Introduction • 13 economy has been growing impressively since the early 1990s. In so far as governance can improve with growth, a country like Bangladesh may be better positioned to further improve its institutions as it continues to grow. Fukuyama thus disagrees with the good governance orthodoxy at the World Bank and other donor agencies, which hold that since good governance accelerates growth, comprehensive institutional reform is a prerequisite for development. During the period 2003–7, virtually every country and region in the world experienced higher growth, and hence, Fukuyama holds that growth accelerations can and have occurred under a wide variety of institutional and policy regimes, a view similar to Hausmann, Pritchett and Rodrik (2004).
Corruption and economic growth If good governance indicators suffer from measurement problems, and if the causality from good governance to economic growth cannot be ascertained, then can there be any causal link between economic growth and at least one indicator, corruption? This is a relevant question, as the good governance agenda often focuses mostly on anti-corruption measures in practice. Corruption conceivably adversely affects development in many different ways, especially if it diverts resources that would otherwise be invested productively and increases uncertainty for investors. However, the historical evidence does not show a significant role of anti-corruption measures in accelerating economic growth. Data for the 1980s or 1990s show that the large differences in growth rates between fast and slow-growing developing countries were not associated with significant differences in corruption indicators (Khan 2006). In fact, the median corruption indices for both fast- and slow-growing developing countries were similar in the 1980s and 1990s, although both groups scored significantly worse than the advanced countries. There are many views on the causes of corruption in developing countries. First, the most common and influential view is that corruption is principally due to the greed of public officials who abuse their discretionary powers for their own self-interest, that is, self-seeking bureaucrats or politicians. From different perspectives, the strength (power) or weakness of central governments, in turn, encourage or allow predation in many developing countries. Anti-corruption strategies therefore require strengthening related government enforcement capacities, but depending on perspectives, may seek to undermine other state capacities deemed likely to enable corruption.
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