Interlinkage between Governance and Economic Development: A Review of Existing Literature

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Smita Lahkar, Prof. Nissar Ahmed Barua


Governance is defined as the exercise of economic, political and administrative authority to manage a country’s affairs at all levels. It comprises mechanisms, processes and institutions, through which citizens and groups articulate their interests, exercise their legal rights meet their obligations and mediate their differences.  Thus, governance can be summed up as a process through which authority in a country is exercised (UNDP, 1997; UNESCO, 2012). Development linked governance has been an issue much debated about in the contemporary world. Since the second half of the 1980’s, growth and development studies have started to shed light on the importance of improving institutions of governance on economic growth. Good institutions, good governance and good leadership are considered by many authors as necessary conditions to support the development effort of a country or region. Good governance is believed to be the single most important factor in eradicating poverty and promoting development, hence, the countries that have a higher rank in the world governance index are often found to be in a higher rank in the other aspects of development.

There are several pathways through which governance and its various dimensions can impact a country’s economic growth, therefore, in this paper all the key issues related to governance has been discussed which are indispensable for the development of a nation.

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