An analysis of the poor governance viewed as a major constraint to the development of a country

Failure to allocate scarce resources to where they are most productive can impose a limit on development. The short-term gains from growth are quickly eroded as GDP per capita actually falls, hence, only when the birth rate falls will GDP per capita rise. This discretion can be counterbalanced by administrative procedure legislation and external reviews of decisions appeal mechanisms, judicial review, ombudsmen etc.

The solution is to reduce information failure by promoting the benefits of education and using the market system to send out effective signals to encourage people to alter their behaviour. Corruption Some developing economies suffer from corruption in many different sectors of their economies.

In this case, there is a positive role for government in terms of encouraging a lower birth rate. Imbalances Not all sectors of an economy are capable of growth.

Bribery is also alleged to be a persistent threat, and tends to involve the issuing of government contracts. Property rights are not protected The right to start a business is limited to a small section or a favoured elite Consumer rights are not protected Employment rights do not exist Competition law is limited or absent Under-investment in human capital Human capital development requires investment in education.

For some developing economies, too many scarce resources may be allocated to sectors with little growth potential. Because of asymmetric information lenders in credit markets may not be aware of the full creditworthiness of borrowers.

Development constraints

The principal - agent landlord - tenant problem In agriculture in particular, the principal-agent problem existing between landlord principal and worker agent creates asymmetric information and moral hazard.

Accountability can be strengthened through formal reporting requirements and external scrutiny such as an independent Audit Office, Ombudsmen, etc. This is one reason for the importance of micro-finance initiatives commonly found across India, Pakistan and some parts of Africa.

It means that decisions taken by government must be founded in law and that private firms and individuals are protected from arbitrary decisions. Low growth Growth is not sufficient to allow scarce financial resources to be freed up for non-current expenditure.

Over-abundance creates a disincentive to be efficient - the reverse of what has happened to Japan, which has very limited oil reserves, and needs to be efficient in the production of manufactures to enable it to import the oil it needs.

Inadequate financial markets Missing markets usually arise because of information failure. Governments have access to a vast amount of important information. In some developing economies, bribery is the norm, and this seriously weakens the operation of the price mechanism. Inefficiency Productive inefficiency Producers in less developed countries may not be able to produce at the lowest possible average cost.

Politicians and public servants are given enormous power through the laws and regulations they implement, resources they control and the organisations they manage. The problem was often seen as excessive centralisation, inflexibility and lack of efficiency. Therefore, there is little incentive to continue in full-time education.

Reliability, Predictability and the Rule of Law The rule of law refers to the institutional process of setting, interpreting and implementing laws and other regulations. Democratic accountability, as represented by accountability of ministers to parliament and the parliament to voters, can be seen as objective in itself, but it also strengthens accountability in general.

Capacity of government organisations is a key factor in the provision of many important services to businesses and the public, and in creating conditions for economic progress and social cohesion. For example, under-spending on education creates social inefficiency.

However, this can have an adverse effect on growth rates in the future. Reliability requires governance that is free from distortionary incentives - through corruption, nepotism, patronage or capture by narrow private interest groups; guarantees property and personal rights; and achieves some sort of social stability.

Workers may not bother to work hard. Many developing economies do not have sufficient financial capital to engage in public or private investment.

Organisational Capacity Good governance has to be built on the quality of organisations so that development is based on this rather than simply relying only on political will, personal will of a strong leader and state power, which may not be sustainable over the longer term.

Accountability and the rule of law require openness and good information so higher levels of administration, external reviewers and the general public can verify performance and compliance to law. For many in developing economies, the return on human capital development is uncertain compared to the immediate return from employment on the land.The e-governance has been defined by the Sultanate of Oman as “E-Governance is the development, deployment and enforcement of the policies, laws and regulations necessary to support the functioning of a Knowledge Society as well as of e-Government”.

An Analysis of the Poor Governance Viewed as a Major Constraint to the Development of a Country PAGES 2. WORDS 1, View Full Essay.

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An analysis of the poor governance viewed as a major constraint to the development of a country
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