Governance : Meaning, Stakeholders, Strategies, Indicators

What is Governance?

The United Nations Development Programme (UNDP), 1997, defined governance as “the exercise of economic, political and administrative authority to manage a country’s affairs at all levels. It comprises the mechanisms, processes and institutions, through which citizens and groups articulate their interests, exercise their legal rights, meet their obligations and mediate their differences.”

In 1993, the World Bank defined governance as the method through which power is exercised in the management of a country’s political, economic and social resources for development.

In simple words, Governance is the process and institutions through which decisions are made and authority in a country is exercised. Governance can be used in several contexts such as corporate governance, international governance, national governance and local governance.

Thus governance focuses on the formal and informal actors and institutions involved in decision-making and implementing those decisions.

Stakeholders of Governance

Government is one of the key actors in governance. Other actors may include political actors and institutions, interest groups, civil society, media, non-governmental and transnational organizations. The other actors involved in governance vary depending on the level of government.

Typically, the stakeholders of governance at national level can be categorised into three broad categories – State, Market and Civil Society.

State, Market and Civil Society : Governance

  1. The State includes the different organs of the government (Legislature, Judiciary and Executive) and their instrumentalities, independent accountability mechanisms etc. It also consists of different segments of actors (elected representatives, political executive, bureaucracy/civil servants at different levels etc.)
  2. The Market includes the private sector – organised as well as unorganised – that includes business firms ranging from large corporate houses to small scale industries/ establishments.
  3. The Civil Society is the most diverse and typically includes all groups not included in (a) or (b). It includes Non-Governmental Organizations (NGOs), Voluntary Organizations (VOs), media organisations/ associations, trade unions, religious groups, pressure groups etc.

Good Governance

Governance by itself is a neutral term while ‘Good Governance‘ implies positive attributes and values associated with the quality of governance. Good governance is a dynamic concept and there is much subjectivity involved in defining the aspects of good governance.

United Nations Development Programme (UNDP) recognizes eight core characteristics of good governance:

  1. Participatory
  2. Consensus oriented
  3. Transparent
  4. Accountable
  5. Responsive
  6. Effective and Efficient
  7. Equitable and Inclusive
  8. Follows the Rule of Law

Understanding the key terms :

Participation :

  • Participation of all section of society is cornerstone of good governance.
  • Participatory governance provides opportunities for citizens to take part in decision making, implementation and monitoring of government activities.
  • However, participation needs to be informed and organized. This includes freedom of association and expression as well as an organized civil society.

Consensus oriented

  • Good governance requires mediation of the different interests in society to reach a broad consensus on ●what is in the best interest of the whole community and ●how this can be achieved.
  • It also requires a broad and long-term perspective on what is needed for sustainable human development and how to achieve the goals of such development.

Rule of Law

  • Good governance requires fair legal frameworks that are enforced impartially.
  • It also requires full protection of human rights, particularly those of minorities and vulnerable sections of the society.
  • An independent judiciary and an impartial and incorruptible police force is sine qua non for impartial enforcement.


  • Transparency means that decisions taken and their enforcement are done in a manner that follows rules and regulations.
  • It also means that information is freely available in easily understandable forms and directly accessible to those who will be affected by such decisions and their enforcement.
  • It also means that enough information is provided and that it is provided in easily understandable forms and media.
  • For example, in India the Right to Information (RTI) Act has been a powerful instrument in the hands of people to ensure transparency in the decision making process of executive.


  • Accountability is the acknowledgment and assumption of responsibility for actions, products, decisions, and policies.
  • The components of accountability are answerability, sanction, redress and system improvement.
  • In general an organization or an institution is accountable to those who will be affected by its decisions or actions.
  • Accountability cannot be enforced without transparency and the rule of law.


  • Good governance requires that institutions and processes try to serve all stakeholders within a reasonable timeframe.
  • Redressal of citizen grievance, citizen orientation, citizen friendliness and timely delivery of services are key component of responsive governance.

Effective and Efficient

  • Good governance means that processes and institutions produce results into the optimum use of resources at their disposal.
  • Thus it also covers the sustainable use of natural resources and the protection of the environment.

Equitable and Inclusive

  • A society’s wellbeing depends on ensuring that all its members feel they have a stake in it and do not feel excluded from the mainstream of society.
  • This requires all groups, particularly the most vulnerable, have opportunities to improve or maintain their well-being.

Many sources include “Strategic Vision” as a 9th principle of Good Governance.

Strategic Vision:
A broad and long-term perspective on good governance and human development is required. There is also an understanding of the historical, cultural and social complexities in which that perspective is grounded.

Strategies for good governance

  • Reorienting priorities of the state through appropriate investment in human needs
  • Provision of social safety nets for the poor and marginalized
  • Strengthening state institutions
  • Introducing appropriate reforms in the functioning of Parliament and increasing its effectiveness
  • Enhancing Civil Services capacity through appropriate reform measures that matches performance and accountability
  • Forging new alliances with civil society
  • Evolving a new framework for government-business cooperation

The Worldwide Governance Indicators project – World Bank

As mention above, World Bank defines Governance as the process and institutions by which authority in a country is exercised.

Specifically, governance is:

  • the process by which governments are selected, held accountable, monitored, and replaced;
  • the capacity of governments to manage resources efficiently, and to formulate, implement, and enforce sound policies and regulations; and
  • the respect of citizens and the state for the institutions that govern economic and social interactions among them
Governance IssuesGovernance
The Process by which Governments are monitored, and replacedVoice and Accountability
Political Stability
Extent of citizens participation in selection of governments
Civil liberties, political rights
Perceptions that the government in power will be destabilised by possible unconstitutional means
The Capacity of the government of effectively formulate and implement policiesGovernance Effectiveness
Regulatory Quality
Perceptions of quality of public service provision, quality of bureaucracy, competence of civil servants, independence of civil service from political pressures, credibility of government's commitment to policies.
The incidence of market unfriendly policies such as price controls
The respect of citizens and the state for institutions that govern economic and social interaction among themRule of Law
Control of Corruption
Success of the society in developing an environment in which fair and predictable rules form the basis for economic and social interactions
Perceptions of the incidence of crime, effectiveness and predictability of judiciary and enforceability of contracts.
Perceptions of corruption

The Worldwide Governance Indicators project’ – By World Bank ranks more than 200 countries on six key indicators of governance. The six indicators are:

  1. Voice and Accountability
  2. Political Stability and Absence of Violence
  3. Government Effectiveness
  4. Regulatory Quality
  5. Rule of Law
  6. Control of Corruption

These aggregate indicators combine the views of a large number of enterprise, citizen and expert survey respondents in industrial and developing countries.

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