From Good Governance to Developmental Governance - How Policies, Institutions and Politics Matter

The present global financial and economic crisis offers an opportunity to rethink the relative roles of state and market as well as of globalisation and national development strategies in the political economy of development. It has become more difficult to argue that globalisation has rendered national development strategies and in particular industrial policies superfluous. The crisis also calls for a rethinking of the prevailing standard recipes for development and of the ‘institutional therapy’ that has been driven by the international development establishment. The article seeks to identify and outline a heterodox view on how policies, institutions and politics matter for latecomer development, and does that by juxtaposing it with the orthodox view. The central argument of the article is that the orthodox view has serious weaknesses, and that a heterodox approach – developmental governance – is the most promising path for future research on governance and economic transformation.