A new World Bank policy report, World Development Report 2017: Governance and the Law, urges developing countries and international development agencies to rethink their approach to governance, as a key to overcoming challenges related to security, growth, and equity. 

The report explores how unequal distribution of power in a society interferes with policies’ effectiveness.  Power asymmetries help explain, for example, why model anti-corruption laws and agencies often fail to curb corruption, why decentralization does not always improve municipal services; or why well-crafted fiscal policies may not reduce volatility and generate long-term savings.

The report notes that when policies and technical solutions fail to achieve intended outcomes, institutions often take the blame.  However, it finds that countries and donors need to think more broadly to improve governance so that policies succeed.  It defines better governance as the process through which state and non-state groups interact to design and implement policies, working within a set of formal and informal rules that are shaped by power.

The report identifies three winning ingredients of effective policies: commitment, coordination, and cooperation. As three core functions to produce better governance outcomes, institutions need to: bolster commitment to policies in the face of changing circumstances; enhance coordination to change expectations and elicit social desirable actions by all; and encourage cooperation. 

According to the report, unequal distribution of power can exclude groups and people from the rewards and gains of policy engagement.  Yet meaningful change is possible with the engagement and interaction of citizens, through coalitions to change the incentives of those who make decisions; elites, through agreements among decision makers to restrict their own power; and the international community, through indirect influence to change the relative power of domestic reformers.

Based on extensive research and consultations in many countries over the past two years, the report proposes principles to guide reform and change the dynamics of governance for equitable development.

The report finds that good policies are often difficult to introduce and implement because certain groups in society who gain from the status quo may be powerful enough to resist the reforms that are needed to break the political equilibrium.