Abstract:

The role of the state in development has undergone substantial changes under the influence of the New Institutional Economics. The new school, which grounds the emergence of the state as an institution on rational individual behaviors, assumes that the developmental state is not intervening and restricting but coordinating and developing. Influencing neo-liberal development economists, this view also holds that the complementarities are key between the state, market, and civil society, which shines out the goal of good governance more and more. However, the goal that includes comprehensive institutional reforms is far from being realistic and feasible for developing countries. These countries with limited resources need to rely on the improvement of institutional capacity while implementing economic development policies, considering diverse development stages and unique institution compositions. The present paper addresses the “good enough governance” and “just enough governance” approaches that emerge with the understanding of an effective state in economic development and are shaped around good governance but develop a critical perspective. In this respect, the study explores the significance of organizing the institutional reforms according to the states’ existing institutional capacities and development levels, as well as determining the priorities transparently in the development process.

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