Governance and Development: The Perspective of Growth-enhancing Governance

determining the growth prospects of countries. However, there is considerable controversy about governance priorities and the types of governance capabilities that are critical. These disagreements are related to fundamental disagreements on the role of markets versus other social, political and technological characteristics that need to be fulfilled for sustainable growth to take off. The contemporary good governance agenda is based largely on governance capabilities that are required to create the conditions for markets to be efficient. While these are important and desirable conditions, we argue that they are second order conditions, in the sense that without other state capacities that directly promote sustainable growth, market conditions for efficiency are on their own insufficient and ultimately unsustainable.