Governance for Inclusive Growth

IMF Working Papers, April 23, 2021

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The government’s ability to deliver inclusive growth crucially depends on the quality of governance.
This paper reviews the linkages between governance and inclusive growth, and key policies to improve governance.
The policies include:
- (1) structural reform, automation, improving rules and procedures (including for fiscal and monetary policies) to limit the discretion and hence the space for policy errors;
- (2) human resource policies, capacity building, effective anti-corruption frameworks to incentivize public officials to make decisions in the best public interest; and
- (3) transparency, accountability, and inclusive political institutions to inform and monitor policymaking.

Governance quality is a central determinant of a government's ability to achieve inclusive growth.
Limiting discretion through clearer rules and procedures (including fiscal and monetary) reduces the space for policy errors.
Strengthening human resource policies and capacity building, together with effective anti-corruption frameworks, aligns public officials' incentives with the public interest.
Enhancing transparency, accountability, and inclusiveness of political institutions supports informed policymaking and monitoring.

Advance structural reform and automation to standardize processes and reduce discretionary decision-making.
Improve rules and procedures for fiscal and monetary policies to constrain policy errors.
Implement human resource policies and capacity development programs for public officials.
Establish and enforce effective anti-corruption frameworks to incentivize decision-making in the public interest.
Strengthen transparency, accountability, and inclusive political institutions to inform and monitor policymaking.

Subject: Anti-money laundering and combating the financing of terrorism (AML/CFT), Civil society, Corruption, Crime, Economic growth, Economic sectors, Inclusive growth, Revenue administration, Tax evasion
Keywords: Anti-money laundering and combating the financing of terrorism (AML/CFT), central bank, Civil society, Corruption, Global, government discretion, government regulation, Inclusive growth, policy advice, poor governance, Tax evasion

IMF Working Papers — "Governance for Inclusive Growth", ByMaksym Ivanyna, Andrea Salerno, April 23, 2021.