Chapter | Innovation Policy and the Economy, Volume 11 | 2011

Innovations in Governance

by Raymond Fisman and Eric Werker

Abstract

In this paper we explore the innovations in governance that have promoted investment and growth. Some policymakers have tinkered with their country's institutions, some have undertaken wholesale changes, while others have attempted to influence the rules in other countries. We survey past attempts at governance innovation, from private governance in India's industrial cities to cross-border government efforts, like Singapore's Suzhou Park, outside of Shanghai, from norm-changing mimes in Bogota to rule-of-law enforcing anti-corruption authorities in Hong Kong. From these recent experiences, we try to extract a few key principles that characterize governance innovations that encourage investment and growth. These include competition, which puts pressure on policymakers to improve institutions; information, which provides necessary knowledge to citizens that can help them push for improved governance; trade in institutions, which allows effective institutions to move across borders; and shifting culture, that is, the jolting of norms to be rule compliant. Finally, we use these principles combined with historical precedent to describe the potential consequences of some recent proposals for governance innovation.

Keywords: Economic Growth; Investment; Governance; Governing Rules, Regulations, and Reforms; Policy; Government and Politics; Innovation and Invention;

Citation:

Fisman, Raymond, and Eric Werker. "Innovations in Governance." In Innovation Policy and the Economy, Volume 11, edited by Josh Lerner and Scott Stern. Chicago: National Bureau of Economic Research, 2011.