Governance comprises the institutions, processes and traditions which determine how power is exercised, how decisions are taken and how citizens have their say, as well as the results thus obtained.

Governance is a concept that has developed considerably since it emerged in discussions of development issues around the late 1980s. The first classic political science essays on the subject talked about the concept of "governability", which made the rule of law the core of development. With the end of the Cold War, "governability" gave way to the concept of governance, defined as redesigning or re-inventing public administration, in the broad sense of the term, to meet the new challenges of development in the era of globalization. Governance now deals with issues relating to the mechanisms needed to negotiate various interests in society. It is increasingly seen as a concept that encompasses a series of mechanisms and processes designed to maintain the system, to empower the population and to ensure that society owns the process.

In defining governance, we must take into account several considerations:

  • We need to adopt a broader definition of governance that lets us go beyond the theme of public-sector management and consider how all sectors of civil society can act as a catalyst.
  • Governance is not the business of government alone. We need to define governance from two perspectives: government and the people.
  • Governance must include and be able to respond to issues relating to the process of change, which characterizes many governments in developing countries and countries in transition.
  • Governance issues are closely related to several development activities, for example, eliminating poverty, creating jobs, protecting the environment, social integration, economic management, agricultural reform, population control, and women's issues all depend on effective governance.
  • The concept of governance must allow us to consider all interactions among everyone involved in decision making. For example, what are the most effective relationships to be maintained between government and society? Within society? Within government? Between government and the private sector? Between central and local governments?

Governance is not synonymous with government. Both refer to purposive behavior, to goal-oriented activities, to systems of rule; but government suggests activities that are backed by formal authority, by police powers to insure the implementation of duly constituted policies, whereas governance refers to activities backed by shared goals that may or may not derive from legal and formally prescribed responsibilities and that do not necessarily rely on police powers to overcome defiance and attain compliance. Governance, in other words, is a more encompassing phenomenon than government. It embraces governmental institutions, but it also subsumes informal, non-governmental mechanisms whereby those persons and organizations within its purview move ahead, satisfy their needs, and fulfill their wants.

Governance is thus a system of rule that is as dependent on intersubjective meanings as on formally sanctioned constitutions and charters. Put more emphatically, governance is a system of rule that works only if it is accepted by the majority (or, at least, by the most powerful of those it affects), whereas governments can function even in the face of widespread opposition to their policies. In this sense governance is always effective in performing the functions necessary to systemic persistence, else it is not conceived to exist (since instead of referring to ineffective governance, one speaks of anarchy or chaos). Governments, on the other hand, can be quite ineffective without being regarded as non-existent (they are viewed simply as "weak"). Thus it is possible to conceive of governance without government - of regulatory mechanisms in a sphere of activity which function effectively even though they are not endowed with formal authority.

Nor is it far-fetched to derive from this line of reasoning a plausible scenario marked by government without governance. Indeed, if one ponders all the deeply divided countries whose politics are paralyzed and stalemated, it can readily be concluded that the world is populated with more than a few formal authorities who lack the regulatory mechanisms to function effectively, that is, with governments without governance. One might even argue, given all the noxious policies governments pursue, that governance without government is in some ways preferable to governments that are capable of governance. As one exasperated analyst has succinctly and tellingly observed, "Governance has been usurped by governments" (Kothari, 1987).