Is Governance Reform a Catalyst for Development?

International development agencies contend developing countries can boost rates of economic growth by introducing “good governance” measures. However, close analysis of specific governance reforms and economic turning points in the United States (when it was a developing country), Argentina, Mauritius, and Jamaica suggests that the agencies underestimate the time and political effort required to change governance, and overestimate the economic impact. Counter to optimistic claims about how much “institutions matter,” these carefully selected cases imply that greater transparency, accountability, and participation are often a result, rather than a direct cause of faster development. Furthermore, they show that closed institutions may be a satisfactory platform for rapid growth, provided those institutions open over time. Policymakers need to understand these processes better before counting on governance reforms to be the springboard out of poverty for most developing countries today.