APA ECONOMIC PAPER BASE ON CHINA

APA ECONOMIC PAPER BASE ON CHINA

APA ECONOMIC PAPER BASE ON CHINA

There is strong evidence that governance and institutions matter in accelerating development and in reducing poverty in developing countries. However, the evidence strongly suggests that there is no common set of institutions that all successful developing countries have shared. More worrying is the observation that governance and institutions in the most successful developing countries have often been starkly at variance with the good governance model that international agencies are committed to. (Bardhan,1997)

Even the most successful developing countries have suffered from significant corruption and other governance failures during the early stages of their development. However, they did have significant governance capacities that allowed states to ensure that the conditions for rapid growth and sustained political legitimacy of the state were maintained.(Besley,1993) A sustained pressure to reduce corruption and improve governance is both necessary and desirable but these ends cannot be achieved unless attention is also given to the governance capacities required for accelerating and sustaining growth. The very desirable goals of good governance may be neither necessary nor sufficient for accelerating and sustaining development. Nevertheless, some types of anti-corruption and governance reforms are likely to be part of a sustainable development strategy in most countries.(Andvig,1990) The challenge for developing countries trying to devise institutional reform and anti-corruption strategies is to learn the right lessons from the international experience and create feasible governance reform agendas appropriate and feasible for their own circumstances. The current governance and anti-corruption agendas do not achieve this and may even be doing damage by setting unachievable targets for developing countries and diverting attention from critical governance reforms.(Carothers,2003)

The first is the corruption and rent seeking that is associated with necessary state interventions that cannot be addressed through privatization or liberalization. Here the reform priority should be to strengthen state capacities to carry out these functions, and at the same time to legalize and regulate the associated rent seeking. (Bardhan,1997)

The second is the important area of political corruption associated with attempts of many developing country states to maintain political stability in a context of severe fiscal scarcity. This driver of corruption cannot be addressed using any of the conventional programmes, and indeed explains why political corruption is ubiquitous in developing countries. The reform priority here should be to identify the organization of patron-client politics in each country and to limit the most damaging effects. (Besley,1993) The long-term solution is to increase fiscal space to the point where political stabilization can be achieved through transparent fiscal transfers to all deserving constituencies.

The third driver of corruption is the structural weakness of property rights in countries where most assets are still unproductive and cannot pay for their protection. This structural problem is strongly supported by New Institutional Economics but has not found its way into the policy discussions around governance and anti-corruption reforms. (Bardhan,1997)We argue that the importance of this driver also explains why weakly protected property rights and the associated corruption appear to be ubiquitous in developing ...