Governance is defined as a set of traditions and institutions by which authority in a country is exercised along the dimensions of political, economic, and institutional/institutional respect. The political: the process by which those who are in authority are selected, are monitored, and are replaced; measured through voice and democratic accountability, as well as political stability and absence of violence and terrorism. The economic: the capacity of government to formulate and implement policies and deliver public services; measured in government effectiveness and regulatory quality. The institutional: the respect of citizens and state for the institutions governing the interactions among them; measured by the quality of the rule of law and the control of corruption. Importantly, this third dimension highlights the important distinction between control of corruption on the one hand, and broader notions of governance on the other. Governance is shown to matter: On average, a country that improves its quality of governance in terms of controlling corruption, rule of law, and the other dimensions over time improves per capita its per capita income threefold. Natural resource is a major sector in about 60 countries around the world, yet in the majority of these countries these resources are not managed very well or managed well at all. Over time, governance in resource-rich countries has not improved on average. Civil society engagement is critical to accountability. The Natural Resource Chapter is highlighted as an important analytic framework and diagnostic tool for governance, as it evaluates the whole chain of decision-making in the sector and provides evidence-based analysis that can be used for advocacy.

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