Good Governance and Aid Effectiveness: The World Bank and Conditionality

Abstract

Prompted by concerns over the effectiveness of aid, the World Bank has significantly stretchedits policy frontiers by endorsing “good governance” as a core element of its developmentstrategy. Governance, which captures the manner in which power is exercised in themanagement of a country’s economic and social resources for development, is a multifacetedconcept. Limited by its restrictive mandate and institutional ethos, the Bank has adopted arestrictive approach, confining itself to the economic dimensions of governance. Nevertheless,this evolution represents an ambivalent enterprise with both promises and dilemmas, as theinherent tension between the economic and political dimensions of governance appears themost contentious issue. While democracy tends to refer to the legitimacy of government, goodgovernance refers to the effectiveness of government. This article assesses the Bank’s approachfor promoting good governance in developing countries. It argues that that the