Governance: A Critical Examination
*By Ali Riaz



The term governance has not only permeated various disciplines, from Political Science to Economics to Business Studies to International Relations, but also has become an integral part of daily discourse. It is easy to notice that no longer is the discussion on government as prominent as it used to be in the 1970s; instead governance has replaced it in many instances.

This paper revisits some of the fundamental issues related to governance. This paper has three objectives: explore the concept of governance and its limitations; trace the pathways of the concept of governance and elements of governance; and critically examine the dominant governance indicators. The central arguments of the paper are that despite pervasive use, the concept of governance has remained contested and has over time pushed away the state as the central element of governance, a limitation which calls for a reexamination of the concept; that the emergence and proliferation of the concept of governance was influenced by neo-liberal orthodoxy about the limited role of the state and by the global political landscape after the end of the Cold War, but there have been reverse waves to counter this notion; and that the institutionalist bias of the extant governance indicators have ignored crucial elements of governance such as the legitimation capacity of the state and power relations within society.

Governance: Definitions and Inadequacies

There is no single universally accepted definition of the term governance. Available definitions include both expansive and circumscribed understandings of governance. Kaufman et al, whose definition is oft-quoted, says, ‘Governance includes the process by which governments are selected, monitored and replaced; the capacity of the government to effectively formulate and implement sound policies; and the respect of citizens and the state for the institutions that govern economic and social interactions among them’ (Kaufman et al 2013).  Fukuyama (2013) on the other hand, has explicitly discarded the necessity of democracy or even any representation of citizens as an element of governance. He defined governance ‘as a government’s ability to make and enforce rules, and to deliver services, regardless of whether that government is democratic or not’ (Fukuyama 2013).  Hestates, ‘the quality of governance is different from the ends that governance is meant to fulfill. That is, governance is about the performance of agents in carrying out the wishes of principals, and not about the goals that principals set.’

Available definitions not only show the differences among scholars and various international organizations but also how it is variously explained within the same organization. These shifts point to the expansion of the concept both horizontally (state and non-state actors) and vertically (formal and informal rules), but they also show that that the importance of the state in governance has been lessened. This should be noted with some concern, however, because both empirically and analytically the state cannot be divorced from governance.

To start the analysis at the level of state, it is imperative to consider governance as an integral part of the capacity of the state. There are various ways to conceptualize state capacity. Despite differences among scholars, one can identify some commonalities; in the contemporary global political landscape a state must have at least three capacities: extractive capacity, coercive capacity, and administrative capacity (Hanson and Sigman, 2013). These dimensions of state capacity in large measure relyon the Weberian notion of the state where state is viewed as a human community that successfully claims amonopoly of the legitimate use of physical force within a given territory. The state’s role in each society should not be viewed only in terms of its economic activity but beyond that to those functions that are essential to the economic process, and as an agency of hegemony/domination, or in other words, as the source of ideology. Therefore, I argue,somewhat akin to what Wang (1995) has proposed in his description, that state capacity should include legitimation capacity. In this conceptualization, the state must have four capacities: legitimation capacity, coercive capacity,extractive capacity, and administrative capacity.

The legitimation capacity of a state is dependent on the success of the state in producing and reproducing an ideology and narratives which allow the state to extract material and political resources. As such, the state which succeeds in making the ideological basis of the state and the regime less contentious enjoys more legitimacy and has a better capacity to extract and administer. The legitimation capacity serves as the basis of other capacities of the state and determines the nature of the state.

Based on the premise that governance is about state capacity, particularly the use of administrative and extractive capacities, governance cannot be conceived without taking the fundamental capacity (i.e. legitimation capacity) into account. That raises the question whether the concept of governance is being hollowed out by progressively pushing the state away from the conceptualization of governance.

The concept of ‘political settlement’ is helpful in understanding how legitimation capacity is created. The political settlement, through formal and informal institutions and formal and informal rules, includes various segments of society and provides legitimacy to the system of governance. Different political settlements produce different results insofar as the political systems are concerned. We can identify four types of political systems: personal rule, minimally institutionalized states, institutionalized competitive states, institutionalized competitive states. Political systems determine the regime’s nature, state’s organizational capacity and level of legitimacy. For example, a political system characterized by personal rule has low organizational capacity and low legitimacy while institutionalized competitive states has high capacity and high legitimacy.

The pathways of the concept and elements of governance

The emergence and the proliferation of the term governance has a history of more than three decades and can be traced back to the critique of the role of the state in the 1970s. Examination of the history and trajectory of the concept of governance revealed that it experienced transformation as neoliberal policies gained prominence and was implemented with much fanfare around the world as globalization took an unprecedented pace. The abject failure of the reform prescriptions of the multilateral organizations such as the World Bank and the IMF, unraveling of the ‘Washington Consensus’ and the rise of the neo-statist intellectual tradition, interrogated the extant notions and questioned the effectiveness of elements of governance.These developments have succeeded in re-inserting the question of the state in the conversation, but only partially. The elements of governance, as currently envisaged, pay very limited attention to the Non-State Actors (NSAs). The NSAs are understood as those recognized as legitimate by the international community, such as the International Developmental NGOs (INGOs). However, in a post-9/11 global environment, Transnational Violent Non-State Actors (TVNSAs) have begun to play vital roles at both the global and national levels impacting the policy-making and implementation arenas on the one hand and actions of civil society, on the other. With this in mind Iinsist that elements of governance need to incorporate TVNAs.

Governance Indicators

With governance becoming the buzz word and ‘good governance’ a de facto criterion for a range of issues including the disbursement of official assistance, foreign direct investments, and the examination of political institutions, it became imperative to develop a set of indicators to measure the success and identify the policy areas which need further attention. The demand has led to the emergence of several governance indicators since the 1990s.

The extant indicators can be divided into two categories: fact-based and perception-based. The World Bank defined the fact-based indicators as ‘indicators [which] utilize quantitative or qualitative data that arenot subject to perceptions, i.e., data that arereproducible and whose value does not depend on the individual providing the information. Thesetype of data can be numerical (prices, amounts, rates) or textual (laws, procedures, rules)’ and perception-based indicators as those which ‘rely on the perceptions of individuals through expert assessments and surveys of individuals or households’ (World Bank2009).

Some of the extant indicators are global in nature, meaning they cover many countries across various regions, whereassome examinethe state of governance in specific regions. The global ones are frequently used by analysts, policymakers and investors alike in making decisions. Of the available indicators four – three global and one regional – have drawn most interest. They are World Governance Indicators (WGI), Country Policy and Institutional Assessment (CPIA), World Governance Assessment (WGA), and Ibrahim Index for African Governance (IIAG).

Along with the proliferation of these indicators came a growing acknowledgement of the limitations of these indicators and calls for reexamination of the elements of these indicators. In response to thecriticisms as well as the desire to improve the quality of these indicators, many producers of these indicators have revised their indicators and made the sources of their data available.

Yet, it appears that available governance indicators, both perception-based and fact-based, have a serious limitation that hasn’t been addressed. That is the adoption of an institutionalist approach, in other words, a bias toward institutions. In the extant indicators, institutions are portrayed and considered as if the people within them have few choices. Reification of institutions not only undermines agency but also ignores them altogether. This proclivity towards institutions discounts the power relationships within a society. It is well to bear in mind that power relationships are products of an array of factors including the political economy, history and culture of a given society at a given moment. The informal practices, present in any society, simultaneously reflects and shapes the nature of the power relationship and, by extension, governance as it determines what gets done and how they are done. By not considering their roles in governance, the governance indicators neglect an important aspect. This overdependence on institutions is a result of a limited understanding of the Weberian concept of state and consequent notion of state capacity.

Therefore, I argue that it is long overdue that we re-examine the indicators of governance which will allow us to be free of the shackles of institutional bias and add non-material important indicators and contextualize the indicators within the history and political economy of the country.


[A summary of the paper presented at the Seminar – Governance: A Critical Examination, organized by the Center for Governance Studies, Bangladesh on 1 February 2017 at the Bangladesh Institute of International and Strategic Studies. For the complete paper with references and figures, please contact]


*Ali Riaz is a University Professor at Illinois State University, USA where he teaches political science and chair of the Department. He previously taught at universities in Bangladesh, England, and South Carolina, USA, and worked as a Broadcast Journalist at the British Broadcasting Service (BBC) in London.In 2013, he served as Public Policy Scholar at the Woodrow Wilson International Center for Scholars at Washington D.C. Dr. Riaz’slatest publications are Bangladesh: A Political History since Independence (2016), the coedited volume Routledge Handbook on Contemporary Bangladesh (2016).

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