The case for governance

By Linda Maguire, Resident Representative, UNDP Panama

The coronavirus COVID-19 is first and foremost a health emergency and the focus, rightly so, is on saving lives. As countries transition through the preparation, response, and recovery phases of the crisis, the immediate health response begins to evolve into an analysis of the socioeconomic impact of both the illness and the measures taken to halt its spread. Even further along, questions about building back better post-COVID-19,in a way that is more sustainable, greener, more equal, digitally connected, and innovative, will dominate.

In this last phase of recovery, questions of productivity, inclusion, and resilience will take center stage as countries emerge from lockdowns to find their economies severely impacted; informal workers and small and medium enterprises disproportionately affected; and questions emerging about the inclusiveness and resilience of pre-COVID-19 economic models.

Effective governance is essential to addressing these challenges. This includes strong institutions that uphold the rule of law and fight corruption. But it must also go beyond these supply and demand elements, to include development outcomes. Part of the critique of democratic governance in the recent past in Latin America and elsewhere stems from a loss of confidence in the institutions and processes which, while they may allow at least in theory for equality of political participation, such as, universal suffrage, have not provided the expected equality of opportunity or socioeconomic mobility. To truly be effective governance must translate into more equal and transformative development. This includes at least in part addressing the disparities of power and influence among the citizens.

Cutting edge thinking

UNDP is a global leader in governance assistance and has more than 35 years of experience. As an organization concerned with sustainable human development, it also provides cutting edge thinking on multidimensional poverty, and inclusive, green growth. In 2019, UNDP Panama published its National Human Development Report on the importance of strong institutions for human development. The same year UNDP produced its global Human Development Report on inequality, which spoke about the next generation of inequalities such as the digital divide which affects education and employment, and climate change which impacts vulnerable populations differently. A common denominator of both reports is the importance of the right policy choices, produced through participatory processes and implemented by transparent and accountable institutions, to improve socio-economic outcomes.  

There is now an opportunity to rethink the policy options available and define a better future. In this respect, four areas of effective governance – or governance that produces better development outcomes – hold promise for a productive, resilient, and truly inclusive recovery in Panama.

Local governance

First, local governance. Recently the President of Panama passed Law 155, which reforms Law 37 (2009) on decentralization, granting greater autonomy to local governments to manage resources for COVID-19. However more needs to be done so that local governments are truly reflective of and responsive to local needs over the long term.

Second, inclusive development planning. This includes evidence-based analysis for national plans, promoting economic diversification and sustainable growth, and effective natural resource management. Panama, like many countries, faces a challenge in the availability of differentiated data on the Sustainable Development Goals and their indicators. In the two spheres of planet and peace, in particular, data to diagnose the situation and monitor progress is lacking, which makes development planning based on evidence very difficult. Also, development planning can often be a sector-specific process dominated by national-level institutions without including the end-user.

Digital governance for transparency

Third, e-governance. COVID-19 has pressured governments to act quickly but to also show unprecedented levels of transparency. In Panama, the government has ensured that state contracts for COVID-19 infrastructure and procurement are published on a website open to the public. Although there is still much to do, this is an important step in government accountability and transparency and can be replicated.

Renewing the socio-economic contract

And finally, renewing or redefining the socio0economic contract. Despite very strong economic growth over the past decade, Panama’s economic model remains highly concentrated. It is also the world’s sixth most unequal country. But it has several advantages working for it in addressing these challenges. It is small, therefore in principle, it can solve the challenges of inequality and inclusive growth with the right policies; it is secure and has strong social cohesion, even more so in the solidarity driven response to COVID-19; and it has a history of inclusive dialogue to bring about important changes. All these factors point to Panama’s potential to look to more inclusive development.