Convergence on Governance Issues, Dissent on Economic Policies

Abstract

Summary WDR97 is an attempt to reconcile the ‘Washington consensus’ with the ‘East Asian model’. It underscores the complementarity existing between state and market, the need to reinvigorate the state's institutions, and the damage caused by the recent over‐withdrawal of the state in many developing and transitional economies. It presents reasonable suggestions in the field of social policy, decentralisation, regulation and participation. Yet, the definition of the long‐term role of the state is reductionist. And the stance on key economic policies remains dogmatic: privatisation is presented as always efficiency enhancing, trade liberalisation as a universal source of growth, and portfolio flows as an essential contribution to higher savings. In addition, little is said about the impact and governance implications of globalisation. This persistent dogmatism is dangerous: even with major improvements in governance, economic performance may remain disappointing if the basic policy stand remains unaltered. It is difficult to assess the influence that WDR97 will have on the World Bank's policies and operations. Obviously ‘the proof of the pudding is in the eating’.

Are new institutional economics enough? Promoting photovoltaics in India's agricultural sector

“…In response to bureaucracy's drain on public resources, competition, it is argued, will raise the transaction cost of seeking protection and subsidy from the state, and henceforth promote efficiency between firms. The World Bank often assumes the existence of a strong private sector, or at least assumes that one will emerge given the correct institutions (Cornia, 1998;Hilyard and Wilks, 1998;Martinussen, 1998). However, absent from analysis is how the private sector may not always be ethical or operate according to quality standards (Bayliss and Cramer, 2001).…”

Participatory Governance

“…Chapter 7 of the World Development Report 1997 focuses on this issue, while the whole report deals with "The State in a Changing World". For a critical analysis of governance issues in this report, see also Cornia (1998).…”