Governance refers broadly to the exercise of power through a country’s economic, social, and political institutions in which institutions represent the organizational rules and routines, formal laws, and informal norms that together shape the incentives of public policymakers, overseers, and providers of public services. This is often referred to as "the rules of the game." Three key dimensions are (a) the process by which governments are selected, held accountable, monitored, and replaced; (b) the capacity of governments to manage resources efficiently and to formulate, implement, and enforce sound policies and regulations; and (c) respect for institutions that govern economic and social interactions. Problems of poverty and governance are inextricably linked. If power is abused, or exercised in weak or improper ways, those with the least power—the poor—are most likely to suffer. Weak governance compromises the delivery of services and benefits to those who need them most; the influence of powerful interest groups biases policies, programs, and spending away from the poor; and lack of property rights, police protection, and legal services disadvantage the poor and inhibit them from securing their homes and other assets and operating businesses. Thus, poor governance generates and reinforces poverty and subverts efforts to reduce it. Strengthening governance is an essential precondition to improving the lives of the poor. This chapter is intended to stimulate a broad-based dialogue on governance and its links to poverty. It assumes that an initial poverty analysis has been undertaken (along the lines suggested in chapter 1, Poverty Measurement and Analysis) and aims to develop a subsequent operational strategy for good governance in support of poverty reduction. Diagnosing the quality of governance arrangements is crucial to determining practical and sustainable strategies for tackling poverty. The chapter is intended to be used as a diagnostic aid by a working team comprising government and civil society representatives. It focuses on some core governance areas, raising issues and providing diagnostic questions. More detailed diagnostics can be applied as time and resources allow. PREVIOUS CHAPTER | NEXT CHAPTER
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