Goodbye to Good Governance? How Development Discourse Copes with State Failure

The team of authors works at the Faculty of Social Sciences, University of Duisburg-Essen, Germany. Dr Tobias Debiel is a professor of international relations and development policy at the university’s Institute of Political Science and director of its Institute for Development and Peace (INEF); Dr Daniel Lambach is a senior researcher at the Institute of Political Science; Birgit Pech is a researcher at INEF.

Over the last twenty years, development policy has undergone a series of changes. In the late 1980s, parts of the development community started touting “good governance” as the key to development. This concept enjoyed a meteoric rise and reached its heyday during the 1990s, leading to a focus on “good performers” that were moving in the direction of market-oriented democracy.

The terrorist attacks in the United States of 11 September 2024 provided a catalyst that affected the whole discourse. Suddenly, “failed” states were at the top of the agenda. Various terminologies emerged to describe the phenomenon, from “difficult partnerships” and “low-income countries under stress”, to “fragile states”. Whichever term is used, it is generally agreed that the development progress of a significant number of countries is blocked by the chronic failure—or even the complete breakdown—of state institutions.

While the definition of state failure or a precise delimitation of which states may be considered fragile is contentious, the impact of fragile statehood on development is unequivocal. The per capita income of fragile states as identified by Britain’s Department for International Development (DFID) is barely half that of other low-income countries.¹ Their child mortality is twice as high and maternal mortality actually three times greater than those of other low-income countries. Fragile states exhibit much higher rates of malnourishment and child mortality, and infectious diseases are more prevalent. De facto, the United Nations’ millennium development goals of alleviating hunger and eradicating poverty by 2015 are beyond the reach of these countries, yet they are home to some 870 million people, making up 14 per cent of the world’s population.² This is a major strategic challenge that the development-policy community is only now addressing. We argue that development policies have undergone a shift towards state-building in response to new research findings as well as a changed policy environment.

Conventional definitions of the “state” tend to employ a Weberian concept of statehood which sees it as inhering in the monopoly of the legitimate use of physical force within a given territory. “State failure” and “state fragility” are thus usually defined as divergences, to varying degrees, from an ideal type of the state.³ This way of defining—and thus framing the discourse on—state failure is not without its blind spots and is open to biased interpretations of what a “functional state” is supposed to entail.

The aim of this article is to show how one can trace the history of the new “state-building paradigm” in development policy back to significant strategic reorientations of major donor organisations over the last twenty years in the face of new challenges. In tracing the genealogy of this discourse, we strive for a better understanding and procedural contextualisation of its inherent concepts and underlying assumptions. We will also discuss recent currents that increasingly question the conventional approach towards “state-building”, with a focus on the role of state institutions in fragile societies.

The Rise and Reign of ‘Good Governance’

The origins of the term “good governance” can be traced back to 1989 when it was first mentioned in a World Bank publication on sub-Saharan Africa.⁴ During the 1980s, against the background of the escalating debt crisis and its attendant changes in North–South relations, the Bretton Woods institutions had begun to prescribe a set of orthodox macroeconomic policies (structural adjustment programmes) attached as conditionalities to credits to recipient countries. Whereas earlier policies had favoured state-led growth, the structural adjustment programmes were modelled on neo-liberal economic theory and focused on “getting the prices right” while “getting the state out of the market”.

At the end of the 1980s, the international financial institutions faced mounting criticism for the social costs of their “shock therapy”, while the economic growth records also showed ambiguous results at best. Simultaneously, “new institutional economics” started to penetrate development thinking.⁵ It was against this background that in 1989 the World Bank published the above-mentioned study on sub-Saharan Africa and for the first time spoke of a crisis of “governance”, then defined as “the exercise of political power to manage a nation’s affairs”.⁶ According to Hans F. Illy, the term “governance” served as a “deus ex machina”⁷ for an institution that has restricted itself to being “guided solely by its concern for economic development and not by any political agenda of its own”.⁸ The World Bank came to define governance more narrowly as “the manner in which power is exercised in the management of a country’s economic and social resources for development”,⁹ practically “synonymous with sound development management”.¹⁰

A factor that certainly helped increase the impact of the World Bank study on sub-Saharan Africa was the political realignment that resulted from the end of the Cold War. First, in this period levels of aid dropped substantially. Odious regimes that had previously been supported due to “bloc” logic were now increasingly cut off from international assistance. Second, the “wave of democratisation” swept across post-communist and previously authoritarian countries in the developing world. Donors sought ways of supporting these new regimes and of encouraging others to make the transition to democracy. Not being bound by non-political mandates (and facing growing aid fatigue at home), bilateral donors enthusiastically adopted the optimistic brand name of “good governance” and expanded the agenda to include participatory development, democratisation, and human rights.¹¹ The notion that “good governance” was an essential precondition for all developing societies thus became firmly entrenched in the mainstream discourse.

This restructuring of development policy led to a review of aid-allocation priorities in policy as well as recipient terms, and thus to a redirection of aid away from unstable and fragile states with which donors were increasingly reluctant to engage. Receiving substantially less development aid than other low-income