Parliaments and the dividends of good governance

صورة AGORA moderator

This is a contribution by Riccardo Pelizzo, Ph.D.  Parliamentary Strenghtening Program, World Bank Institute

 

It is debatable whether an endless economic growth is possible or even desirable , one may wonder whether there are resources to ensure growth without end, and you can have some concerns about the environmental impact that a growing world population , production , consumption and waste-production may have. These are important questions on which citizens and political elites must reflect.

But to the extent that a country’s ability to attract international investments, to innovate, to create employment and reduce the gap between the richer and the poorer segments of society depends on the rate of economic growth, it is important to understand how growth can be promoted.

Economists , from Nobel Prize winner Krugman to Nobel Prize North, tell us that the economy can grow for two reasons: either because it uses more resources ( more raw materials , more capital, more labor and more human capital) or because it uses more efficiently the resources it has at its disposal. The more efficient use of resources is the real driver of economic growth.

Corruption , mismanagement , cronyism , which consist of a waste of resources , are an obstacle to improving the efficiency of production processes and to securing sustainable good economic growth.

Empirical studies conducted in the course of the last 16 years, ever since data on governance indicators were first collected, showed that corruption takes a toll on growth and development. Higher rates of corruption are associated with lower growth rates, lower GDP per capita, higher infant mortality, lower average life expectancy, lower levels of education and higher levels of economic inequality.

Corruption impoverishes society and hits particularly hard the most vulnerable segments of society (infants and elderly).

Empirical studies, such as the ones Stapenhurst and Pelizzo have conducted, have shown that legislatures play a key role in curing corruption. By monitoring the expenditure of public money, by monitoring the policy implementation, by effectively performing their oversight function, legislature make a significant contribution to curing corruption and creating the conditions for sustainable growth, development and poverty reduction.

Riccardo Pelizzo, Ph.D.