4 range of experimentation is taking<sup>place as reforming countries seek solutions adapted to their</sup> diverse predicaments.

In this context, participation<sup>forms part of sound economic management if it</sup> enhances, rather than restrains,<sup>flexibility in the face of change.</sup> Successful adjusters have displayed a capacity to leam and<sup>adapt in response to technological and market shifts; altered global</sup> conditions or strategic moves by<sup>competitors. In tum, this has led them to implement market</sup> :riendly policies, a supportive and flexible<sup>public sector and a judicious mix of debureaucratization,</sup> decentralization and deregulation.

Often, such reforms have required<sup>social sacrifices and/or have been disruptive to</sup> vested interests. Successful performners<sup>have been those in a position to rely on the maintenance of</sup> social cohesion in the face of severe<sup>shocks. They have drawn on a critical mass of political</sup> support to inaugurate adjustment<sup>and they have used participation to secure a durable consensus for</sup> reform; and to sustain desirable policy<sup>directions through flexible implementation strategies.3/</sup> Conversely, representative governments<sup>highly responsive to their electorates have found it difficult</sup> to adopt rigorous fiscal policies.<sup>No clear linkage has been found between democratization and</sup> economic growth. See World Development<sup>Report 1991, The Challenge of Development, Oxford</sup> University Press, June 1991, pp. 132-136.

# Governance

Participation is a component of governance.<sup>Irrespective of the political system in</sup> place, good govemance implies economic<sup>management which is shaped by accountability,</sup> transparency and the rule of law. Despite<sup>wide dissemination of "best policy practice" and a broad</sup> consensus on the desirable ingredients<sup>of reform, policy reversals in developing countries have been</sup> numerous and, in the aggregate, development<sup>results have left much to be desired. Thus, given</sup> difficult global conditions, per capita<sup>incomes in developing countries declined in 1990 as well as</sup> in 1991, the only time this has happened<sup>since 1965 when the World Bank starteJ collecting</sup> comprehensive data on developing<sup>countries.4/</sup> Strategy is not implementation. The<sup>gap between making policy and getting things</sup> done must be closed. Responsiveness is not easily combined<sup>with efficiency in economies</sup> characterized by pervasive corruption,<sup>mistrust in the legal regime, civil strife, etc. Hence, the</sup> growing interest in the institutional<sup>dimension of development-i.e.</sup> governance.5/ Simply put, governance goes beyond the policy<sup>itself and reflects a preoccupation with the constitution of policy</sup> and its implementation.

# Shifts in Sectoral **Priorities**

Yet another reason policy makers<sup>are struggling to define and adopt judicious</sup> participation strategies into the management<sup>of economies is the growing importance of sectors</sup> which demand collective action (see<sup>Section 6, below). A constructive engagement of the State</sup> combined with effective reliance on<sup>the market has become imperative to overcome the undersupply</sup> of public goods whihh has become an increasingly<sup>limiting constraint to economic growth.</sup> A decade or more of restraint<sup>in public expenditures has created a large</sup> infrastructure gap.6/ The worldwide information economy<sup>is dependent on effective</sup> telecommunications networks which<sup>require significant investments. The cyclical pattem of energy</sup> prices as well as growing environrental<sup>constraints on the development of traditional energy</sup> sources are likely to trigger massive<sup>investment requirements before the end of the decade. In</sup> order to keep food production in<sup>line with needs (while arresting the degradation of the natural</sup>