Lesson 2

The Key Actors in Governance

SPECIFIC OBJECTIVES: at the end of the lesson, the students should be able to:

1. Identify the different actors in governance;

2. Critically explain the role of each player in the governance process;

3. Critique on the current efforts of these key actors in the any governance
endeavors;

4. Illustrate the inter-relationship of the role of the key actors in governance;

5. Discuss some of the lessons and best practices in the governance of

partnerships.

6. Critically assess the involvement of Civil Society organizations and the private
sectors in governance.

LESSON PROPER

The management of public affairs is not an exclusive domain of government and

the concept of governance goes beyond the realm of the state or public sector. It
also involves the Civil Society which comprises of schools/academe,
nongovernment organizations (NGO), People’s Organization, Voluntary
Organizations, and the Private or the Business Sectors. The involvement of these
sectors is based on their common interest and similar aspirations committed to the
same public concerns. As Louise Frechette, Deputy Secretary General of the UN
said, “Governance is not something the state does to society, but the way society
itself, and the individuals who compose it, regulate all the different aspects of their
collective life.
 2

Figure 4 Key Actors in Governance

State/
Public
Sector

Civil Business
Society Sector

Source: UNDP (1997)

1. The State

The state is the principal actor of government to facilitate participation and

provide an enabling environment to other elements of the society. It is a strong entity
that recognizes the significance and autonomy of the other sectors without
overwhelming them.
1. 1 The state as enabler provides for the legal and regulatory framework
and political order within which firms and organizations can plan and act. It encourages
citizens to act by liberating them from the fear of military reprisals when they criticize
policies or serve marginalized groups. It can assure private firms that policies are fair
and not subject to caprice or whim or the private interest of political officials.
 3

1.2. The state as resource provider facilitates by providing resources to assist

markets and communities. Such resources include information, technical expertise,
research and development programs, physical infrastructure as well as grants-in-aid or
incentive schemes.

As part of the state, the local government performs a crucial role in the efforts of
the national government in implementing its programs and projects. The Local
government is the real actor in effecting governance and development.

The Local Government

The Local Government is an avenue where the civil society groups at the community
level can participate meaningfully in the decision-making processes. By virtue of the
powers and authority provided in the Local Government Code of 1991, local
government formulates and defines the legal and regulatory framework. This serves as
the basis for the involvement and participation of the various organizations and groups
in the governance of the community.

The Local Government also maintains a political order and provides the necessary
resources such as technical expertise and infrastructure to the various groups, most
especially to those who are places at disadvantaged position.

As an enabler, the local government likewise provides the environment for the
development of full potentials of its citizens guided by the “overarching goals of
respecting, protecting and fulfilling basic human rights for all and of empowering
everyone to shape their own destiny under a regime in which the realization of basic
rights is guaranteed” (J. Natividad, Rights-Based Philippine Governance Review, DAP,
2005: 21)
ADB also outlined the role of the STATE and the key milestone in governance as
shown below.
 4

Roles of the States and Key Milestones in Governance Table 1

Sound Development Key Milestones
Management Roles of the
State
1. Creating a conducive  Enact and enforce laws that promote
economic environment economic competition
 Decentralize economic decision making and
stabilize inflation
 Reduce public deficit and free market to set
prices for privately produced goods and
services

2. Protecting the Vulnerable  Ensure the survival of pension systems

 Create or maintain reasonable
unemployment benefits
 Establish and maintain a system of private
health and social insurance
 Maintain social assistance programs for the
disabled and disadvantaged

3. Improving government  Attract qualified, competent, honest and

efficiency and responsiveness realistically paid individuals into public
service
 Establish a civil service system that relies on
merit-based recruitment and promotion,
incentive-based compensation, and reward
oriented career paths that are clearly defined
 Attract and retain a corps of professionals
who are responsible for formulating and
implementing economic policies and support
them with good training, appropriate degree
of independence and professional reward
structures.
 Protect professional civil servants from
political interference in carrying out their
responsibilities
 Establish a civil service system that is
flexible enough to facilitate communication
between the public and private sectors
4. Empowering people and  Establish a conducive institutional
democratizing the political system environment comprising properly functioning
parliaments, legal and judicial systems, and
electoral processes.
5. Decentralizing the  Respond quickly to local needs and
 5

administrative system conditions

 Redistribute authority, responsibility and
finances for public services among different
government levels
 Strengthen sub-national units of
governments
 Respect traditional structures of authority as
well as traditional mechanisms for resolving
conflicts and managing common property in
society
6. Reducing gaps between rich  Reduce social disparities
and poor
7. Encouraging cultural diversity  Maintain cultural identity and roots while
and social integration promoting social cohesion
 Ensure political systems are accessible to all
and that legal systems afford equal
opportunities
8. Protecting the environment  Integrate economic and environmental
accounting
 Promote interregional equity

Table 1
*
Source: Asian Development Bank (2005) Country Governance Assessment

* The Country Governance Assessment of the Philippines is prepared by the Philippine Governance Assessment
Study Team headed by the Team Leader Alex B. Brillantes Jr. of the UP National College of Public Administration
& Governance.

2. The Private or Business Sector - Corporate Governance

In governance parlance, the private/business sector serves as the engine of the

society. It is an important collaborator in the economic development of the community.
It generates jobs and incomes for the people in the community. Because of its
resources such as financial and technical expertise, it can assist the local government in
coming up with an economic plan for the community and help in the implementation of
the plan. It can also provide the needed resources for the government to enable it to
pursue big and wide scale projects that are beyond the local government’s financial
capability. Efficiency and economy are expected outputs or products of corporate
governance. The state provides a level playing field for those able to compete, and
turns its attention to the provisions of safety nets for those unable to do so.

In the field of information technology, the private sector can help the local
government in the development of technologies that would help proper the growth and
development of the economy of the community. In this connection, the private sector
 6

can assist the local government promote the transfer of technology such as the
application of spatial planning and decision support systems for effective local
governance.

The participation of market and civil society in governance adds new role to the
state and that is of building partnerships and linkages to the two sectors. Moreover,
their engagement of the state shifts the social picture from elite control to active
citizenship.

3. The Civil Society

The Civil Society consists of the complex of citizens and groups outside government
working in the public arena. It is often called as CSOs- civil society organizations and
also sometimes referred to as the Third Sector.

The civil society comprises the academe or schools, NGO’s e.g. Association of Schools
of Public Administration in the Philippines, Inc. (ASPAP, Inc) housed at the National
College of Public Administration and Governance which is religiously collaborating with
Government and NGOs (GOP-UNDP Programme, Galing-Pook Foundation, Social
Watch Philippines, TAN, TI etc.) in promoting governance and development.). Other
civil society groups include POs and the voluntary groups.

This sector plays an important role in the facilitation and interaction among the
key players of local governance. It mobilizes the various groups or organizations in the
community to participate in planning and decision-making process.

The Philippines has a large and very vibrant Third Sector with a long history
dating back to its colonial years. The total number of civil society organizations is
estimated to between a low of 249,000 to a high of 497,000 (Cariño, 2002: 84). Ma.
Oliva Z. Domingo also discussed in her paper entitled: Third Sector Governance:
Meanings, Issues, and Challenges in the Philippines”, the Civil Society is the third
sector governance.

The extensive use of the term governance in the literature and day-to-day
operations of Third Sector organizations precedes the now current, broader meaning
popularized by the UNDP. Brian O’Connell’s work published in 1985, identifies
governance as a basic role for the boards of voluntary organizations (1985: 22). An
even much earlier work describes alternative governance models for nonprofit
universities (Baldridge et al, 1997). Scholars writing on Third Sector organizations make
fine distinctions between governance and management (Wood, 1996: 3-4), or even with
administration (Lyons, 2001: 123-124), but affirm that the term governance captures the
scope of the “special kind of management” applicable to these organizations.
 7

Within the broad view of governance, Third Sector organizations play a key role
as they engage in programs and deliver services in areas where government is absent
or where the private sector is not interested in. They facilitate political and social
integration by mobilizing and empowering people to participate in economic, social, and
political activities. Within the Third Sector itself, governance generally refers to the
exercise of governing functions by responsible persons. In this sense, the term has an
inward looking perspective, an internal relevance for Third Sector organizations.

Whether in the broad or the internal point of view, Third Sector organizations are
called upon to respond to the challenge of good governance. In order to do so, the
Sector needs to clarify the meanings, issues, and role expectations associated with the
concept of governance.

In local governance, a critical role that the civil society plays is that it provides the
forum for the airing of grievances, complaints, concerns, issues and problems among
the populace. Specifically, it provides voice to the “inarticulate and the unarticulated”. It
also performs some political role in the community by serving as an instrument of
checks and balances on the power of the state or local government and the business
sector behavior. It is seen as a claim holder of basic human rights. And most of all, it
can serve as an alternative delivery mechanism for the frontline services.

Some civil society organizations engage primarily in the critique of existing policy
and the advocacy of what to them are more appropriate policies for the good of the
nation. In authoritarian regimes which close avenues of citizen access to policy
formulation, some groups may be forced to go underground and work for the ouster of
the regime itself. But even in the most democratic states, there will be no lack of critics
that press for regime change and drastic policy reversals. NGOs may also go beyond
opposition and debate into competing with government’s own delivery system,
demonstrating that the alternative mechanisms they advocate are capable of being
implemented on the ground.

Other civil society organizations may extend the government’s delivery system by
mobilizing people to prove themselves eligible to receive government social services, or
providing their own services in areas unreached by the public bureaucracy. The
government may complement NGOs in turn by providing the needed scaling up and
referral system for their relatively smaller programs.

In relations to this, there are other possible directions to strategic directions for
active civil society participation in good governance. In general terms, this means
supporting efforts to promote partnerships between government and civil society.
These maybe in designing, implementing, monitoring, and evaluating programs and
projects. This can also mean identifying areas where civil society can either
complement or supplement the efforts of the Government to deliver services, or even
serve as alternative mechanisms altogether. ADB (2005)
 8

3. The Private or Business Sector - Corporate Governance

In a governance parlance, the private/business sector serves as the engine of

the society. It is an important collaborator in the economic development of the
community. It generates jobs and incomes for the people in the community. Because
of its resources such as financial and technical expertise, it can assist the local
government in coming up with an economic plan for the community and help in the
implementation of the plan. It can also provide the needed resources for the
government to enable it to pursue big and wide scale projects that are beyond the local
government’s financial capability. Efficiency and economy are expected outputs or
products of corporate governance. The state provides a level playing field for those
able to compete, and turns its attention to the provisions of safety nets for those unable
to do so.

In the field of information technology, the private sector can help the local
government in the development of technologies that would help proper the growth and
development of the economy of the community. In this connection, the private sector
can assist the local government promote the transfer of technology such as the
application of spatial planning and decision support systems for effective local
governance.

The participation of market and civil society in governance adds new role to the
state and that is of building partnerships and linkages to the two sectors. Moreover,
their engagement of the state shifts the social picture from elite control to active
citizenship.
 9

Figure 5 Urban Actors

Source: United Nations Economic & Social Commissions for Asia and the Pacific (UN
ESCAP) (2001) Internet Source: http://www.unescap.org/huset/gg/governance.htm

As mentioned earlier, government is one of the key actors in governance. Other

actors involved in governance vary depending on the level of government that is under
discussion. In rural areas, for example, other actors may include influential land lords,
 10

associations of peasant farmers, cooperatives, NGOs, research institutes, religious

leaders, finance institutions political parties, the military etc. The situation in urban areas
is much more complex. Figure 5 provides the interconnections between actors involved
in urban governance. At the national level, in addition to the above actors, media,
lobbyists, international donors, multi-national corporations, etc. may play a role in
decision-making or in influencing the decision-making process.

All actors other than government and the military are grouped together as part of
the "civil society." In some countries in addition to the civil society, organized crime
syndicates also influence decision-making, particularly in urban areas and at the
national level.

Similarly formal government structures are one means by which decisions are
arrived at and implemented. At the national level, informal decision-making structures,
such as "kitchen cabinets" or informal advisors may exist. In urban areas, organized
crime syndicates such as the "land Mafia" may influence decision-making. In some rural
areas locally powerful families may make or influence decision-making. Such, informal
decision-making is often the result of corrupt practices or leads to corrupt practices.
( http://www.unescap.org/huset/gg/governance.htm)

In developed and developing countries alike, the state is being compelled to redefine
its role in social and economic activity - to reduce it, reorient it, reconfigure it. The
pressures for change stem from three sources:

• The private sector wants a more conducive market environment and a better
balance between state and market.

• Citizens want increased accountability and responsiveness from government, as

well as greater decentralization.

• Global pressures from supranational and worldwide social and economic trends
are challenging the identity and nature of the state.
 11

Relationships between Governance and Human Development as performed by

each Domain of Governance

Each domain of governance - the state, the private sector and civil society - has
a unique role in promoting sustainable human development.

The state

In countries where electoral processes exist, the state is composed of an elected

government and an executive branch. The state's functions are manifold - among them,
being the focus of the social contract that defines citizenship, being the authority that is
mandated to control and exert force, having responsibility for public services and
creating an enabling environment for sustainable human development. The latter means
establishing and maintaining stable, effective and fair legal-regulatory frameworks for
public and private activity. It means ensuring stability and equity in the marketplace. It
means mediating interests for the public good. And it means providing effective and
accountable public services. In all four roles, the state faces a challenge - ensuring that
good governance addresses the concerns and needs of the poorest by increasing the
opportunities for people to seek, achieve and sustain the kind of life they aspire to.

The state, of course, can do much in such areas as upholding the rights of the
vulnerable, protecting the environment, maintaining stable macroeconomic conditions,
maintaining standards of public health and safety for all at an affordable cost, mobilizing
resources to provide essential public services and infrastructure and maintaining order,
security and social harmony.

State institutions can also empower the people they are meant to serve -
providing equal opportunities and ensuring social, economic and political inclusion and
access to resources. But people can be empowered only if their legislatures, electoral
processes and legal and judicial systems work properly. Parliaments of freely and fairly
elected members representing different parties are crucial to popular participation and
government accountability. Effective legal and judicial systems protect the rule of law
and the rights of all. Open elections mean public confidence and trust - and so political
legitimacy. States should also decentralize political and economic systems to be more
responsive to citizens' demands and to changing economic conditions.

In developed and developing countries alike, the state is being compelled to redefine
its role in social and economic activity - to reduce it, reorient it, and reconfigure it. The
pressures for change stem from three sources:

• The private sector wants a more conducive market environment and a better
balance between state and market.

• Citizens want increased accountability and responsiveness from government, as

well as greater decentralization.
 12

• Global pressures from supranational and worldwide social and economic trends
are challenging the identity and nature of the state.

The private sector

The state is a big force for development - but it is not the only one. Sustainable
human development depends in part on creating jobs that provide enough income to
improve living standards. Most states now recognize that the private sector is the
primary source of opportunities for productive employment. Economic globalization is
fundamentally changing the ways in which industries and enterprises operate. In many
developing countries, private enterprise must be encouraged and supported to be more
transparent and competitive in the international marketplace.

Equitable growth, gender balance, environmental preservation, expansion of the

private sector and responsible and effective participation in international commerce
cannot be achieved by the market alone, however. States can foster private sector
development that is sustainable by:

• Creating a stable macroeconomic environment.

• Maintaining competitive markets.

• Ensuring that the poor (especially women) have easy access to credit.

• Nurturing enterprises that generate the most jobs and opportunities.

• Attracting investment and helping to transfer knowledge and technologies,

particularly to the poor.

• Enforcing the rule of law.

• Providing incentives for human resource development.

• Protecting the environment and natural resources.

Civil society

Civil society also has to protect the rights of all citizens. As the state and the
private sector are being reshaped and their relationships redefined, civil society is
changing in important ways. Unresponsive government and unrelenting economic and
social pressure have undermined some traditional civil society organizations and
strengthened others - and in many cases forced people to organize in new ways. Civil
society is thus more than just society. It is the part of society that connects individuals
with the public realm and the state - it is the political face of society.
Civil society organizations channel people's participation in economic and social
activities and organize them into more powerful groups to influence public policies and
 13

gain access to public resources, especially for the poor. They can provide checks and
balances on government power and monitor social abuses. They also offer
opportunities for people to develop their capacities and improve their standards of living
- by monitoring the environment, assisting the disadvantaged, developing human
resources, helping communication among business people.

More fundamentally, civic networks ease the dilemmas of collective action by

institutionalizing social interaction, reducing opportunism, fostering trust and making
political and economic transactions easier. Well-developed civic networks also amplify
flows of information - the basis for reliable political, economic and social collaboration
and public participation of civil society members. These relationships and social norms
make up a nation's social capital.

Civil society organizations do not always pursue the qualities of good

governance. Nor are they always the most effective development agents. That is why
states, while recognizing and protecting the democratic rights of civil society
organizations, must also ensure that the rules of law and values that reflect societal
norms are adhered to. Democratic institutions, particularly local ones, can be important
in ensuring that all in society have a voice, as well as ensuring that there are
transparent and fair ways to reach consensus.

Like private enterprises, civil society organizations need adequate capacities to

fulfill their potential. They also need an enabling environment, including a legislative and
regulatory framework that guarantees the right of association, incentives to facilitate
support and ways for civil society organizations to be involved in public policy-making
and implementation.

Strengthening the enabling environment for sustainable human development

thus depends not only on a state that governs well and a private sector that provides
jobs that generate income. It also depends on civil society organizations that make
political and social interaction easier and that mobilize society to participate in
economic, social and political activities. UNDP (1997)

Apart from three key players of governance above, the Institute on Governance
considers a fourth player, the Media, which provides for a flow of information between
the major players, and between the players and society at large. However, media, even
if not controlled by the state, is part of the private sector and therefore not a
dispassionate player. The relative size and strength of each of the players varies
depending on the history, culture and politics of the country. There are no firm
boundaries between these players (and in fact they often overlap) because the borders
of these sectors are permeable (e.g. state-owned organizations may have a foot in both
government and the private sector; government-funded NGOs also straddle two
camps). Edgar et. al (2006)

LESSON 3
 14

The Characteristics of Good Governance

Specific Objectives

At the end of the lesson, the learners should be able to:

1. Identify and enumerate the eight characteristics of good governance according to

UNDP;

2. Describe each element or indicators of good governance;

3. Determine how can these indicators be utilized in the measurement of

performance of the government or assess whether these indicators are present in
the government;

4. Illustrate the inter-linkages among the different elements of governance; and

5. Present some examples of best practices in good governance;

What is good governance?

Like government, governance can be good or bad. Bad government and bad
governance have similar characteristics: Corruption, Whimsical and Expedient
Decision-Making, Shortsightedness, disregard for the concern of the many and
decisions1. In the same vein, the criteria for good governance and would be the same
as good governance. They include accountability and ethics in decision-making and
implementation, transparency and predictability, rule-bound decision-making and action,
responsiveness, a long term view of the public interest. The public should therefore
have a right to expect laws, a fair judicial system, politically accountable lawmaking and
an effective and reform-minded bureaucracy.

One goal of good governance is to enable an organization to do its work and

fulfill its mission. Good governance results in organizational effectiveness.

A lot of attention has been focused on good governance practices in the private
sector in Canada, the United States, the United Kingdom, and elsewhere. In the
corporate world of business, the “bottom line” provides a helpful focus point, but even
here there can be difficult questions of judgment as to what constitutes good
governance. Current debate about corporate governance is just starting to look at
questions about the broader purposes of private corporations. The private sectors are
expected to provide corporate social responsibility which seeks to include sustainable
1 The Concept of Governance, Ledivina V. Carino, From Government to Governance, Reflections on the 1999
World Conference on Governance. 2000.
 15

development and the need to address the social, economic and environmental impact of
various operations.

In the public and non-profit sectors, the question of what constitutes good
governance is often more complex. In public purpose organizations, good governance is
about more than getting the job done. Especially in non-profits, government agencies
and the like, where values typically play an important role in determining both
organizational purpose and style of operation, process is as important as product. Good
governance becomes more than only a means to organizational effectiveness and
becomes an end in itself.

Good governance is about both achieving desired results and achieving them in the
right way.

Since the "right way" is largely shaped by the cultural norms and values of the
organization, there can be no universal template for good governance. Each
organization must tailor its own definition of good governance to suit its needs and
values.
There is plenty of room for different traditions and values to be accommodated in
the definition of good governance. At the same time, all is not relative. There are some
universal norms and values that apply across cultural boundaries.

A number of multilateral organizations and institutions (e.g. the United Nations

Development Programme (UNDP), the Organization for Economic Cooperation &
Development (OECD), the Asian Development Bank) have reflected on the elements of
good governance and on their relation to development. As the ethos and experience of
these institutions vary, so, too do their perception of what constitutes good governance.

The challenge for all societies is to create a system of governance that promotes,
supports and sustains human development - especially for the poorest and most
marginal. But the search for a clearly articulated concept of governance has just begun.

Good governance is, among other things, participatory, transparent and

accountable. It is also effective and equitable. And it promotes the rule of law. Good
governance ensures that political, social and economic priorities are based on broad
consensus in society and that the voices of the poorest and the most vulnerable are
heard in decision-making over the allocation of development resources.
 16

THE EIGHT CHARACTERISTICS OF GOOD GOVERNANCE BY UNDP

Good governance is participatory, consensus oriented, accountable, transparent,

responsive, effective and efficient, equitable and inclusive and follows the rule of law. It
assures that corruption is minimized, the views of minorities are taken into account and
that the voices of the most vulnerable in society are heard in decision making. It is also
responsive to the present and future needs of society. Much has been written about the
characteristics of efficient government, successful businesses and effective civil society
organizations, but the characteristics of good governance defined in societal terms
remain elusive.

Interrelated, these core characteristics are mutually reinforcing and cannot stand
alone. For example, accessible information means more transparency, broader
participation and more effective decision-making. Broad participation contributes both to
the exchange of information needed for effective decision-making and for the legitimacy
of those decisions. Legitimacy, in turn, means effective implementation and encourages
further participation. And responsive institutions must be transparent and function
according to the rule of law if they are to be equitable.

These core characteristics represent the ideal - and no society has them all. Even
so, UNDP believes that societies should aim, through broad-based consensus-building,
to define which of the core features are most important to them, what the best balance
is between the state and the market, how each socio-cultural and economic setting can
move from here to there.

UNDP is faced increasingly with post-crisis situations and disintegrating societies.

For them, the issue is not developing good governance - it is building the basic
institutions of governance. The first step is towards reconciliation - building society's
ability to carry on a dialogue on the meaning of governance and the needs of all citizens

Good governance has 8 major characteristics. It is participatory, consensus oriented,

accountable, transparent, responsive, effective and efficient, equitable and inclusive and
follows the rule of law. It assures that corruption is minimized, the views of minorities are
taken into account and that the voices of the most vulnerable in society are heard in
decision-making. It is also responsive to the present and future needs of society.

Participation

Participation by both men and women is a key cornerstone of good governance All
men and women should have a voice in decision-making, either directly or through
legitimate intermediate institutions that represent their interests. Such broad
participation is built on freedom of association and speech, as well as capacities to
participate constructively. Participation could be either direct or through legitimate
 17

intermediate institutions or representatives. It is important to point out that

representative democracy does not necessarily mean that the concerns of the most
vulnerable in society would be taken into consideration in decision making. Participation
needs to be informed and organized. This means freedom of association and
expression on the one hand and an organized civil society on the other hand.

Rule of law

Legal frameworks should be fair and enforced impartially, particularly the laws on
human rights.

Good governance requires fair legal frameworks that are enforced impartially. It
also requires full protection of human rights, particularly those of minorities. Impartial
enforcement of laws requires an independent judiciary and an impartial and
incorruptible police force.

Transparency

Transparency is built on the free flow of information. Processes, institutions and

information are directly accessible to those concerned with them, and enough
information is provided to understand and monitor them.

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 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.

Responsiveness

Institutions and processes try to serve all stakeholders. Good governance

requires that institutions and processes try to serve all stakeholders within a
reasonable timeframe.

Consensus oriented

Good governance mediates differing interests to reach a broad consensus on what

is in the best interests of the group and, where possible, on policies and procedures.

There are several actors and as many view points in a given society. Good
governance requires mediation of the different interests in society to reach a broad
consensus in society 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. This can only result from an understanding of the historical, cultural and
social contexts of a given society or community.
 18

Equity and inclusiveness

All men and women have opportunities to improve or maintain their well-being.

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

Figure 6
Characteristics of good governance
 19

Source: Governance for Sustainable Human Development A UNDP Policy Document (1997)

Effectiveness and efficiency

Processes and institutions produce results that meet needs while making the best
use of resources.

Good governance means that processes and institutions produce results that
meet the needs of society while making the best use of resources at their disposal. The
concept of efficiency in the context of good governance also covers the sustainable use
of natural resources and the protection of the environment.

Accountability

Decision-makers in government, the private sector and civil society organizations

are accountable to the public, as well as to institutional stakeholders. This
accountability differs depending on the organization and whether the decision is
internal or external to an organization.

Accountability is a key requirement of good governance. Not only governmental

institutions but also the private sector and civil society organizations must be
accountable to the public and to their institutional stakeholders. Who is accountable to
whom varies depending on whether decisions or actions taken are internal or external to
an organization or institution. 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.
 20

Strategic vision

Leaders and the public have a broad and long-term perspective on good
governance and human development, along with a sense of what is needed for such
development. There is also an understanding of the historical, cultural and social
complexities in which that perspective is grounded.

The World Bank on the other hand, cites 4 dimensions of governance which are:
Public Sector Management, Accountability, and Legal Framework for Development and
Transparency & Information

The World Bank’s interest in governance stems from its concern with the
effectiveness of the development efforts it supports. From this perspective, sound
development management is critical in ensuring adequate returns and efficacy of the
programs and projects financed and for the World Bank’s underlying objectives of
helping countries reduce poverty and promoting sustainable development growth.

Four Basic Elements of Good Governance according to ADB

ADB likewise regards governance as synonymous with sound development

management. It relates to governance to the effectiveness with which development
assistance is used, the impact of development programs and projects and the
absorptive capacity of borrowing countries. To address governance issues, the Asian
Development bank has built upon the approach of the World Bank and has identified
four basic elements of good governance:

1. Accountability

Accountability is imperative to make public officials answerable for

government behavior and responsive to the entity from which they derive their
authority. This may be achieved differently in different countries or political
structures, depending on the history, cultural milieu, and value systems involved.

Accountability also means establishing criteria to measure the

performance of public officials, as well as oversight mechanisms to ensure that
standards are met. The litmus test is whether private actors in the economy have
procedurally simple and swift recourse for redress of unfair actions or
incompetence of the executive authority. Lack of accountability tends in time to
 21

reduce the state’s credibility as an economic partner. It undermines the capacity

of governments to sustain the long-term business confidence essential for
growth-enhancing private sector investment. Looked at from this angle,
accountability can help reduce sovereign risk.

The accountability of public sector institutions is facilitated by evaluation of their

economic and financial performance. Economic accountability relates to the
effectiveness of policy formulation and implementation, and efficiency in resource
use. Financial accountability covers accounting systems for expenditure control,
and internal and external audits.

2. Participation

The principle of participation derives from an acceptance that people at

the heart of development. They are not only the ultimate beneficiaries of
development but are also the agents of development. In the latter capacity, they
act through groups or associations (e.g. trade unions, chambers of commerce,
NGOs, political parties) and as individuals. (e.g through letters to newspaper
editors, participating in radio and television talk shows, voting). Since
development is both for and by the people, they need to have access to the
institutions that promote it.

Participation is often related to accountability but not necessarily so. In

representative democracies, where citizens participate in government through the
electoral process, public officials are indeed accountable ultimately to the
electorate. This may not be the case however, in other political systems. For all
economies though, the benefits of participatory approaches can be considerable.
These include improved performance and sustainability of policies, programs,
and projects as well as enhanced capacity and skills of stakeholders.

At the grassroots level, participation implies that government structures

are flexible enough to offer beneficiaries and others affected, the opportunity to
improve the design and implementation of public programs and projects. This
increases “ownership” and enhances results. At a different level, the
effectiveness of policies and institutions impinging on the economy as a whole
may require the broad support and cooperation of major economic actors
concerned. To the extent that the interface between the public agencies and the
private sector is conducive to the latter’s participation in the economy, national
economic performance will be enhanced.

Participation in economic life by agents other than the state would cover
not only the role of the private sector but also the activities of NGOs. These
elements of civil society offer an alternative means of channeling the energies of
private citizens. They can be helpful in identifying people’s interests, mobilizing
public opinion in support of these interests and organizing action accordingly.
 22

Being close to their constituents, NGOs can provide governments with a useful
ally in enhancing participation at the community level and fostering a “bottom-up”
approach to economic and social development.

3. Predictability
Predictability refers to the existence of laws, regulations and policies to
regulate society; and their fair and consistent application. The importance of
predictability cannot be overstated since, without it, the orderly existence of
citizens and institutions would be impossible. The rule of law encompasses both
well-defined rights and duties, as well as mechanisms for enforcing them, and
settling disputes in an impartial manner. It requires the state and its subsidiary
agencies to be as much bound by and answerable to, the legal system as are
private individuals and enterprises.

The importance of rules-based systems for economic life is obvious. They

are essential component of the environment within which economic actors plan
and take investment decisions. To the extent, therefore, that legal frameworks
help ensure that 1. business risks can be assessed rationally, 2. transaction
costs are lowered and 3 governmental arbitrariness is minimized, they should
prove conducive to risk taking, growth and development. In an opposite
scenario, the capricious application of rules generates uncertainty and inhibits the
growth of private sector initiatives. Regulatory uncertainty also tends to raise the
cost of capital by increasing the risk of investment.

Besides legal and regulatory frameworks, consistency of public policy is

also important. Government policies affect the investment climate directly and
economic actors require reasonable assurance about the future behavior of key
variables such as prices, the exchange rates, and the employment levels.
However, consistency does not mean rigidity. Governments do need to respond
flexibly to changing circumstances and to make midcourse corrections as
necessary. Also, when government’s change, the successor administration will,
understandably, want public policy to reflect its priorities, rather those of its
predecessor.

4. Transparency

Transparency refers to the availability of information to the general public

and clarity about government rules, regulations and decisions. Thus, it both
complements and reinforces predictability. The difficulty with ensuring
transparency is that only the generator of information may know about it, and
may limit access to it. Hence, it maybe useful to strengthen the citizen’s right for
information with a degree of legal enforceability, for similar reasons. Broadly
restrictive laws that permit public officials to deny information to citizens need to
provide for independent review of claims that such denial is justified in the greater
public interest.
 23

Transparency in government decision making and public policy

implementation reduces uncertainty and can help inhibit corruption among public
official. To this end, rules and procedures that are simple, straightforward, and
easy to apply are preferable to those that provide discretionary powers to
government officials or that are susceptible to different interpretations.

In relation to the above-mentioned indicators/elements of good governance the

Key Dimensions and specific areas of actions are identified by ADB as provided on

Basic Elements Key Dimensions Specific Areas of Action

of Good
Governance
1. Accountability means Establishing criteria to Public Sector
making public officials measure performance of Management
answerable for public officials Public Enterprise
government behavior and Institutionalizing Management
responsive to the entity mechanisms to ensure Public Financial
from which they derive that standards are met management
authority Civil Service Reform
 24

2. Participation refers to Undertaking development Participation of

enhancing people’s for and by the people beneficiaries and affected
access to and influence groups
on public policy Interface between
processes government and the
private sector
Decentralization of public
and service delivery
functions (empowerment
of Local Governments)
Cooperation with
NonGovernment
Organizations
3. Predictability refers to Establishing and Law and development
the existence of laws, sustaining appropriate Legal Frameworks for
regulations and policies to legal and institutional Private Sector
regulate society and the arrangements Development
fair and consistent Observing and upholding
application of these the rule of law
Maintaining consistency
of public policies
4. Transparency refers to Ensuring access to Disclosure of Information
the availability of accurate and timely
Information to the general information about the
public and clear economy and
government rules, government policies
regulations, and decisions
Table 2
Basic Elements of Good Governance
Source: Asian Development Bank (2005) Country Governance Assessment
 25

Institute On Governance Five Principles of Good Governance

The Five Good Governance Principles (See the reader volume for the discussions)
The UNDP Principles and related UNDP text on which they are based
The Institute on Governance has identified five principles of governance, using as basis
the UNDPs indicators of good governance.

1. Legitimacy and Voice

Participation – all men and women should have a voice in decision-making, either
directly or through legitimate intermediate institutions that represent their intention. Such
broad participation is built on freedom of association and speech, as well as capacities
to participate constructively.

Consensus orientation – good governance mediates differing interests to reach a broad

consensus on what is in the best interest of the group and, where possible, on policies
and procedures.
 26

2. Direction
Strategic vision – leaders and the public have a broad and long-term perspective on
good governance and human development, along with a sense of what is needed for
such development. There is also an understanding of the historical, cultural and social
complexities in which that perspective is grounded.

3. Performance
Responsiveness – institutions and processes try to serve all stakeholders.
Effectiveness and efficiency – processes and institutions produce results that meet
needs while making the best use of resources.

4. Accountability
Accountability – decision-makers in government, the private sector and civil society
organizations are accountable to the public, as well as to institutional stakeholders. This
accountability differs depending on the organizations and whether the decision is
internal or external.

Transparency – transparency is built on the free flow of information. Processes,

institutions and information are directly accessible to those concerned with them, and
enough information is provided to understand and monitor them.

5.Fairness

Equity – all men and women have opportunities to improve or maintain their well being.
Rule of Law – legal frameworks should be fair and enforced impartially, particularly the
laws on human rights.

As reflected on the discussions above, the different institutions and organizations

have their own indicators or criteria of good governance which they can apply in their
own organizations or as useful tool of government as measures in good governance.
 27

Lesson 4 Issues & Challenges on Governance

Specific Objectives

At the end of the lesson, the students should be able to:

1.) Describe the processes/factors pushing for governance and the capacities needed
for good governance;

2.) Highlight some of the key issues facing policy makers as they seek to advance the
growth and adoption of good governance in their domestic environment;

3.) Identify the key issues and questions where collaboration and cooperation are
needed;
 28

4.) Cite the different problems, challenges and issues encountered by the different
actors in governance e.g the issue on corruption and the efforts to fight it at the
supranational level.

5.) Discuss the trends, efforts and challenges for good governance; and

6.) Identify the lessons learned and recommend solutions to realize good governance.

Lesson Proper

FACTORS/PROCESSES PUSHING FOR GOVERNANCE

The International Monetary Fund (IMF) identified several factors/processes pushing for
governance, good governance, in particular. These are:

1. the quest for growth and development

2. the environmental movement
3. globalization
4. consolidation

1. The Quest for Growth & Development

This is the key factor pushing for governance. Since the Industrial Revolution,
the market had the principle role in growth, with the state needed only to nurture the
climate that would allow it to grow. However, the quarter century after World War II
swung the pendulum to the state. In the West, John Maynard Keynes gave
theoretical justification for the state to manipulate price signals and fight
unemployment and business downswings. Meanwhile, the socialist states installed
and consolidated central planning systems.

In the Third World, the state also reigned supreme as the principal planner,
energizer, promoter and director of the accelerated development effort” (Lewis,
1964:26). In the attempt to assume a central role in planning for the whole economy
and society but also to create its own enterprises. However, at its best, the state
had to saddle these economic institutions with social functions, making it difficult to
compete on equal terms in the economy. At the extreme, elite control of the
enterprises or of the state itself made them subject to rent seeking and corruption,
leading to losses that were shouldered not by those responsible for them, but all
taxpayers in a country. In many states where the taxation system was regressive,
the losses were borne primarily by the poor.

Thus, a quarter century of the interventionist’s state saw a widespread

dissatisfaction about it from all fronts. In the First World, the trigger was the
burgeoning welfare bill, in the Second World, the failure of state planning symbolized
 29

by the collapse of the Soviet Union, and in the Third World, the inability of states,
even when achieving some economic prosperity, to check growth of inequality and
poverty in their territories. Governmental rent seeking, inefficiency and corruption
led the demands for privatization, which pushed the state away from its central role.
However, the private sector by itself could not consider the distributional questions
that led to the rethinking of development as economic growth in the first place.

The inability of economic gains to produce acceptable levels or redistribution,

poverty reduction and political freedoms woke up civil society. But they could
criticize government and set up alternative delivery systems but could not provide
nationwide coverage. Similarly, they decried the private sweatshops but could not
set up the industries to take their place. Clearly, no one sector could manage
society by itself but each had a role to play in making it move forward.

2. The Environmental Movement

The concept of development has changed from the exclusive focus on
economic growth of the 1950s to the inclusion of distributional goals like the
reduction of poverty and inequality during the UN Development Decades, to the
current battle cry for “sustainable human development”. Although SHD as a term
is espoused primarily by the United Nations, its incorporation of concerns for
people and nature not only for the present but also for later generations is now
widely accepted by state, market and civil society worldwide.
Peoplecenteredness as an aspect of development recognized that growth alone
may affect human lives adversely. Therefore the concern for people must be
central and not just be a by-product or a trickling down of economic achievement.
The incorporation of nature into the equation owes much to the environmental
movement which brought home the point that everyone is indeed only one planet,
and the depletion of resources in one area is felt in a real way in all areas. There
is no dichotomy between people and nature, however, because the preservation
of the environment is itself a pledge to care for generations of people yet unborn
who must also be allowed to enjoy and care for the biodiversity, beauty and
wealth of the planet as a proper habitat for all creation.

The environmental movement has provided to governance an urgency to

deal with issues in a holistic manner, to include not only the sector at hand and
the obvious stakeholders, but also other affected by them in other areas and in
future times2. It has forced a redefinition of the public interest with nature itself as
a recognized stakeholder. It has pressured private firms to consider ecological
effects of their products-even goods as useful and popular as cars have come

2 The Environmental Movement (a term that sometimes includes the conservation and green movements) is a diverse
scientific, social, and political movement. In general terms, environmentalists advocate the sustainable management of
resources, and the restoration and protection of the natural environment through changes in public policy and individual
behavior. In its recognition of humanity as a participant in (not enemy of) ecosystems, the movement is centered on
ecological and human health.
 30

under close scrutiny for their lead emissions, for their greedy use of non-
replaceable fuels, for the noise and traffic they cause that debase the quality of
these aspects, and firms both for profit and non-profit to race for alternative,
ecologically acceptable solutions. The state has also been pressed to consider
new regulatory laws and deregulation of the economy. If nothing else, the
ecological movement has underscored the point that no one sector can manage
the demands of society- and the environment- all by itself.

3. Globalization

The global context*

The transformation from command to market-oriented economies, the

emergence of democratic political regimes in the former Soviet Union, the rapid
development and global proliferation of new technologies, the pervasive spread of
telecommunications systems, the growing importance of knowledge-based industries
and skills and the continuing integration of the world economy through trade and
investment - all these have created the foundation for a new age of sustainable human
development. But all carry risks as well. Is it to be a breakthrough or a breakdown?

Changes in the world's economic, political and social systems have indeed
brought unprecedented improvements in human living conditions in both developed and
developing countries. Consider the profound breakthroughs in communications,
transport, agriculture, medicine, genetic engineering, computerization, environmentally
friendly energy systems, political structures, peace settlements. The list goes on.

But these changes also bring new uncertainties and challenges as the world
steps into the 21st century. Signs of breakdown are everywhere: disintegration of
families; destruction of indigenous societies; degradation and annihilation of plant and
animal life; pollution of rivers, oceans and the atmosphere; crime, alienation and
 31

substance abuse; higher unemployment; and a widening gap in incomes and

capabilities. Not a pretty picture.

The trend towards globalization deserves special attention. It is manifest in the

growth of regional blocs that cooperate in such areas as trade and legal frameworks, in
the power of intergovernmental bodies such as the World Trade Organization and in the
spread of transnational corporations. Globalization has profound implications for

*
The discussion on Globalization is elaborated in the World Economic Outlook, International
Monetary Fund, Washington D.C., May 2000 and in
www.imf.org/external/np/exr/ib/2000/041200.htm governance the final impact of which we
cannot yet determine. First is the increasing marginalization of certain population
groups. Those who do not have access to the technological/information revolution are in
danger of becoming part of a structural underclass. Second is the erosion of state
sovereignty as transnational bodies increasingly mediate national concerns and press
for universal laws. Third is the increased globalization of social and economic problems,
such as crime, narcotics, infectious diseases and the migration of labour. Finally,
international capital and trade are decreasingly accountable to sovereign states.

Governance can no longer be considered a closed system. The state's task is to

find a balance between taking advantage of globalization and providing a secure and
stable social and economic domestic environment, particularly for the most vulnerable.
Globalization is also placing governments under greater scrutiny, leading to improved
state conduct and more responsible economic policies.

Because each domain of governance - state, private sector, civil society - has
strengths and weaknesses, the pursuit of good governance requires greater interaction
among the three to define the right balance among them for sustainable peoplecentered
development. Given that change is continuous, the ability for the three domains to
continuously interact and adjust must be built-in, thus allowing for long-term stability.
UNDP's Initiatives for Change recognizes that the relationships among government, civil
society and the private sector:

..are key determinants in whether a nation is able to create and sustain equitable
opportunities for all of its people. If a government does not function efficiently and
effectively, scarce resources will be wasted. If it does not have legitimacy in the eyes of
the people, it will not be able to achieve its goals or theirs. If it is unable to build
national consensus around these objectives, no external assistance can help bring them
about. If it is unable to foster a strong social fabric, the society risks disintegration and
chaos. Equally important, if people are not empowered to take responsibility for their
own development within an enabling framework provided by government, development
will not be sustainable.
 32

Developing countries must ensure that everyone can participate in economic and
social development and take advantage of globalization. They must build a political
system that encourages government, political, business and civic leaders to articulate
and pursue objectives that are centered around people and a system that promotes
public consensus on these objectives.

The term "globalization" has acquired considerable emotive force. Some view it
as a process that is beneficial—a key to future world economic development—and also
inevitable and irreversible. Others regard it with hostility, even fear, believing that it
increases inequality within and between nations, threatens employment and living
standards and thwarts social progress. This brief offers an overview of some aspects of
globalization and aims to identify ways in which countries can tap the gains of this
process, while remaining realistic about its potential and its risks.
Globalization offers extensive opportunities for truly worldwide development but it
is not progressing evenly. Some countries are becoming integrated into the global
economy more quickly than others. Countries that have been able to integrate are
seeing faster growth and reduced poverty. Outward-oriented policies brought dynamism
and greater prosperity to much of East Asia, transforming it from one of the poorest
areas of the world 40 years ago. And as living standards rose, it became possible to
make progress on democracy and economic issues such as the environment and work
standards.

Undersecretary Luis C. Liwanag of DBM highlighted that one of the greatest

challenges that is confronted in any development efforts today is globalization 3.
Globalization has been criticized for having a lopsided inclination towards rich and
developed countries. It has also been said that globalization impinges on nation-states
sovereignty and territory since the dominant players weaken the power and influence of
individual nation-states, particularly the Third World Countries and those that are not
linked to the regional trading blocs. With globalization, we are bounded by foreign
economic policies and by agreements between member nations.

Economic "globalization" is a historical process, the result of human innovation

and technological progress. It refers to the increasing integration of economies around
the world, particularly through trade and financial flows. The term sometimes also refers
to the movement of people (labor) and knowledge (technology) across international
borders. There are also broader cultural, political and environmental dimensions of
globalization that are not covered here.

At its most basic, there is nothing mysterious about globalization. The term has
come into common usage since the 1980s, reflecting technological advances that have
made it easier and quicker to complete international transactions—both trade and
financial flows. It refers to an extension beyond national borders of the same market

3 This was presented by Undersecretary Luis Liwanag in his paper presentation entitled “The Role of
Public Administration in Governance” on the National Conference on Public Administration and the
Millennium Development Goals in October 2004.
 33

forces that have operated for centuries at all levels of human economic activity—village
markets, urban industries, or financial centers.

Markets promote efficiency through competition and the division of labor—the

specialization that allows people and economies to focus on what they do best. Global
markets offer greater opportunity for people to tap into more and larger markets around
the world. It means that they can have access to more capital flows, technology,
cheaper imports, and larger export markets. But markets do not necessarily ensure that
the benefits of increased efficiency are shared by all. Countries must be prepared to
embrace the policies needed, and in the case of the poorest countries may need the
support of the international community as they do so.

As globalization has progressed, living conditions (particularly when measured by

broader indicators of well being) have improved significantly in virtually all countries.
However, the strongest gains have been made by the advanced countries and only
some of the developing countries.

That the income gap between high-income and low-income countries has grown
wider is a matter for concern. And the number of the world’s citizens in abject poverty is
deeply disturbing. But it is wrong to jump to the conclusion that globalization has caused
the divergence, or that nothing can be done to improve the situation. To the contrary:
low-income countries have not been able to integrate with the global economy as
quickly as others, partly because of their chosen policies and partly because of factors
outside their control. No country, least of all the poorest, can afford to remain isolated
from the world economy. Every country should seek to reduce poverty. The international
community should endeavor—by strengthening the international financial system,
through trade, and through aid—to help the poorest countries integrate into the world
economy, grow more rapidly, and reduce poverty. That is the way to ensure all people
in all countries have access to the benefits of globalization.

Sources: www.imf.org/external/np/exr/ib/2000/041200.htm

4. Consolidating Peace

Another force pressing for governance is the need to consolidate peace in

wartorn nations. This issue is rarely recognized as among the processes pushing for
governance. However, this unique perspective was brought to the force dramatically by
Hage Geingob, Prime Minister of Namibia, in his remarks to the World Cog. Countries
that have undergone a civil war, secession movements or the creation of a new state
out of the break-up of national territories have a specially strong imperative to get
everyone involved in the process of building a nation or affecting a national
reconciliation. In these situations, the coming together of the state, market and civil
society to manage societal affairs is not more rhetoric but a national urgency. It
 34

requires bringing together former adversaries beyond the discussion table to the fields
of service in the cities and farms including those which were battlegrounds. This is not
only a lesson learned in Namibia.

In a recent study in Mali, Uganda, Thailand, Guatemala and the Philippines, as

countries emerging from internal conflict, all found governance particularly,
decentralizing governance-was necessary to make concrete the commitments of all
protagonists for peace. It entailed capacity building not only for state agencies in
dealing with former rebels, but also leadership and political skills training for those
former combatants so that they may take up social responsibilities side by side with
their military and civilian counterparts.

It required the private sector to regard them with new eyes, as potential
producers and consumers and therefore part of the market also (UNDP, 2000:25-34)
They were acknowledged as members of civil society even as other organizations of
that sector also recognized their role in affecting changes in governance for all and not
only for former adversaries. As Prime Minister Geingob stated, the tasks of nation
building must be seen by all as their responsibility and the resulting peace and
development their common ownership.

KEY ISSUES and CHALLENGES IN GOVERNANCE The Philippine Experience

1. Policy Issues, Concerns, and Challenges4

Most people agree that the constitutional and legal frameworks in the Philippines
provide the foundations for good governance. The policy environment allows people’s
participation and public scrutiny and criticism of government operations and outputs.
Further, the country has adequate laws, rules, and regulations to establish order and
move forward. While underdevelopment can easily be attributed to a lack of institutional
capacity and professional competencies to implement policies and enforce laws, certain
lessons learned and issues related to public policy making deserve mention. The
Philippine public policy-making process bears the following features: (i) policy decisions
and programs are arrived at through institutional mechanisms provided for in the
Constitution of the Republic of the Philippines and other laws; (ii) policy-making process
is then characterized as precedent bound, based on laws and forged by such structures
as a bicameral legislative body and the executive branch of the
Government; (iii) legislative branch is composed of the Senate and the House of
Representatives, while the president heads the executive branch of the Government
and is the prime initiator and implementer of policies and programs; and (iv) the
decisions of the legislative and executive branches are subject to judicial review by the
Supreme Court and inferior courts on questions of constitutionality and statutory
construction.

4 An excerpt from Country Governance Assessment, (2005)

 35

Different sets of forces each influence the different stages of public policy making,
namely, decisions on (i) including items in the agenda, (ii) developing any particular
agenda item, (iii) passing legislation, and (iv) implementing new laws. Different
constituencies exert their influences at different stages of policy development and
execution. Many policies have nonetheless missed out in giving importance to
meaningful public consultations, constructive debate and criticism, and needed
consensus building and development of a sense of ownership of different stakeholders.
Without these elements, and with extensive graft and corruption in the country (which
undermines and subverts the rule of law), many policies fail to command respect and
compliance.

It should also be made clear that policy initiatives for governance reforms could be
undertaken by the Government even without legislation. In these cases, one might
consider whether legislation is useful or not. The value of legislation is that it binds
public institutions to certain decreed directions. If one wants to assure the future
sustenance of any initiative currently carried out by the Government, legislation may be
considered. However, the Government tends to be too legalistic and rule bound in
addressing most of its problems.

Legislation is complicated, not under the complete control of any person or group,
and may have unpredictable results. Embarking on a campaign to get something
legislated cannot be a decision taken lightly or casually. In addition, successful
legislation generally occurs when the problems deemed important meet the solutions
deemed highly probable by political personalities or groups in positions of power.
Problems, policies, and politicians have to intersect for proper action to occur.

Legislation as an instrument for achieving desirable societal goals and institutionalizing

reforms is advisable when the underlying assumptions of policies have any or all of the
following characteristics:

(i) policies can only be optimally effective when adopted by the whole Government and
supported by stakeholders;
(ii) policies can yield best results only when implemented over the life of several
administrations;
(iii) policies can be accomplished only with adequate and judicious use of resources;
(iv) policies can be accomplished by the Government’s applying cost-effective measures
and using available technology and resources;
(v) policies, when deliberated and agreed, would create a framework for many people
and groups to assume broader responsibilities on an institutional basis.

A policy needs to be very clear and specific about the:

(i) nature and magnitude of the problem being addressed;

(ii) basic mechanism for responding to the problem;
 36

(iii) standards and provisions for making the mechanism work;

(iv) system of responsibilities and accountabilities for coordination, implementation,
control, and review of results; and
(v) organizational and budgetary implications.
These elements are often deficient in many public policies. It is common to have layers
of rules and regulations to clarify policy provisions, not to mention sets of procedures to
inform and guide implementers and stakeholders.

Some policy initiatives may not be ready to be pursued because the data and
analysis necessary to make a decision may be unavailable. In these cases, research is
probably more appropriate than formulating a new policy or draft legislation. Some
policies are haphazardly and hastily developed and scarcely take into account
deliberate and careful planning and effective use of objective and accurate information.
Public policy making in the Philippines boldly underscores the need to improve its
capacities in undertaking knowledge-based policy analysis and development.

Access to timely and correct information about public policies also precludes
overall efficiency, effectiveness, and productivity. Those who are affected may
sometimes be unaware of or improperly informed about their rights, duties, and
responsibilities provided for in relevant policies.

2. Problems in the Bureaucracy

Bureaucracy is a distinctive arrangement used by human beings to organize their

activities. The invention of Western bureaucracy several centuries ago helped solve the
problem for leaders of governing human systems that grew larger and more
complicated with each passing year. The great virtue and probably defining
characteristic of bureaucracy, according to the one of the founders of sociology,
German Max Weber (1864-1920), is as “an institutional method for applying general
rules to specific cases, thereby making the actions of government fair and predictable”
However, in the governance process, there are two problems in a bureaucratic type of
government: inefficiency and arbitrariness.

For nearly half a century, the Philippines was caught in an endless cycle of
reform exercises that hardly produced tangible and lasting results. Structural issues—
such as (i) duplicated functions and overlapped jurisdictions, (ii) outdated and slow
government procedures, (iii) various loopholes in administrative procedures, and (iv)
limited capacity for policy analysis and strategic long-range planning that caused delays
and higher costs in handling business—made maintaining objectivity, accountability,
and transparency in decision making and government operations difficult and gave rise
to a host of other problems, including poor implementation and coordination. (ADB,
2005).
 37

As reflected in the Country Governance Assessment, (2004) Administrative

reform efforts in the Philippines did not fully succeed because of the following:
(1.) lack of acceptance of and commitment to the need for reform by political
authorities and different affected entities;
(2.) lack of stakeholder appreciation and agreement concerning administrative reform
being a long, strategic, and continuous process;
(3.) lack of understanding that reform objectives are specific, measurable, realistic,
and time bound;
(4.) lack of good reform implementation strategies and adequate resources to carry
them out;
(5.) lack of an established central agency tasked with formulating, coordinating, and
monitoring reforms and providing corrective measures; (6.) lack of reform procedures
and regulations that are fairly and consistently applied;
(7.) lack of meaningful stakeholder participation in the entire reform process;
(8.) lack of strong and sustained support of political leaders;
(9.) lack of an established and enforced system of accountabilities; and
(10.) lack of safety nets for groups and individuals who may be disenfranchised by
interventions.

In the Common country Assessment of the Philippines (2004), an inefficient

bureaucracy is one of the major problems and an area for development cooperation 5.
Past Philippine administrations have carried out reorganization and reengineering
schemes for the bureaucracy, in an effort to improve efficiency and reduce corruption.
Studies about Philippine civil service system point to several deficiencies include:
(1.) Weak mechanisms for planning, agenda setting and policy-making;
(2.) Failure to implement and maintain an appropriate performance
management and measurement system;
(3.) Overlapping and duplicating government functions and activities;
(4.) Overemphasis on rules and procedures rather than direct resource
management towards the realization of intended outcomes and impacts;
(5.) A highly politicized bureaucracy
(6.) Lack of required managerial and technical expertise

5 The Common Country Assessment (CCA) is an in-depth analysis of the development problems in the
Philippines, undertaken through a participatory process of consultations among United Nations agencies, its
development partners both in the government and civil society, and with other donor agencies in the country. It
builds upon the programme of reform launched by the UN Secretary-General in 1997, preparing the UN for the
challenges of the 21st century and emphasizing its mandate in developing standards and goals arising from UN
conventions and global conferences. In particular, the CCA was driven by the principles and goals of the
Millennium Declaration, especially the Millennium Development Goals (MDGs). It also builds on the
development objectives of the Government of the Philippines, articulated in its Medium Term Development
Plan as well as commitments made in the context of international conventions, conferences and protocols
 38

2. 1. Corruption

Corruption damages the development process in many ways. It undermines social

confidence in the willingness and capacity of public institutions to fulfill their obligations
to the people and it reinforces existing power relationships that are themselves typically
part of the development problem. Losses due to corruption deepen poverty as they
deprive the disadvantaged sectors of much needed programmes and environmental
stewardship. Incidences of bribery and graft are often front page news, leading the
public to perceive them as the norm rather than the exception in government
transactions, further reducing the incentive or willingness to increase taxpayer
compliance.

The Government has recently introduced affirmative actions toward addressing this
problem such as the passage of the Procurement Act, the implementation of lifestyle
check among government officials, and the reactivation of the Inter-Agency Anti-
Corruption Committee (IAGCC) to synchronize the various anti-corruption initiatives of
the national government. Despite these efforts, large scale and petty corruption is
pervasive throughout various levels of the Philippine government. The draft report of
the “Consultations on the UN Conference on Financing for Development cited that out
of a total national budget of Php 781 billion in 2001, PhP100 billion, or 13% was at risk
of being lost to corruption; 70% involved in public works contracts while 30% involved
the purchase of supplies and equipment. The Office of the Ombudsman estimated that
a total of USD48 billion was lost to graft and corruption over the past 20 years, and that
only 60% of the national budget was actually spent on government programmes and
projects.

Numerous laws addressing graft and corruption exist in the Philippines, and
these date back to 1955. At present, the main references are the Revised Penal Code
of 1960, referred to as the Anti-Graft and Corrupt Practices Act, and Article XI of the
1987 Constitution of the Republic of the Philippines. Box 1 presents a summary list of
related laws, presidential decrees and proclamations, and other regulations on
corruption prevention.

Box 1: List of Laws Related to Graft and Corruption

1946–1971
• Republic Act (RA) 1379 (1955). This act declared forfeiture in favor of the state
any property found to have been unlawfully acquired by any public officer or
employee, and provided for the proceedings.
• RA 3019 (1960). This act provided for the repression of certain acts of public
officers and private persons alike, which constitute graft or corrupt practices or
which may lead thereto, also known as Anti-Graft and Corruption Practices Act.
• RA 6028 (1969). This act provided for the promotion of higher standards of
efficiency and justice in the administration of laws as well as to better secure the
right of the people to petition the government for redress of grievances, creating
the office of the citizen’s counselor.
 39

1972–1986

• Presidential Decree (PD) 6 (1972). This decree amended certain rules on

discipline of government officials and employees.
• PD 46 (1972). This decree made it punishable for public officials and employees
to receive and for private persons to give gifts on any occasion, including
Christmas.
• PD 677 (1975). This decree amended Section 7 of RA 3019 (as amended).
 40

• PD 749 (1975). This decree granted immunity from prosecution to

givers of bribes and other gifts and to their accomplices in bribery and
other graft cases against public officers.
• PD 807 (1975). This decree provided for the organization of the
Civil Service Commission, in accordance with provisions of the
Constitution of the Republic of the Philippines (repealed under President
Aquino’s administration).
• PD 1606 (1978). This decree revised PD 1486 (creating a special
court to be known as Sandiganbayan—the main antigraft court that
adjudicates criminal cases brought to it by the Office of the Ombudsman
(OMB); it deals only with cases filed against high-ranking government
officials.

1987–Present

• 1987 Constitution of the Republic of the Philippines. Article XI,

Accountability of Public Officers; Article II, Section 27 and Section 28
policy of the State to maintain honesty and integrity in the public service
and take positive and effective measures against graft and corruption;
and Article III, Section 7, provides for the right of people to have access to
public information.
• 1987 Administrative Code (Executive Order [EO] No. 292). This
code instituted the administrative code of the Philippines.
• EO 243 (1987). This order created OMB and restated its
composition, powers, functions, and other salient features in the 1987
Constitution of the Republic of the Philippines.
• RA 6713 (1989). This act established a Code of Conduct and
Ethical Standards for Public Officials and Employees.
• RA 6770 (1989). This act provided for the functional and structural
organization of OMB and delineated its powers and functions.
•
RA 7055 (1991). This act strengthened civilian supremacy over the military by
returning to the civil courts the jurisdiction over certain offenses involving
members of the armed forces, other persons subject to military law, and
members of the Philippine National Police.
• RA 7080 (1991). This act defined and penalized the crime of
plunder.
• RA 8249 (1997). This act further defined the jurisdiction of the
Sandiganbayan, amending PD 1606 (as amended).
• Proclamation 189 (1999). This proclamation declared war against
graft and corruption and authorized the Philippine Jaycee Senate, through
the Graft Free Philippines Foundation, Inc., to institutionalize public
awareness of clean, efficient, and honest governance.
• EO 317 (2000). This order prescribed a code of conduct for
relatives and close personal friends of presidents, vice-presidents, and
members of the Cabinet.
• EO 12 (2001). This order created the Presidential Anti-Graft
Commission and provided for its powers, duties, and functions and for
other purposes to investigate complaints or hear administrative cases
filed against presidential appointees.
 41

• EO 25 (2001). This order established The Governance Advisory

Council to encourage more active involvement of the business sector in
curbing graft and corruption.
• Code of Corporate Governance (2002). This code further provided
to actively promote corporate governance reforms aimed to raise investor
confidence,
develop capital market, and help achieve high sustained growth for the corporate
sector and the economy.
• Code of Judicial Conduct (1989). This code provided for the appropriate
conduct of judges in performing their duties; otherwise known as the Code of
Judicial Conduct.
• RA 9160 (2001). This act defined the crime of money laundering and provided
for the penalties of such act.
• RA 9184 (2002). This act provided for the modernization, standardization, and
regulation of procurement activities of the Government, also known as the
Government Procurement Reform Act.
• EO 38 (2001). This order reorganized and extended the life of the Special Task
Force created under EO 156 dated 7 October 1999 entitled "Creating a Special
Task Force to Review, Investigate and Gather Evidence Necessary to
Successfully Prosecute Irregularities Committed at the Bureau of Internal
Revenue, Bureau of Customs and Other Government Offices or Agencies
Under or Attached to the Department of Finance.”
• EO 40 (2001). This order consolidated procurement rules and procedures for all
national government agencies, government-owned or -controlled corporations,
and government financial institutions, and required the use of the Government
electronic procurement system.
• EO 72 (2002). This order rationalized the agencies under or attached to the
Office of the President.
• EO 109 (2002). This order streamlined the rules and procedures on the review
and approval of all contracts of departments, bureaus, offices, and agencies of
the Government including government-owned or controlled corporations and
their subsidiaries.
• EO No. 114 (2002). This order restructured the Bureau of Internal Revenue
toward a Taxpayers’ Focused Organization.
• EO No. 251 (2003) This order required the Bureau of Internal Revenue to
furnish OMB with income tax returns filed.
• RA 9194 (2003). This act amended RA 9160 (Anti-Money Laundering Act).
Source: http://www.tag.org.ph/phillaw

Corruption is becoming global. Hence, anti corruption efforts also require a global
action. It is in this premise that the United Nation Convention Against AntiCorruption
 42

(UNCAC) is being pushed for ratification by UN member states 6. Dimitri Vlassis (2006)
in his discussions on UNCAC highlighted four elements of anti-corruption which include:

Box 2 United Nations Convention on Anti-Corruption

I. Prevention

Corruption can be prosecuted after the fact, but first and foremost, it requires

6 Dimitri Vlassis from The United Nations Office of Drugs & Crime with headquarters in Vienna conducted a
Trainor’s Training on UNCAC at the UP National College of Public Administration and Governance on
August 31-September 1, 2006 with the end in view of ratifying the UNCAC in the Philippines. UNCAC is the
first global instrument to fight corruption. In the Philippines however, UNCAC has not yet been ratified. See
the Reader Volume of Governance & Development for the full text of the UNCAC.
 43

prevention. An entire chapter of the Convention is dedicated to prevention, with

measures directed at both the public and private sectors. These include model
preventive policies, such as the establishment of anticorruption bodies and
enhanced transparency in the financing of election campaigns and political
parties. States must endeavor to ensure that their public services are subject to
safeguards that promote efficiency, transparency and recruitment based on merit.
Once recruited, public servants should be subject to codes of conduct,
requirements for financial and other disclosures, and appropriate disciplinary
measures. Transparency and accountability in matters of public finance must
also be promoted, and specific requirements are established for the prevention of
corruption, in the particularly critical areas of the public sector, such as the
judiciary and public procurement. Those who use public services must expect a
high standard of conduct from their public servants. Preventing public corruption
also requires an effort from all members of society at large. For these reasons,
the Convention calls on countries to promote actively the involvement of
nongovernmental and community-based organizations, as well as other elements
of civil society, and to raise public awareness of corruption and what can be done
about it. Article 5 of the Convention enjoins each State Party to establish and
promote effective practices aimed at the prevention of corruption.

2. Criminalization

The Convention requires countries to establish criminal and other

offences to cover a wide range of acts of corruption, if these are not already
crimes under domestic law. In some cases, States are legally obliged to establish
offences; in other cases, in order to take into account differences in domestic law,
they are required to consider doing so. The Convention goes beyond previous
instruments of this kind, criminalizing not only basic forms of corruption such as
bribery and the embezzlement of public funds, but also trading in influence and
the concealment and laundering of the proceeds of corruption. Offences
committed in support of corruption, including money-laundering and obstructing
justice, are also dealt with. Convention offences also deal with the problematic
areas of private-sector corruption.

3. International cooperation

Countries agreed to cooperate with one another in every aspect of the

fight against corruption, including prevention, investigation, and the prosecution
of offenders. Countries are bound by the Convention to render specific forms of
mutual legal assistance in gathering and transferring evidence for use in court, to
extradite offenders. Countries are also required to undertake measures which will
support the tracing, freezing, seizure and confiscation of the proceeds of
corruption.

4. Asset recovery

In a major breakthrough, countries agreed on asset-recovery, which is

stated explicitly as a fundamental principle of the Convention. This is a
particularly important issue for many developing countries where high-level
corruption has plundered the national wealth, and where resources are badly
 44

needed for reconstruction and the rehabilitation of societies under new

governments. Reaching agreement on this chapter has involved intensive
negotiations, as the needs of countries seeking the illicit assets had to be
reconciled with the legal and procedural safeguards of the countries whose
assistance is sought.

Several provisions specify how cooperation and assistance will be

rendered. In particular, in the case of embezzlement of public funds, the
confiscated property would be returned to the state requesting it; in the case of
proceeds of any other offence covered by the Convention, the property would be
returned providing the proof of ownership or recognition of the damage caused to
a requesting state; in all other cases, priority consideration would be given to the
return of confiscated property to the requesting state, to the return of such
property to the prior legitimate owners or to compensation of the victims.

Effective asset-recovery provisions will support the efforts of countries to

redress the worst effects of corruption while sending at the same time, a
message to corrupt officials that there will be no place to hide their illicit assets.
Accordingly, article 51 provides for the return of assets to countries of origin as a
fundamental principle of this Convention. Article 43 obliges state parties to
extend the widest possible cooperation to each other in the investigation and
prosecution of offences defined in the Convention. With regard to asset recovery
in particular, the article provides inter alia that "In matters of international
cooperation, whenever dual criminality is considered a requirement, it shall be
deemed fulfilled irrespective of whether the laws of the requested State Party
place the offence within the same category of offence or denominate the offence
by the same terminology as the requesting State Party, if the conduct underlying
the offence for which assistance is sought is a criminal offence under the laws of
both States Parties

The Convention also covers many critical issues related to corruption, and
this is evident in some of its provisions:

Article 5 stresses the importance of critical issues of transparency and

accountability in national legal systems.
Article 9 explicitly focuses on public procurement and calls upon public
authorities to “take the necessary steps to establish appropriate systems of
procurement, based on transparency, competition and objective criteria in
decision-making, that are effective, inter alia, in preventing corruption”. Article 10
highlights the issue of secrecy in public administration and calls for actions to
secure greater freedom of information. Article 11 calls upon Governments to
safeguard the integrity and independence of the judiciary by preventing
opportunities for bribery. Article 12 expressly raises issues of corporate
governance by calling for strengthened regulatory and legal actions to curb
private-sector corruption. Article 14 hones in on anti-money laundering matters
to boost prevention, strengthen reporting and tighten regulation of financial
institutions. Articles 15 and 16 bluntly decry the bribery of national and foreign
government officials and call for actions to stop such practice. Article 33
 45

underscores the need to protect people who report acts of corruption.

Article 43 stresses the need for international cooperation to curb corruption and calls for
strengthened actions.
Source: http://www.unodc.org/unodc/en/crime_convention_corruption.html

3. Issue on Public Fiscal Management

Another issue on good governance is on public fiscal management. Prior
to government reform programmes, there were weaknesses and constraints in
fiscal management, especially in the budgeting process. Some of these
constraints are still lingering.

Recognizing the impact that the fiscal condition has on macroeconomic stability,
the government should continue to give priority to raising revenues and improving
the efficiency of the bureaucracy so that more and better quality public service
can be delivered.

Following the onset of the Asian financial crisis, the Philippines government’s
deficit deteriorated quickly, mainly due to slippages in revenue collection. The
major causes of the decline include the following:

1. Tax evasion and weakness in the tax structure.

2. The private corporate and banking sectors which are major contributors
to the national coffers were weighed down by nonperforming assets.

Box 3. Tax revenues

Tax revenues as a share of GDP, fell from 13.9 % in 2000 to 13.5% in 2001. About PhP150
billion is lost to tax evasion, PhP92 billion of which constitutes uncollected income tax. In
succeeding years, these translated into higher debt service payments, which along with the non
passage of important tax measures, created a vicious cycle of higher deficit and debt.
Recognizing the major causes of declining revenue collection, the government began in 2002 to
implement reforms in both the Bureau of Internal Revenue and Bureau of Customs. On the
expenditure side, expenditure reduction programs were also put in place, such as the Government
electronic Procurement System. Moreover, the passage of Dept Cap Act is expected to ease the
problem or rising interest payments.

Source: UNDP (2004) A Common View, A Common Journey, A Common Country Assessment of
the Philippines.
http://www.undp.org.ph/?link=6
 46

4. Deficiencies in the Political and Electoral System

Public confidence in election outcomes is low because of widely alleged irregularities in

the Philippine electoral processes. The modernization of the electoral system in the
country today is an attempt to enhance public confidence in election outcomes and
address traditional election anomalies such as cheating, intimidation and bribery. The
government has initiated concrete efforts to institutionalize electoral reforms through the
passage of laws on Election Modernization (see appendix for the full text of the Election
Modernization Act or RA 8436), Party-List System and the Absentee Voting for
Overseas Filipinos7. A democratic and effective political and electoral system is
important to ensure that a development agenda, primarily addressing the needs of poor
and disadvantaged, is promoted and sustained beyond administrations. Civil society
organizations are currently working with their government counterparts of pending
reform bills in Congress that also seek to address issues on political dynasties, the
continued practice of party turn-coatism and the diminution of the electoral process into
mere contests of personalities.

References:

1. Eastern Regional Organization for Public Administration (EROPA) (2000),

From Government to Governance, Reflections on the 1999 World
Conferences on Governance.

2. Asian Development Bank, (2005), Governance: Sound Development

Management.

3. United Nations Development Program (1997), Governance & Sustainable

Human Development. A UNDP Policy Document.

4. United Nations Development Programme 1997a Reconceptualizing

Governance. Discussion Paper 2. New York: Management Development
and Governance Division, Bureau of Policy and Programme Support,
UNDP, January.

5. Asian Development Bank (2005), Country Governance Assessment.

6. UNDP (2004) A Common View, A Common Journey, A Common Country

Assessment of the Philippines.

7. Ewalt, Jo Ann G. (2001). Theories of Governance & New Public

Management: Links to Understanding Welfare Policy Implementation. A

7 Computerization of May 2004 elections was not implemented because of the court ruling.
 47

Second Draft. A Paper Presented at the Annual Conference of the

American Society for Public Administration.

8. United Nations Development Program & Economic & Social Commission for
Asia & the Pacific, (2003) Promoting the Millennium Development Goals in
Asia and the Pacific: Meeting the Challenges of Poverty Reduction; New
York.

9. Legaspi, Perla E. (2005). Overview of Governance Framework. A Working

Draft on a Handbook on LGU-SPA Partnership; UP NCPAG.

10. Laura Edgar, et al (2006) Partnerships: Putting Good Governance

Principles in Practice. Institute on Governance (IOG)

11. Ma. Oliva Z. Domingo, Third Sector Governance: Meanings, Issues, and
Challenges in the Philippines, National College of Public Administration and
Governance, University of the Philippines.

12. Cariño, Ledivina V. (ed.) 2002 Between the State and the Market: The
Nonprofit Sector and Civil Society in the Philippines. Quezon City: Center
for Leadership, Citizenship and Democracy, National College of Public
Administration and Governance, University of the Philippines, with the
assistance of the Ford Foundation.

13. Vlassis, Dimitri (2006) United Nations Convention against Corruption,

United Nations Office on Drugs and Crime Division for Treaty Affair. A
Paper Presented During the Trainors’ Training on UNCAC at the University
of the Philippines, National College of Public Administration & Governance.

14. Associations of Schools of Public Administration in the Philippines, (2004).

Proceedings of the National Conference on Public Administration and the
Millennium Development Goals: Challenges and Reforms for Effective
Teaching and Capacity Building for Service Delivery.

15. http://magnet.undp.org/policy/

16. http://www.adb.org/Governance/gov_practices.asp.

17. http://www.unescap.org/huset/gg/governance.htm

18. .http://www.iog.ca/boardgovernance/html/gov

19. http://www.birmingham.gov.uk
 48

20. http://www.adb.org/Governance/gov_practices.asp.

21. www.imf.org/external/np/exr/ib/2000/041200Z