Liberal economists have developed a framework of good governance as market-enhancing governance, focusing on governance capabilities that reduce transaction costs and enable markets to work more efficiently. In contrast, heterodox economists have stressed the role of growth-enhancing governance, which focuses on governance capacities to overcome entrenched market failures in allocating assets, acquiring productivity-enhancing technologies and maintaining political stability in contexts of rapid social transformation. The two are not necessarily mutually exclusive, but current policy exclusively focuses on the former, and ignores the strong empirical and historical evidence supporting the latter to the detriment of the growth prospects of poor countries.
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Paper provided by United Nations, Department of Economics and Social Affairs in its series Working Papers with number
54.
Find related papers by JEL classification: O20 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - General O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General P14 - Economic Systems - - Capitalist Systems - - - Property Rights P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
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