The title of this year’s report – Better Governance, Better Economies – summarizes its message well. Good governance matters. It matters at the level of countries, subnational regions and firms, and it also matters for people’s well-being.

Poor governance is detrimental for three reasons. First, it creates uncertainty. When the rules of the game lack clarity, outcomes become unpredictable. Thus, uncertainty discourages investment, be it inflows of foreign direct investment, firm-level decisions about the expansion of operations or entrepreneurs’ decisions on whether or not to set up new businesses.

Second, poor governance damages competitiveness. Corruption, the twin brother of poor governance, necessitates additional payments, increasing the cost of running a business, gaining an education or accessing medical services.

Third, poor governance creates an uneven playing field. It gives advantages to firms and individuals with links to ruling elites, while disadvantaging others, leading to inequality of outcomes, inequality of opportunities and inefficient allocation of resources. It also gives rise to a general sense of injustice and disillusionment with politics.

Read the full report: https://2019.tr-ebrd.com/