed and advocated for the next 25 centuries. The worry is that the countries growing without democratic governance were championing a development model (he called it the “Chinese model”) that does away with democracy and good governance (the “Greek heritage model”).  His article, provocatively titled “the decline of white man”, takes a number of debatable shortcuts to make this point.

The french columnist refers to a brief article just published by Daniel Kaufmann in an  online publication of the US Government, suggesting that although economic growth had taken off in several regions of the world in the past decade, global governance, as measured by the recently released  2008 World Governance Indicators, was essentially stagnating.

True, on average, governance did not improve worldwide over the past decade. But the variance has been large: governance improved significantly in several developing countries (e.g. Liberia, Ghana, Colombia) just as it regressed dramatically in others (e.g. Zimbabwe, Venezuela). Dimensions of governance vary greatly within the same country, too: for instance, China fares poorly on voice and accountability, but does well in governance effectiveness.

In the short-to-medium term, there is some evidence that improving governance (including voice and accountability) enhances growth, even if there are outliers. That link becomes much stronger in the longer term: see for example the graph in this recent article in the Economist.

Finally, it is not clear how symptoms of misgovernance in industrialized countries, such as the collusion of senior government officials with big firms (in the USA), or their capture of the media (in Italy), relate to the glorified “Greek model”. The “West” is not monolithic, its governance performance is not and has never been uniform, the “Greek heritage model” is more like a patchwork of models. Nor is Asian governance monolithic, as Japan or that other Asian super-performer, India, demonstrate.