Playing by a simple set of rules

PUBLISHED : Thursday, 02 October, 2003, 12:00am
UPDATED : Thursday, 02 October, 2003, 12:00am

The social landscape facing East and South Asia's policymakers has changed dramatically since the middle of the 20th century. The region's population has more than doubled. Small, static, rural populations have become urbanised, placing new demands on governing systems.

The global economy has also changed. Globalisation has increased the importance of players from outside the domestic spectrum and made it more difficult for governments to manage all aspects of a country's life. In recognition of this new complexity, the international development community has begun to focus more closely on governance. That is, the set of structures and practices that define the bounds within which societies as a whole, and governments in particular, make decisions that affect both a country's course and the lives of its citizens.

Douglass North, the Nobel laureate economist, has described two key aspects of governance as the 'rules of the game' and the 'relationship between the players'. The best games have a small set of rules that are easily applied, allowing fluid and creative play.

Clear, simple rules are especially important in three areas: minimising corruption, enforcing property rights and consistently applying the rule of law. Most countries fall down in at least one of these areas. The close relationship between business and government in East Asia, for example, contributed to the region's 1997 financial crisis. In South Asia, violent conflict and the power of vested interests hamper application of the rule of law.

Many governments in the region have taken steps towards changing and more clearly defining their role. In East Asia, the state has continued to withdraw from markets, recognising the limits of what it can achieve and the need to allow private enterprise to flourish. However, governments can still help foster an enabling environment for the market to operate in.

The role of civil society in accessing and giving a voice to hard-to-reach communities is also increasingly being recognised. Still, its relationship with government and business is often characterised more by conflict than co-operation. The private sector's role in policymaking, too, often lacks clarity. Where businesses have considerable influence over government, their need to make profits may run roughshod over policies that would otherwise protect the needs of the many from the will of the few.

History shows democracy is the best governance mechanism for orienting society towards broad-based progress. The significant moves that some have made in this direction - most notably Taiwan and South Korea - bode well for their future development prospects.

Although countries do not compete in the way firms do, it is valuable to think of a country's governance systems as a competition - all governments should aspire to providing a more effective service than other governments, and all countries can benefit by learning from others.

Conferences, exchanges and the active development of policy networks also bring great rewards for little investment. A seminar being held by the United Nations Conference on Trade and Development and the UN Development Programme in Bangkok today - 'Governance in Asia: Underpinning Competitiveness in a Global Economy' - will bring together policymakers from across the region to discuss governance challenges.

How a country organises itself in a global economy is vital to its prospects for success. The role of government - the only player with the legitimacy of a popular mandate - remains important, and business and civil society can become important partners for governments. Relations between them will have strong impacts on the region's future prosperity.

David Bloom is a professor of economics and demography at the Harvard University School of Public Health; David Steven is managing director, and Mark Weston is an associate at River Path Associates, a UK-based consultancy