Week 3 - Democracy, Institutions and Government
Last week, we explored evidence-based interventions, global health and health financing. While improving health outcomes directly is crucial, the success and sustainability of such efforts depend heavily on the broader systems within which they operate: the quality of government, institutions and political systems.
Consider two neighboring countries with similar resources, histories and geographic conditions that nonetheless follow dramatically different development trajectories. Or why some promising interventions succeed in one context but fail in another. The answer often lies in the quality of institutions and governance.
Institutions determine whether resources are invested productively or captured by a minority, whether innovations spread or stagnate and whether public services reach those who need them most. They are also usually the foundations on which all development programmes run.
Overview
Democracy
Defining Democracy
A Brief History of Democratic Ideas
Democracy's Global Spread and Measurement
Does Democracy Lead To Development?
Institutions
What are Institutions?
Historical Development of Institutions
Why Institutions Matter: Inclusive vs. Extractive
Critiques of Institutional Theories
Government
Core Functions
The Growth of State Capacity
Corruption
Historical Examples
Relationship with Development
Standard Anti-Corruption Strategies
Context-Specific Approaches to Fighting Corruption
Global Governance Landscape
Key Global Institutions
Effectiveness, Criticisms, and Reform Debates
Power Centres in Global Governance
Institutional Change: Mechanisms and Strategies
Careers in Government, Institutions & Democracy
Democracy
Democracy represents a category of political systems where power is distributed among people, influencing decision-making and holding leaders accountable. Understanding its characteristics and relationship with development can be vital.
Defining Democracy
Democracy describes systems where citizens participate in decision-making, either directly or through elected representatives. While often associated with national governments, its principles (like participation, voting and defined rules) apply across many organisations. Key elements typically include:
Collective participation and voting rights
Meaningful and contested elections
Established rules for decision-making
Constraints on executive power (checks and balances)
Protection of basic political and civil liberties (freedom of speech, assembly, press)
A Brief History of Democratic Ideas
While widespread democracy is recent, its core concepts evolved over centuries.
Ancient Athens
Direct democracy where some people (~15%) voted directly on laws and policies
Despite narrow citizenship (excluding women, slaves and foreigners) they introduced citizen participation as legitimate governance and accountability of officials
Roman Republic
Developed more representative elements with elected officials and checks on power through a system of assemblies, consuls and the Senate
Though representation remained limited to patrician classes, it established principles of separation of powers
Medieval Innovations
Swiss Landsgemeinde - direct democratic assemblies for citizen voting
English Magna Carta - limited monarchical power
Various city-states in Northern Italy and the Hanseatic League - experimented with councils and representation
Modern Democratic Revolutions
The American and French revolutions institutionalised democratic principles through written constitutions, rights declarations and representative institutions
Rejected hereditary power and established popular sovereignty as a source of legitimate government
Democracy's Global Spread
The expansion of democratic governance worldwide is largely a phenomenon of the last century, particularly accelerating after WWII and the Cold War. As the visualisation below shows, democratic rights were virtually non-existent 200 years ago, compared to billions living under some form of democracy today.
Our World in Data - 200 years ago, everyone lacked democratic rights. Now, billions of people have them
Throughout the 19th century, democracy remained rare, with only 14 million (less than ~1%) people living in liberal democracies by 1900
Democratic progress accelerated in the 20th century, despite setbacks like the rise of fascism in the 1930s
By the late 1990s, the majority of the world's population (about 3 billion people) lived in electoral or liberal democracies
Recent decades show both democratic advances in formerly authoritarian contexts and democratic retreat in established democracies
Democracy measurements are done by a variety of organisations using different indices, with some focused on voting procedures and others on liberal democracy more generally (including rights protections, press freedoms and judicial independence). Considering the visualisation above, the difference between whether the number of people globally living in democracies is decreasing or staying roughly similar depends on how India is classified. Episodes of Regime Transformation (ERT)-project and Regimes of the World (RoW) both define India as an electoral autocracy whereas Boix-Miller-Rosato still count India as a democracy.
There is inherent subjectivity when trying to determine how democratic a country is, and these classification differences highlight the complexity of measuring democracy across political systems. Even with rigorous methodologies, these assessments ultimately involve expert judgments about the quality and extent of political rights, which can lead to disagreements at the margins. Despite these challenges, the broader pattern of recent democratic decline across multiple indices suggests a genuine global shift rather than merely a methodological artifact.
Our World in Data - How democratic have countries been across the world? And how big are the differences between them?
Does Democracy Lead To Development?
A central question is whether, and how, democracy affects development outcomes. The relationship is complex and debated, particularly regarding economic growth, but is clearer for human development aspects.
Democracy and Human Development
Democracies tend to perform better on human development indicators like education and life expectancy and are notably better at avoiding catastrophes like famines.
Our World in Data - Does democracy lead to better health?
There is a correlation between democratic governance and health outcomes (measured by life expectancy)
Several studies suggest this relationship is causal
Mechanisms linking democracy to better health
Increased government responsiveness to citizens' needs due to electoral accountability
Higher public spending on health and other public goods
More effective and less favouritism-driven public service delivery
Democracy and Economic Growth
The link between democracy and economic growth is more contested than the link with human development.
Acemoglu et al - Democracy Does Cause Growth
Analysing 175 countries from 1960-2010 found that democratisation increases GDP per capita by approximately 20% over the long run
The effect of democracy on growth doesn't seemingly depend on a country's initial level of economic development
There's no evidence of negative effects of democracy on growth, even for countries at low levels of economic development
Democracy appears to increase economic growth through several channels:
Increasing investment
Encouraging economic reforms
Improving provision of public goods (education, healthcare)
Increasing tax revenue
Reducing social unrest
Does democracy cause growth? A meta-analysis (of 2000 regressions)
Democracy has a positive and direct effect on economic growth, contrary to previous meta-analyses
The growth effect of democracy appears stronger in more recent papers not included in a previous 2008 meta-analysis
Challenges
The East Asian Paradox
Rapid growth occurred under authoritarian regimes before democratisation in several countries
China's Model
Sustained growth without democracy (though with significant economic liberalisation)
Institutional Quality Matters
The effectiveness of democratic institutions varies greatly and state capacity matters
Potential for larger policy gridlock in more democratic countries
Evidence suggests links to better human development outcomes, including health, likely driven by accountability mechanisms. Its relationship with economic growth is more debated but getting stronger more recently, with evidence supporting a positive causal link.
While we've looked at the relationship between democratic systems and development outcomes, it's important to recognise that democracy is just one aspect of a broader institutional landscape. The quality of institutions often determines whether democratic processes translate into meaningful development. For instance, a country might hold regular elections (a democratic procedure) but still struggle with development if property rights remain insecure or if the rule of law is weak. This brings us to the broader concept of institutions.
Institutions
What are Institutions?
Institutions are fundamental frameworks that structure political, economic and social interactions within societies. Understanding institutions is critical because they determine how resources are distributed and underpin long-term development trajectories.
Institutions encompass both:
Formal rules - often written down and officially sanctioned
Examples include a country's constitution, specific laws regulating banking, property titling systems, tax codes or electoral laws defining how votes are cast and counted
Informal constraints - these are unwritten codes of conduct, norms, traditions and conventions that shape behaviour
Examples include norms around corruption (is it tolerated or condemned), social customs related to marriage or inheritance, conventions in business negotiations, or community-level rules for managing shared resources like water or forests
Together, these formal and informal structures create predictability by establishing expectations and defining the rewards and penalties associated with different actions.
They operate across various domains.
Political institutions
Electoral systems, rules governing campaign finance, parliamentary procedures, constitutional limits on executive power
Economic institutions
Property rights systems (how land is owned and transferred), contract enforcement mechanisms, banking regulations, patent laws, rules governing international trade
Legal institutions
The structure of the court system, legal codes (civil law vs common law traditions), procedures for evidence and trial, mechanisms for appointing judges
Social institutions
Examples: Norms surrounding family structures and gender roles, educational systems and curricula, widespread religious practices, cultural attitudes towards trust and cooperation
You can see an interesting example of how religious institutions can affect development outcomes in this post by Alice Evans looking at how the afterlife affects economics1
The historical development of institutions shows how they generally evolved to address challenges as they came up.
Classical antiquity
Political instability led Athens to develop democratic institutions
Rome's expansion and desire to maintain control led to standardised laws, citizenship frameworks and provincial administration to govern diverse populations
Medieval period
In England, Henry II's desire to centralise royal power led to common law systems replacing inconsistent feudal justice
Church and state demand for educated administrators spurred university creation
Increasing specialisation and economic complexity necessitated guilds for quality control and merchant protection
Early modern period
Currency instability and trade expansion required stable banking institutions
The costs and risks of overseas trade and colonial expansion led to joint-stock companies and maritime insurance, enabling investors to share financial risks
Growing state responsibilities required merit-based bureaucracies over patronage
Modern era
Abuses of power drove demands for constitutional constraints and representation
Global conflicts compelled creation of international peacekeeping organisations
Market failures and economic interdependence necessitated regulatory frameworks
Why Institutions Matter: Inclusive vs Extractive
When development efforts fail despite adequate funding and technical expertise, the root cause often lies in the institutional environment. A vaccine programme may struggle in a country with weak public administration, a promising agricultural innovation might not spread where land rights are insecure and anti-poverty transfers may not reach intended recipients when there is entrenched corruption.
A highly influential framework for understanding the impact of institutions comes from Acemoglu and Robinson's Why Nations Fail. They distinguish between:
Inclusive Institutions that create virtuous cycles, fostering innovation and sustained, broad-based prosperity
Secure private property rights, unbiased legal systems, regulations that encourage competition and new business entry, freedom to choose careers
They create broad incentives for investment, innovation and effort
Distribute political power broadly, establish constraints on its exercise and uphold the rule of law
Inclusive political institutions tend to support and be supported by inclusive economic institutions
Extractive Institutions that may achieve short-term growth (e.g., by forcibly mobilising resources), but ultimately stifle innovation and effort, leading to stagnation and instability as they actively resist changes threatening elite control
Designed by ruling elites to extract wealth and resources from the rest of society
Feature insecure property rights (for the masses), biased legal systems, high barriers to entry and often coercion
Concentrate power in the hands of a narrow elite, lacking constraints and accountability
Critiques
The China Challenge
China has maintained high growth for decades despite politically extractive institutions. Acemoglu and Robinson argue this is unsustainable without political reform, while critics see it as a fundamental challenge to their theory
Geography vs. Institutions
Jared Diamond and Jeffrey Sachs argue that geographical factors (climate, disease burden, natural resources) play a more fundamental role than acknowledged
Reverse Causality
Does economic development lead to better institutions rather than vice versa? They use historical natural experiments like the divergence of formerly similar regions to address this
Some successful developers (Singapore, South Korea, Taiwan) established inclusive economic institutions before fully inclusive political ones
Measurement and Implementation
The difficulty of operationalising the inclusive/extractive framework for policy purposes
Historical Interpretation
Some historians question the interpretation of specific historical cases used to support their theory
Case Study: The Two Nogales
One of the illustrations used by Acemoglu and Robinson is the comparison of Nogales, Arizona (USA) and Nogales, Sonora (Mexico) - two halves of the same city divided by a border. Despite shared geography, climate and cultural heritage, the U.S. side has three times the income of the Mexican side, better public services, lower crime rates and higher health outcomes.
They attribute this divergence not to geography, culture or individual leadership, but to the different institutional trajectories of the United States and Mexico. The U.S. developed more inclusive institutions that broadly distributed political power and economic opportunity, while Mexico's institutions evolved from colonial extractive systems that concentrated power and wealth.
Case Study: South Korea and North Korea
Another illustration comes from the Korean peninsula. Following division in 1945, both nations started with similar cultural backgrounds, natural resources and Japanese colonial legacy. South Korea gradually developed inclusive institutions with economic freedoms, property rights and eventually democratic accountability. North Korea established highly extractive institutions with centralised economic control and concentrated political power.
By 2023, South Korea's GDP per capita exceeded $34,000 while North Korea's remained under $1,800. South Korea became a technological innovator with world-class companies and living standards, while North Korea has experienced recurring famines and economic crises.
Dietrich Vollrath - Why Isn’t the Whole World Rich?
Early economic research attributed growth differences to ‘factors of production’ - physical capital (infrastructure, equipment) and human capital (skills, education). Countries that invested more in these areas tended to grow faster. However, these studies didn't explain why some countries invested in these factors while others didn't, leading researchers to look for deeper causes
Economists have grouped these fundamentals into three categories: culture, geography and institutions - with institutions receiving the most research attention
Institutions like property rights, constraints on government power, democracy and lack of corruption appear associated with growth, but causality is difficult to establish, and measuring institutions objectively is problematic
Researchers have turned to natural experiments to better isolate institutional effects
The divergence between North and South Korea after 1953
The lasting negative effects of colonial institutions like Peru's Spanish forced labor system
The impact of direct British rule in parts of India
How pre-colonial political organisation affects current economic outcomes in Africa
Recent research focuses less on identifying specific growth-promoting institutions and more on understanding why failed institutions persist. This work suggests that expanding economic and political power to more people helps countries negotiate better economic institutions
They claim to have identified which institutions don't work and recognise that wider distribution of economic and political power creates conditions where good institutions are more likely to emerge
Institutions provide the framework within which governments operate. If institutions are the 'rules of the game,' governments are the primary players tasked with implementing, enforcing and sometimes changing these rules.
The effectiveness of government, its ability to deliver services, maintain order and implement policy, depends heavily on the institutional environment. At the same time, governments through their actions can gradually reshape institutions. This dynamic relationship helps explain why government structures can produce radically different outcomes across countries with similar institutional histories.
Government
The ways societies organise themselves politically and economically are crucial for development. At the heart of this are institutions and within institutional framework operates governments, the specific set of organisations and individuals with the authority to make and enforce decisions for a society. Key functions include law-making, enforcement (defence, policing), providing public goods (infrastructure, education, public health), and revenue collection. A capable and responsive government is essential for translating institutional potential into tangible outcomes.
Understanding government involves looking at its core functions, its structure (form), and its ability to act effectively (state capacity).
Core Functions
Beyond the specific mechanisms of democracy or the nature of institutions, governments typically perform several functions vital for development.
Rule-Making and Enforcement
Establishing laws and regulations (within the institutional framework) and ensuring compliance through policing, defence and judicial systems. This creates predictability and order
Provision of Public Goods
Supplying goods and services that markets may under provide, such as infrastructure (roads, power), public health, basic education and national defence
Revenue Collection
Raising the necessary funds to finance public activities and services, often via taxation
Redistribution
Implementing policies (taxes, social transfers) to alter the distribution of income and opportunity, often aiming to reduce inequality or poverty
Regulation
Overseeing economic activities to ensure fair competition, protect consumers and the environment and maintain financial stability
Economic Management
Steering the macroeconomy, managing trade policy and sometimes undertaking strategic industrial policy (though the extent and nature of this role are debated)
For governments to fulfil these essential functions effectively, they require specific operational capabilities, often called state capacity. A government might be democratically elected and operate within nominally inclusive institutions, but without adequate capacity to implement policies, collect revenue or maintain territorial control, it will struggle to deliver development outcomes.
The Growth of State Capacity
Historically, the ability of states to perform these functions effectively, their state capacity, was limited. Over the last 200 years, particularly in high-income countries, state capacity has grown enormously, enabling extensive service provision and regulation.
Taxation
Our World in Data - Taxation & Public Spending: Explore long-run trends in government revenue and expenditure, indicators of state capacity
Until 1920, tax revenues were low across early-industrialised countries (below 10% of national income)
Low- and Middle-Income Countries (LMICs) rely more heavily on indirect taxes, particularly trade and consumption taxes vs direct taxation and personal income taxes in richer countries
Political institutions impact tax collection - countries with stronger executive constraints collect higher tax revenues
There's a strong positive correlation between GDP per capita and tax revenue as a percentage of GDP
Taxes and transfers reduce income inequality by about one-third on average in OECD countries
Territorial control
A government's ability to control its territory represents one of the most basic expressions of state capacity. Most contemporary states effectively control virtually all their territory, with government authority recognised throughout their borders. However, significant exceptions exist in West and East Africa, parts of Central and South America, and some fragile states where government control remains contested by insurgent groups, criminal organisations, or where remote areas remain effectively ungoverned.
Historically, even today's strongest states once faced territorial control challenges. The progression towards comprehensive territorial control represents a fundamental aspect of state development.
Bureaucratic quality
The effectiveness of state policies depends heavily on the quality of public administration. High-performing bureaucracies (found primarily but not exclusively in wealthy democracies) feature merit-based recruitment, professional standards and limited corruption. In contrast, low-capacity bureaucracies struggle with endemic corruption, patronage-based hiring and arbitrary implementation of rules.
Beyond bureaucratic quality, states also differ in their information-gathering capabilities. The establishment of population registries, regular census-taking and statistical agencies represents a dimension of administrative capacity that enables evidence-based policy.
Our World in Data - State Capacity
Most countries have strengthened their state capacity over recent decades.
Particularly dramatic improvements have occurred in countries starting from lower capacity bases like Uganda and Vietnam
Even high-capacity states like Germany have continued to enhance their capabilities
This trend spans all major regions and income groups
Some states have experienced capacity deterioration, particularly those affected by armed conflict, economic collapse, state capture by predatory elites or external destabilisation
Even with strong formal institutions and substantial state capacity, development efforts can be undermined by corruption, the misuse of public power for private gain.
Corruption essentially creates a gap between formal institutions (what the rules say should happen) and actual practice (what really happens). Understanding corruption as a systemic challenge rather than simply individual moral failings provides insights into why anti-corruption efforts often fail and what approaches might prove more effective.
Corruption
Corruption is a major impediment to development.
Our World in Data - Corruption - How common is corruption? What impact does it have? And what can be done to reduce it?
Historical examples include ‘rotten boroughs’ in 1800s England
Rotten boroughs were constituencies in England with small electorates, sometimes fewer than 10 voters. Wealthy patrons could effectively buy these seats by controlling these few voters through bribes or influence. For example, Old Sarum in Wiltshire had only seven voters but sent two members to Parliament, while Manchester with 60,000 inhabitants had no representation
There is a strong correlation between lower corruption and higher human development
Increased monitoring and audits can reduce corruption (Indonesian study showed 30% reduction in missing funds)
Evidence of officials in charge of Indonesian road projects responding to incentives: it found that audits were most effective when officials faced elections soon, and village elites shifted to hiring family members, which was harder to detect
Education correlates with lower corruption levels, although some countries can have high education ratings and still have high corruption
Cultural norms affect corrupt behaviour
There is significantly less corruption where officials face reelection
Standard anti-corruption strategies often focus on transparency, accountability and strengthening enforcement agencies (police, courts, anti-corruption commissions).
Institutional economists like Mushtaq Khan argue these approaches often fail in contexts where corruption is widespread. They misunderstand the problem: it's not just a few ‘bad apples’ but a systemic issue where rule-breaking is pervasive, often necessary to navigate daily life due to low capabilities and pervasive informality. In such contexts, enforcement agencies themselves often become corrupted or tools of political power.
Enforcement relies heavily on horizontal policing (peers checking peers). If the relevant peers for a given activity all benefit from rule-breaking (networked corruption), top-down vertical enforcement is unlikely to work and may provoke conflict (e.g., Niger Delta oil theft).
Effective anti-corruption efforts need to be context-specific and politically feasible. Khan suggests focusing on the below.
Identifying situations where powerful actors have divergent interests regarding rule-following
Designing interventions that align the self-interest of some powerful actors with rule-following (e.g., dual-use infrastructure projects that provide immediate local benefits, incentivising monitoring by capable locals)
Creating exit strategies from networked corruption by providing alternative livelihoods or services
Focusing on building organisational capabilities incrementally
Many development challenges, like corruption, transcend borders and require coordinated international action. Global institutions have emerged to address these challenges, from financial instability to health emergencies. These international organisations operate within their own complex institutional environments, facing challenges of representation, accountability and effectiveness that parallel those at the national level, but with the added complexity of sovereign states as their members.
Global Governance Landscape
Global governance institutions have profoundly shaped our world since the mid-20th century. Operating beyond national borders, these organisations create frameworks for addressing transnational challenges ranging from poverty reduction to pandemic response.
Key Global Institutions
United Nations (UN)
The UN emerged in 1945 from the ashes of World War II, replacing the (seemingly failed) League of Nations. Its mandate spans maintaining international peace, protecting human rights, delivering humanitarian aid and promoting sustainable development. The organisation's structure reflects power dynamics of the post-war era: a General Assembly representing all member states, a Security Council with five permanent veto-wielding members and a network of specialised bodies including the Economic and Social Council and International Court of Justice.
Through agencies like UNDP and UNICEF, the UN establishes global norms and coordinates development initiatives worldwide. Despite its universal membership, the UN struggles with Security Council reform deadlock, funding shortfalls and the gap between its ambitious resolutions and actual implementation capacity.
World Bank Group
The World Bank Group comprises five institutions, with the International Bank for Reconstruction and Development and International Development Association forming its core lending operations. Founded in 1944 primarily to finance European reconstruction, the Bank's mission has expanded dramatically over decades.
1960s: Infrastructure Focus
Large-scale projects dominated this era, reflecting modernisation theory emphasis on physical capital as the key development constraint. Dams, highways and power plants received priority funding, often with minimal input from affected communities
1970s: Poverty Reduction Shift
The Bank began addressing basic human needs amid oil shocks and widespread nationalisations. Rural development programmes and investments in health and education gained prominence under Robert McNamara's presidency
1980s: Structural Adjustment Programmes
Responding to developing country debt crises, the Bank mandated market-oriented reforms including privatisation, liberalisation and fiscal austerity. These programmes proved socially disruptive in many contexts and were criticised for imposing standardised solutions regardless of local conditions
1990s: Governance and Institutions
Conditionality expanded to include democratic reforms and good governance requirements. Environmental impacts received greater scrutiny, while the Bank played a major role in post-Soviet transitions across Eastern Europe and Central Asia
2000s: Debt Relief Era
The Heavily Indebted Poor Countries Initiative and Multilateral Debt Relief Initiative marked this period. China emerged as an alternative development partner and lender, coinciding with the Millennium Development Goals framework
2010s: Inclusive Growth Focus
Inequality reduction and shared prosperity became central concerns. The Bank increased attention to fragile states and conflict regions while aligning with the Sustainable Development Goals
2020s: Climate and Pandemic Response
Climate finance, adaptation strategies and health system strengthening have taken centre stage in recent years, alongside digital transformation initiatives
International Monetary Fund (IMF)
Created alongside the World Bank at Bretton Woods in 1944, the IMF initially focused on stabilising exchange rates and addressing balance of payments issues. Its role evolved substantially after the collapse of fixed exchange rates, shifting towards global financial system surveillance.
Today the IMF functions as a crisis lender providing emergency financing to troubled economies, conducts regular economic monitoring through Article IV consultations and delivers technical assistance on monetary and fiscal policy. Reform discussions continue regarding its governance structure, where advanced economies maintain disproportionate voting power, and its conditionality requirements, which critics argue often impose excessive austerity on vulnerable populations.
World Health Organization (WHO)
Established in 1948 as the UN's specialised health agency, the WHO coordinates global health efforts through four main functions: disease surveillance, emergency response coordination, standard-setting for medicines and convening international health initiatives. Its achievements include smallpox eradication, dramatic reductions in child mortality and expanded immunisation coverage worldwide. The organisation faces significant challenges including unstable funding heavily dependent on voluntary contributions, political interference from powerful member states and limitations in its authority during health emergencies as demonstrated during recent outbreaks.
The above multilaterals represent only part of global governance architecture. A wider ecosystem encompasses regional bodies like ASEAN and the African Union, specialised agencies such as the IAEA and issue-specific partnerships including GAVI Alliance. Together they form an intricate network with overlapping mandates that often creates coordination problems.
Effectiveness, Criticisms, and Reform Debates
International institutions face recurring challenges that have sparked calls for reform.
Representation Issues
Decision-making power remains concentrated among wealthy nations, particularly in the IMF and World Bank where voting rights distribution largely favours advanced economies. Countries most affected by institutional policies often have minimal input into their design
Policy Shortcomings
Washington Consensus reforms promoted by international financial institutions often failed to account for sequencing challenges, social impacts or country-specific contexts. One example is the imposition of rapid privatisation in post-Soviet economies without adequate regulatory frameworks. Coordination failures between institutions frequently result in contradictory policy advice
Accountability Gaps
Measuring the actual impact of international institutional interventions proves consistently difficult. Feedback mechanisms that would enable learning from failures remain underdeveloped in most organisations. Many programmes generate unintended consequences that aren't adequately addressed
Reform proposals span a spectrum from modest to transformative approaches. Some advocate incremental changes like adjusted voting weights and transparency improvements. More ambitious structural reforms include new decision-making bodies and revised lending criteria. The most radical proposals call for fundamentally reimagining global governance architecture for contemporary challenges.
Case Study: Reforming the UN Humanitarian System
The challenge of reforming global institutions is clear in efforts directed at the UN humanitarian system. While essential for global crisis response through agencies like WFP and UNHCR, the system itself faces acknowledged structural issues: overlapping mandates, inbuilt inefficiencies and agency competition, often hindering coordinated action and making reforms difficult to implement due to member state dynamics and systemic inertia.
Recognising this, the UK, as a major donor between 2011-2018, attempted to leverage its funding to push for greater effectiveness. Successes included championing the shift to cash transfers and providing predictable multi-year funding, which demonstrably helped agencies like WFP build new capacities and plan more efficiently in contexts like South Sudan.
However, the UK's ambitious attempts to tackle deeper systemic issues proved complex. Its drive for accountability led to increasingly demanding reporting requirements, which, while aiming for oversight, placed more burdens on UN agencies already navigating complex operations, running counter to internationally agreed goals of harmonising such demands.
An experimental 'Payment by Results' scheme, linking 30% of core funding to collective reform progress across six UN bodies, was aimed directly at breaking down agency silos. Yet, its design and the UK's failure to secure buy-in from other key donors limited its traction against the UN's resistance to change, with some UN staff misinterpreting it as a drive towards cost savings rather than programme effectiveness, which led to misaligned incentives.
While evaluating the effectiveness and reform challenges of established international institutions provides valuable insights, global governance extends far beyond formal government structures and multilateral organisations. Understanding this broader landscape is essential because development outcomes are increasingly shaped by a diverse range of actors, many operating outside traditional governance frameworks.
From technology companies determining information access to financial institutions influencing capital flows, these entities often exercise governance functions without corresponding accountability mechanisms. By looking at this wider landscape, we can better identify leverage points for change.
Power Centres in Global Governance
The Effective Institutions Project has attempted to map the wider landscape by identifying the most influential organisations shaping global outcomes. Their analysis covers an ecosystem where governmental, corporate, multilateral and civil society actors interact and compete.
Examining these different categories is useful as it illuminates the diverse channels through which governance occurs, not just through treaties and international organisations, but through standard-setting, resource allocation, idea generation and technological control.
It highlights the growing importance of non-state actors in shaping development outcomes and provides context for institutional competition and forum-shopping as actors seek favourable venues for advancing their interests.
Government Leaders
United States
Executive Office of the President: Controls world's largest military and reserve currency
National Security Council: Coordinates foreign policy and security apparatus
Congress (Representatives and Senate): Holds budgetary authority and treaty ratification powers
China
Communist Party Politburo: Central decision-making body in rising superpower
State Council: Implements domestic and international policy
European Union
European Commission: Regulatory superpower with global standard-setting influence
European Council: Coordinates member state positions on foreign policy
Russian Government: Nuclear capabilities and energy resources leverage
Other Key Governments: India, Brazil, UK, Germany, France, Japan, Saudi Arabia, Türkiye
National governments remain the primary building blocks of global governance, retaining formal sovereignty and the authority to enter binding agreements. However, their influence varies dramatically based on economic weight, military capability and technological advancement.
Corporate Influence
Technology Giants
Amazon - E-commerce infrastructure and cloud computing dominance
Alphabet (Google/DeepMind) - Controls information access and AI development
Meta (Facebook/WhatsApp/Instagram) - Global communications platforms
OpenAI - Advancing frontier AI capabilities
Chinese Tech companies - (Baidu, Huawei, Tencent)
Financial Powers
BlackRock - World's largest asset manager ($11+ trillion under management)
JPMorgan, Goldman Sachs
City of London/Wall Street - Financial services hubs
Resource Controllers
Aramco - World's largest oil producer
Trafigura - Commodities trading networks
Rio Tinto - Mining conglomerate
Cargill - Agricultural commodity giant
These corporate entities increasingly function as governance actors themselves by setting standards, controlling essential infrastructure and shaping regulatory environments. Their economic resources often exceed those of smaller nation-states, raising questions about democratic accountability in global governance.
Multilateral Frameworks
UN, WHO, World Bank Group
African Union - Continental integration efforts
OECD - Policy coordination among advanced economies
NATO - Military alliance
Regional Development Banks - Asian Development Bank, African Development Bank, etc.
Knowledge and Norm Shapers
Media - BBC, The New York Times, Al Jazeera, etc with agenda-setting influence
Foundations - Gates, Wellcome, Novo Nordisk (combined assets >$180 billion, which is just under one year of ODA from governments)
Academia - Harvard, Oxford, Tsinghua, etc
Think Tanks - Brookings Institution, Chatham House, International Crisis Group
NGOs - Amnesty International, Greenpeace, Oxfam
Religious Institutions - Vatican, Al-Azhar university, various faith networks
These actors wield soft power through their ability to shape narratives, generate knowledge and influence values. While lacking formal authority, they can mobilise public opinion, provide expertise and establish normative frameworks that guide the behaviour of more powerful actors.
Understanding the landscape of global governance, from multilateral organisations to corporate influence, raises a fundamental question: how do institutions change?
Institutional Change: Mechanisms and Strategies
Institutional change is among the most challenging aspects of development. Both history and contemporary experience show that institutions are typically resistant to change, as they often reflect existing power structures and entrenched interests. Yet meaningful institutional transformation does occur, sometimes gradually and sometimes rapidly.
Critical Junctures and Windows of Opportunity
Significant institutional changes often occur during periods of crisis or transition when established arrangements are weakened or delegitimised.
Political transitions
Democratic revolutions, regime changes, and independence movements can create openings for institutional redesign. South Africa's transition from apartheid allowed for the creation of new political institutions embodied in its 1996 constitution
Economic crises
Severe economic disruptions can discredit existing institutional arrangements and create space for reform. The Latin American debt crisis of the 1980s led to widespread institutional restructuring across the region, including privatisation, trade liberalisation, and fiscal reforms
Natural disasters or pandemics
Major shocks can expose institutional weaknesses and generate political will for change. Following the devastating 2004 tsunami, Indonesia implemented significant decentralisation reforms that redistributed power and resources to local governments
However, these windows don't automatically lead to better institutions, the direction of change depends on multiple factors going well.
Incremental Change and Institutional Layering
Not all institutional change is dramatic. Often, transformation occurs through incremental processes.
Layering
Adding new elements to existing institutions without dismantling them. China's economic reforms beginning in 1978 show this approach, market mechanisms were gradually introduced alongside, rather than replacing, state planning. Especially when compared to the dramatic upheaval caused by the cultural revolution of the previous decade
Conversion
Repurposing existing institutions for new goals. Many colonial-era bureaucracies were maintained after independence but redirected towards national development priorities
Drift
When institutions remain formally unchanged but their impact evolves due to changing environments. Environmental protection agencies established in the 1970s now address climate change, though their core structures remain similar
These gradual changes can accumulate over time, resulting in profound institutional transformation without obvious breaking points. This can be for better or worse as can be seen with various government departments, NGOs or foundations shifting away from their original goals.
Internal Reformers
Working within systems to change them requires specific approaches.
Coalition building
Successful reformers identify and mobilise supportive stakeholders across different groups. In Georgia's anti-corruption reforms (2004-2012), reformers built coalitions across political parties, civil society and business sectors
Strategic sequencing
Prioritising easier quick win reforms first can build momentum for deeper changes. Rwanda's post-genocide government initially focused on security and basic service delivery before undertaking more ambitious institutional reforms
Pocket of effectiveness approach
Creating well-functioning units within otherwise dysfunctional systems
Reform through demonstration
Proving that better institutional arrangements work in controlled settings before expanding. Vietnam's economic reforms began with limited experiments in agricultural production before broader implementation
External Catalysts
Outside actors have several potential leverage points.
Technical assistance and knowledge transfer
International organisations and bilateral donors provide expertise and training to strengthen institutional capacity. The OECD's anti-bribery convention implementation has supported legal and enforcement reforms across member countries
Financial incentives and conditionality
Linking financial support to specific institutional changes. While controversial, conditionality has contributed to institutional reforms in areas like public financial management and banking regulation
Creating and supporting transnational advocacy networks
External actors can amplify domestic reform voices. International support for anti-corruption NGOs helped advance institutional reforms in countries like Indonesia and Ukraine
Normative pressure and socialisation
International standards and peer review mechanisms can motivate reforms. The Financial Action Task Force's evaluations have spurred anti-money laundering institutional improvements globally
Civil Society and Bottom-Up Pressure
Non-state actors drive institutional change through the following.
Monitoring and advocacy - Tracking government performance and advocating for reforms
Strategic litigation - Using courts to force institutional change
Information campaigns - Educating citizens about institutional shortcomings can generate reform pressure
Collective action and social movements - Mass mobilisation can force institutional responses
Challenges and Limitations
Isomorphic Mimicry and Facade Reforms
A persistent challenge is that institutional changes often remain superficial, countries adopt the forms of effective institutions without their functions. Development organisations frequently contribute to this problem by emphasising formal structures over actual capacity and performance
Power and Political Economy
Institutional reforms that threaten entrenched interests typically face fierce resistance. Understanding the political economy, who wins, who loses, and who has the power to block change, is essential for effective reform strategies
Acemoglu and Robinson emphasise that sustainable institutional change requires shifts in the underlying distribution of power. Otherwise, elites will eventually reassert control, undermining formal institutional changes
Path Dependence and Cultural Constraints
Institutions develop within specific historical and cultural contexts that constrain change possibilities. What works in one context may fail in another due to different historical legacies, cultural norms or complementary institutions
How can individuals contribute to improving governance and institutional quality? Various career pathways offer opportunities to influence these systems, each with distinct leverage points, challenges and considerations.
Careers in Government, Institutions & Democracy
Working to improve governance and institutions is challenging but offers potentially high-leverage pathways for impact, as these systems often underpin other development outcomes.
1. Government, Politics & Civil Service
Working within or directly engaging with state structures offers channels to shape/implement policy, manage public resources, deliver services or gain political power. Success hinges on navigating political realities, bureaucratic processes, and public opinion
Organisations: National ministries (finance, planning, justice, sector-specific), local government authorities, public service commissions, anti-corruption bureaus, electoral management bodies, political parties, campaign organisations, elected offices
Considerations:
Pros: Potential for large-scale impact, direct involvement in implementation/decision-making, deep contextual understanding
Cons: Bureaucracy, political interference limiting technically sound solutions, potential for corruption exposure/pressure, job insecurity in political roles, potentially lower pay than private sector for civil service. Measuring individual contribution can be hard
Link - Civil Service Careers in LMICs - Probably Good
2. Multilateral & Intergovernmental Organisations
These bodies influence global norms, provide technical assistance/funding for governance reforms, convene international actors, and sometimes adjudicate international law. Work often involves cross-country analysis, diplomacy, and specialised legal/technical expertise
Organisations: World Bank, IMF, UN agencies (UNDP, UNODC), regional development banks (AfDB, ADB), OECD, specialised bodies (International IDEA), international courts (ICC, ICJ), treaty secretariats
Considerations:
Pros: Global reach, influence on policy agendas, access to diverse contexts, often good career stability/benefits
Cons: Bureaucratic constraints, potential disconnect from local realities, navigating complex member state politics, slow decision-making. Advanced degrees often required
3. Research, Academia & Think Tanks
Generating evidence, developing theories, analysing trends and providing policy recommendations on governance, institutions, democracy and related issues
Organisations: Universities (political science, economics, public policy, law, anthropology depts), independent research institutes (CGD, ODI, Brookings, Chatham House), regional policy think tanks
Considerations:
Pros: Intellectual freedom (relatively), potential to shape understanding and long-term agendas, contributing to evidence base
Cons: Challenge of ensuring research uptake, reliance on grant funding, highly competitive academic tracks, impact often indirect and long-term
4. Non-Governmental Organisations (NGOs) & Civil Society
Advocating for specific reforms, monitoring government performance, empowering citizens, implementing grassroots governance projects, building community capacity and organising collective action
Organisations: Transparency International, Human Rights Watch, Carter Center, national chapters of global NGOs, community organising groups, grassroots movements
Considerations:
Pros: Often closer to communities, potential for agility and direct impact on accountability, strong value alignment for staff
Cons: Funding instability, reliance on donor priorities, measuring advocacy/organising success can be difficult, potential political risks/pushback
5. Private Sector, Consulting & Corporate Influence
Providing advisory services to governments/IOs, developing relevant technologies, managing political/institutional risks for businesses, and shaping governance norms/practices from within large corporations
Organisations: Major consulting firms (public sector practices), specialist governance consultancies, technology companies (civic tech, gov tech, major platforms setting content/data policies), political risk advisory firms, large corporations (govt. affairs, ethics/compliance, sustainability depts)
Considerations:
Pros: Often well-resourced, focus on tangible results/efficiency, potential to influence powerful private actors internally, exposure to diverse challenges
Cons: Risk of applying generic solutions without deep context, aligning profit motives with public good, ethical dilemmas working with certain regimes or on potentially harmful policies/internal practices
6. Media & Journalism
Investigating and reporting on government actions, corruption, institutional failures, and political processes to inform the public and hold power accountable
Organisations: News outlets (international, national, local), investigative journalism units/non-profits, freelance journalists
Considerations:
Pros: Crucial role in transparency and democratic accountability, potential for high public impact through exposés
Cons: Financial precarity in the industry, potential political pressure/threats, challenge of maintaining objectivity, impact depends on public/official reaction
7. Philanthropy & Grantmaking
Strategically allocating resources from foundations or donor funds to support initiatives aimed at improving governance, democracy, institutional capacity or accountability
Organisations: Private foundations (e.g., Gates, Ford, Open Society Foundations, Wellcome Trust), community foundations, donor advised fund sponsors
Considerations:
Pros: Significant influence on agendas and resource allocation, ability to fund innovation and long-term work, often good working conditions
Cons: Limited number of roles, potential for echo chambers/funder bias, responsibility of making impactful allocation decisions, distance from direct implementation
8. Innovation & Entrepreneurship (GovTech/CivicTech/Social Enterprise)
Creating and scaling new technologies, platforms or organisational models (non-profit or for-profit) specifically designed to address governance challenges like service delivery, citizen engagement, transparency or efficiency
Organisations: Start-ups, social enterprises focused on governance, innovation hubs/labs (within larger orgs or standalone), accelerators/incubators supporting civic ventures
Considerations:
Pros: High potential for disruptive impact and scalable solutions, direct creation/implementation
Cons: High failure rate for start-ups, funding challenges (esp. for non-profit models), navigating complex government procurement/adoption processes, ensuring genuine impact vs. superficial tech solutions
Questions
Overall Reflection:
How central do you believe institutions and governance are to long-term development, compared to factors like aid or technology?
Which institutional failure (e.g., low state capacity, corruption, extractive politics) seems like the biggest bottleneck to progress?
Has your view on the role of democracy in development shifted?
Where do you see the biggest real-world tension between democratic processes (which can be slow or messy) and the desire for decisive action or rapid development? Are there examples where non-democratic systems seem to achieve 'better' development outcomes in some areas, and what are the trade-offs?
Interventions & Change:
How effective do you think international institutions like the IMF/World Bank have been? What is their most constructive role moving forward?
Given the difficulty of institutional reform, where should efforts be focused? Building state capacity? Fighting corruption? Promoting democracy?
What are the ethical considerations and risks for external actors trying to influence governance in LMICs?
What roles in government are likely to be the most impactful?
Is it possible to make changes to institutions (from inside or outside)?
How much potential is there in non-state approaches like charter cities or strengthening social movements to drive institutional change?
Many aspects of good governance are hard to measure directly, unlike health metrics like mortality rates. How important are these intangible factors and how should we factor them into our understanding of development progress or the success of governance reforms?
Future Impact
Thinking about the different careers, which ones seem best positioned to influence long-term, systemic institutional change?
What skills or perspectives seem most valuable for someone wanting to contribute effectively to these areas over the next 5 to 10 years?
Where do you see the most potential for innovation in improving governance? Is it through technology (GovTech/CivicTech), new models of citizen participation, reforms within international institutions or something else?
Which aspect of this week's topics resonate most with you as an area where you'd potentially want to contribute?
Feedback
What key aspects were missing from this overview?
What questions did this topic raise that weren't listed?
Further Reading
Why Nations Fail Summary by Ben Kuhn
Open Philanthropy - Global Public Health Policy
CFR
What Is the IMF?
What Does the World Health Organization Do?
Yaw
The International Monetary Fund's & World Bank's Many "Attempts" to Fix Poverty in Sub-Saharan Africa
Book Review - The Problem of Democracy: America, the Middle East and the Rise & Fall of An Idea by Shadi Hamid
The Paradise Premium - a new theoretical model showing how religious believers often sacrifice economic gains for spiritual rewards. This paradise premium quantifies how concerns about the afterlife affect economic decision-making and labour participation
Historical Secularisation and Religious Revival - Europe and parts of Asia underwent secularisation that prioritised material progress over spiritual concerns, which may have enabled economic development. However, many regions later experienced religious revivals (like the Global Islamic Revival) that refocused attention on piety and paradise
Gender Divergence Between East and South Asia - Cultural and religious differences led to divergent female labour participation between East Asia (where economic prosperity became culturally celebrated) and South Asia (where religious concerns about female modesty and seclusion limited women's economic participation)