EDEN BUILDING TO STOCK EXCHANGE Published: 12:29 AM, 07 July 2019
Good governance and doing business M S Siddiqui The concept of "governance" is not new. It is as old as human civilization. Simply put "governance" means: the process of decision-making and the process by which decisions are implemented (or not implemented). Recently the terms "governance" and "good governance" are being increasingly used in development literature.Good governance has 8 major characteristics. It is participatory, consensus oriented, accountable, transparent, responsive, effective and efficient, equitable and inclusive and follows the rule of law.The Cambridge Dictionary refers to it as 'the way that organizations or countries are managed at the highest level, and the systems for doing this'. The concept of governance defines the manner in which power is exercised in the. management of a country's economic and social resources for development (World Bank. 1992). It is also defined as 'the useof political authority and exercise of control over a society and the management ofresources for social and economic development'. The concept of public good governance became rather significant inthe early 1990s 'when international aid agencies realized that poor governance acrossmany developing countries was a major obstacle to their economic development'.The WB in its working paper defines governance as a neutralconcept, meaning 'the political direction and control exercised over the actions of themembers, citizens or inhabitants of communities, societies and states'. WB highlights the idea that thereare some dimensions of governance that appear to affect economic performance such as accountability, openness and transparency, and the rule of law. All these aspects of governance affect economic development, including quality of the business environmentthrough their influence on fiscal integrity, on predictability, and on the creationand maintaining of a business environment focused on economic performance. WB stated that six newaggregate indicators of governance were defined, such as 'voice and accountability','political stability and lack of violence', 'government effectiveness', 'regulatory quality' 'rule of law' and 'corruption'. It suggested that effective governmentsshould properly answer to citizen needs, promote politically neutral managers,and develop a framework of probusiness policies. However, there is a major issue that still remains a subject of controversial debates andthis issue deals with the most adequate indicators that should be used to capture correctlythe quality of corporate governance.
Government is one of the actors in governance and many dimensions of governance 'only the extent to which governments are accountable, respect democratic rights as well as refrain from imposing burdens on business have a statistically significant influence'. (Neumayer, 2002).Governance is approached as a new public management that should make the difference between government and governance i. e. 'less government and more governance' (Osborne and Gaebler 1992). The acts of government are meant to serve the interest of the general population and the cooperation between public and private sectors is crucial for ensuring the good of the society. Despite the differences indefining the concept of governance, one central common element in all these conceptualGood governance has become a topic of great interest for both scholars and public policy organizations since good governance influences economic prosperity. Good governance must necessarily ensure a framework of good rules that enhance ease for doing business that are meant to enhance the predictability of economic interactions between various contractual partners. Good Governance leads to a transparent environment for conducting public affairs, being a promoter of free market policies, justice, and the rule of law. The effects of good governance are, no doubt, felt on the business and economic environment. Good governance implies fair regulatory frameworks, accountability, and transparent policy making, all these factors having direct influences on economic activity. The effects of good governance are felt on the business and economic environment. Good governance implies fair regulatory frameworks, accountability, and transparent policy making. These factors have direct influences on economic activities of a country. Good governance must necessarily ensure a framework of good rules that clearly establish rules that are meant to enhance the predictability of economic interactions between various contractual partners. The public and private sectors are depending on each other to activate efficiently and to achieve their objectives, therefore the public sector should facilitate, through an appropriate regulatory framework and control of corruption, the effectiveness of the business sector. Private sector outputs could provide a basis for the public sector to serve the economic health of a country and its population. In this context, the ease of doing business must represent an issue of major concern for government and the public sector, and one of the major interests of government should be more accessible business regulations and regulatory processes, given the relevance of business environment outputs for the public sector. Good governance as conceived by the World Bank, the United Nations Development Programme (UNDP), the Organization for Security and Co-operation in Europe (OSCE), the United States Agency for International Development (USAID) and other donor agencies consists of two major dimensions: political and economic (see figure 1). The political dimension can be
broken down into four key components: government legitimacy; government accountability; government competence; and rule of law (human rights). The economic dimension also has four components: public sector management; organizational accountability; rule of law (contracts, property rights); and transparency (including freedom of information). This does not encompass all aspects of the concept of governance, but provides a framework for discussion. As the following section points out, initiatives to develop measurements of governance have been selective in the choice of dimensions and concepts. The business environment seems to be positively affected by the good governance. According to Çule and Fulton (2013) the influence of governance over the business environment is given by the supposition that an economy with a moderate level of bureaucracy, a high concern for legislative compliance, and good instruments for controlling corruption is expected to create and maintain a business environment that stimulates economic performance. There is no doubt that the public and private sectors are depending on each other to activate efficiently and to achieve their objectives, therefore the public sector should facilitate, through an appropriate regulatory framework and control of corruption, the effectiveness of the business sector. Private sector outputs could provide a basis for the public sector to serve the economic health of a country and its population. In this context, the ease of doing business must represent an issue of major concern for government and the public sector, and one of the major interests ofgovernment should be more accessible business regulations and regulatory processes, given the relevance of business environment outputs for the public sector. Bangladesh is gradually heading for market economy although our mind set of both citizen and the politicians and bureaucrats are historically against private sector. The 7th Five year plan had forecast of gradually transform of economy with an investment of 78% from private sector. The role of private sector is not much discussed in Bangladesh rather this is not encouraged in our society. But the public and private sector is complementary to each other.
The writer is a legal economist Email: mssiddiqui2035@gmail.com