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Thursday, November 22, 2012

The Failure of Good Governance:How it led to financial crisis?

 
The concept of good governance has typically been used in development economics as a way to describe the system of aid-recipient countries,-developing economies.The recent economic crisis has brought this concept into light in developed economies where governance,both public and private,has been assumed to be sound.Euphemistically put,the unfolding of recent events has proven that this is not always true.

Government create the conditions for the functioning of markets,operation of private firms,strength of civil society,and welfare of communities and individuals.System of governance affect the performance of the state in executing its core functions and through this performance of countries in meeting their major economic a social goals,In the private sector,the same concept applies-firms,leadership enables that functioning of various departments and is responsible for the welfare of the firm's employees.A firm's leadership also largely determines the firm's performance and its ability to meet its goals.

                                                                                 In recent months,developed economies around the world experienced and unprecedented shock-credit markets froze up,equity markets tumbled to record lows and major banks failed and whole countries were on the brink of default.While the crisis cannot be blamed on one single entity because it came about as a result of greed and complacency of consumers,investors and businesses alike,it is widely argued that the lack of good governance at the public and private levels led to this meltdown.!!

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