I.

Origin, Development, rational, theories and key actors in governance

1. The origin and development of governance: The origin of governance derives ultimately, from the
Greek verb kubernaein meaning to steer the metaphorical sense first being at testing in Plato.
The Evolution of Governance has been nine Stages. 1st stage was called Clans (3 million years ago) -one
family group living for hunting and gathering ,2nd stage Kingdoms (10,000 years ago) - start farming system
and collect revenues ,3rd stage Empires (4,000 years ago)-developed new tactics and expanded through
conquest and the suppression of people in new territories by enforcement,4 th stage Democracies (since has
started 3,000 years in Athens- governance system exercises a more participatory system appeared in which
power was given to the people in the form of votes. Still it practices more country including Ethiopia,5 th
stage Republics (2,000-year) - civilizations expanded, more decision-making power had to be delegated, and
political power became increasingly subordinated to laws (e.g. USA),6 th stage Constitutional Republics
(living 250 years) in this stage the main idea nations began to separate powers and set out basic rights
through charter, subordinating more political power to the rule of law.7 th stage Startup Nations: startup
societies or contract-based private cities—less dependent on monopoly states. 8th stage Cloud Governance-
people will be able to select different forms of association from a menu of governance options, without
relocating.9th stage Rules without Rulers-Organizations are already pioneering hierarchy-free governance
systems. Such systems allow self-organization, mimicking the natural world.

2. Rationalities of governance: Rationality of governance can change the behavior of different actors .there
are three rationalities of governance.
A. Administrative rationality: follow up governance through rules and principles, and leads to sustainable
environmental governance
B. Economic rationality: depends on economic and business norms for allocating prices and it gives
property right for citizens.
C. Deliberative rationality Governance: a form of democracy in which deliberation is central to decision-
making. It adopts elements of both consensus decision-making and majority rule.
3. Theories of governance: There are 9 major theories of governance, which are ;

A. Rational choice theory :states that individuals rely on rational calculations to make rational choices
that result in outcomes aligned with their own best interests. It is often associated with the concepts of
rational actors, the rationality assumption, self-interest, and the invisible hand. The invisible hand
theory states that individuals driven by self-interest and rationality will make decisions that lead to
positive benefits for the whole economy. Therefore, economists who believe in the invisible hand theory
lobby for less government intervention and more free-market exchange opportunities (Adam Smith,).
Smith believed that, “government should limit; its activities to administer justice, enforcing private
property rights, and defending the nation against aggression.” In addition Adam Smith advised certain
interventions about government expenditures on: defense against foreign invasions, public investments
 collect taxation, care for sufferers with diseases, postal service, quality control on goods, and set interest
rates.
B. Delegation theory is closely linked to rational choice Theory. Delegation theorists argue that key to
effective governance is getting the structure of delegation right. The process of delegation: Assignment of
authority, Assignment of task, Creation of responsibility, Creation of accountability.
C. Social interpretive theories emphasize the meaningful character of human actions and practices.
Interpretive approaches to governance often emphasize contingency.
D. Bounded Rationality theory: The concept appears in Herbert Simon's Administrative Behavior.
According to Simon, human behaviourist neither totally rational nor totally non-rational. It has its limits
information, limited time, and restricted computational ability. Hence, decisions are never the 'best
possible' outsoles in choice behaviours on the part of decision-makers (only solutions that 'satisfy').
E. Neo-institutionalism studies the features of the economy institutional structures that facilitate the
development of the peoples. the neo-institutionalism economy analysis, defines the artificial
institutionalism and economy development.
F. Systems theory, also called social systems theory.Hence a system can be either closed or open. But
most approaches treat an organization as an open system. An open system interacts with his environment
by way of inputs through puts and outputs. Open systems theory refers simply to the concept that
organizations are strongly influenced by their environment (economy, politically, and culturally).
G. .The environment consists of other organizations that exert various forces of an economic, political, or
social nature.
H. Regulation Theory focuses on the ways in which material, institutional, policy-driven, and
discursive(Diaspora) supports allow capitalism to ‘regulate’ its instabilities in order to ward off
revolution. The concern with the temporary stability of capitalism leads regulation theorists to explore its
varieties across time and space. Regulation refers to the state's attempts to monitor (and thus direct)
conduct.
I. Network theory Governance refers to self-regulation of actors within networks; the ‘networking’ of
these actors. The concept of a network was a whole composed of a set of actors or units and their
relations to one another.
4. Key actors of governance: According to UNDP (1997) there are three key actors of governance

A. State (public sector) - refers to the system of direction and control of business corporations,and
which creates a conducive political and legal environment;
B. the private sector, which generates jobs and income; and
C. Civil society, which facilitates social and political interaction.
The essence of governance is to foster interaction between these three types of actors to isolated
people-centered development.