The case of some Asian countries, whose governance record is a far cry from the accepted blue print, but have posted impressive and sustained growth, has been cited as part of the contrary evidence. Against this background, it is proposed that further research is needed to provide a definitive position on the matter. The possibility is expressed that though governance and poverty reduction may be correlated, the direction of causation may not be so clear. Further, it is claimed that governance is a multi-dimensional concept and provides an avenue for intrusion into virtually every aspect of state functioning. It thus essentially compromises sovereignty in decision-making, and transfers accountability of government from its own citizens to the donor community. Given the imprecision of the meaning and instability of the concept, approaches to its measurement run into difficulties and yield results of doubtful validity and reliability. Yet these measurements have become the basis for further conditionality in aid distribution and the introduction of selectivity in determining aid recipients. With the wide-spread inclusion of governance criteria in aid conditionality, there is a measure of stress imposed on recipient countries, which generally lack the capacity to pursue the wide range of reforms required, the urgency of some of which have been called into question by some informed observers. Some critics see a more sinister dimension in the governance discourse, claiming that the whole purpose of the approach is to create in the developing countries the state-market relationships typical of Western neo-liberal systems.

As the major development finance institution in the world, and a dominant influence in thinking on  BIS Review 109/2007  3  economic development, its ideas soon permeated not only the international financial institutions (IFIs) but the aid community generally. The precise link forged between good governance and economic development is the raison d’etre of the central place accorded good governance in current international development discourse. Various formulations of this relationship have been propounded. Doorknobs for instance justify good governance, namely the fight against corruption, nepotism, bureaucracy and mismanagement, and the promotion of transparency, accountability and proper procedures, as ensuring the effective utilisation of aid for the achievement of poverty reduction. Other writers variously state that good governance is a pre-requisite for sustainable development in Africa. They stress the importance for growth and development of a predictable regulatory framework, efficiency and transparency in public administration and an independent judiciary. Others remark on the pressures arising from globalisation and the competition for aid and investment as major driving forces for good governance; and the comparative attractiveness to investors of a corrupt-free country, with sound policies and well-managed administrative and judicial systems. The link between good governance and development is however not universally accepted and its implications are not always viewed positively. It has been argued that the link between governance and poverty reduction is at best tenuous. While in some areas empirical evidence tends to suggest that good governance leads to positive growth outcomes, other evidence suggests that this may not be so.