A few days ago, Dani Rodrik opened an interesting discussion with his post "How the financial crisis has killed the governance reform agenda." Basically what he says is that "we need to downplay the role of improved governance as a causal mechanism for economic growth."
His main argument is that the financial crisis in the US did not only undercovered issues of capture and corruption in this country -as Simon Johnson and Dani Kaufmann have argued- but also showed that it is possible to be corrupt and rich at the same time. Based on this evidence and on his previous belief that the causal relation between governance and growth was never proofed to be strog, he concluded that even though governance reform is a good thing to do, it should not be confused for a growth strategy.
Dani Kaufmann, who has previously blogged on the financial crisis and governance, answered Dani Rodrik's post by saying that "the fact that there may have been corruption in the US in no way undermines the case for good governance being a powerful driver of development…"
See full Article.
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