A recent paper of the Middle East Policy Council Journal entitled “Is Governance a Prerequisite for Democracy? Insights from the Middle East” offers compelling observations as to how, among other notes, “being exposed to sound governance practices at the corporate level, citizens can begin to acknowledge and claim their right to express their opinions and to have access to transparent information, not only in the corporations in which they invest, but also in their governments.” Such insights are particularly noteworthy for CIPE’s efforts to foster economic reforms in MENA, which should also be considered forces that create incentives to pave the way for further democratic and political reforms.
As the need to make MENA governments more representative, accountable and effective grows, this also brings to light the significance of corporate governance and governance institutions essential in stimulating private investment and enhancing bureaucratic quality. Thus, as the authors note, “as much as a corporation faces the need to institute corporate governance to serve its shareholders efficiently, maximize their wealth and treat them equally, a nation faces the need to adopt democratic practices that ensure that the will of their citizens is being served, their resources efficiently employed, their economic wealth maximized and fairly distributed, and their participation encouraged.” Needless to say, improved governance can produce better business climates that further investment and productivity, reducing the scope for arbitrary government policymaking while providing mechanisms that help countries minimize the persistence of unfavorable policy distortions. By ensuring public accountability of politicians and bureaucrats, better governance also contributes to the effective implementation of economic policies that are conducive to growth.
The effect of democracy on growth in MENA therefore depends on whether a democratic transition leads to better governance, and consequently a better business climate. The success and sustainability of potential democratic regimes will in part be based on the extent to which they adhere to characteristics exemplifying sound governance principles and the emergence of a dynamic private sector that will allow MENA nations to meet the current development challenges of the region.
Published Date: May 05, 2009