From institutions to governance - getting the governance structure right for optimal economic performance

Abstract

This paper examines the importance of strong institutions, i.e., a strong governance structure, as a cornerstone for reform efforts to promote good governance in the Pacific Island countries (PICs). Operating on the premise that the effectiveness of governance is a function of the quality of the institutional environment in which it is performed, the paper argues that any reform efforts to promote good governance in the PICs should begin by addressing, first and foremost, the institutional roots of the problem in order for these reform efforts to have positive payoffs. In this pursuit, the paper addresses the following questions: What constitutes good governance; how do institutions shape governance; and what institutions are crucial for good governance? The resolution of these questions is important for a better understanding of the complex interface between institutions and the governance process, and for the formulation of strategies for institutional reforms that would underpin good governance, which is critical to the economic growth and development of the PICs.