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"Good governance" is generally used to refer to the strength of public institutions in the developing world. It is generally a technocratic term, used especially by the World Bank, to evaluate how competently a country is run.
One of the most important elements of good governance is lack of corruption. On this measure, governance standards examine to degree to which leaders siphon off public money to personal bank accounts, whether bribery is common, and the amount of cronyism (awarding jobs or contracts to friends or relatives rather than the best people for the job).
Another measure of good governance is effectiveness. For example, even if a country has good laws on paper, laws that exist on paper may or may not be well-enforced. The quality of public works and infrastructure also matter in terms of whether projects actually get completed or whether they get held up by bureaucratic incompetence.
Another common index of good governance is "ease of doing business' which includes things like ability of businesses to get permits on a timely basis and the competence or obstructiveness of government bureaucracy.
Another aspect of good governance is the competency of those who are expected to carry out the goals of a public institution. Even aside from cronyism, which thanatassa so rightly points to as a problem in good governance, there is often a lack in developing countries of what Max Weber would have referred to as a bureaucracy. A bureaucracy is a cadre of people who carry out the tasks of government administration, no matter who the leadership at the top is. A group of people who have the education, skills and experience to carry out these tasks is vital for good governance. A bureaucracy provides stability and continuity, doing the daily business that allows a society to carry on. When a developing country has been colonized, this structure sometimes remains in place. But when a society has overthrown a colonial power and has rid itself of all accouterments of colonialism, a new bureaucracy must take its place to have good governance. Without a group of people who have been educated, people who can be trained to carry on these daily tasks, and people to train them, it can take a long time to develop an effective bureaucracy, thus delaying good governance or even making it an impossibility.
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