Over the years, the focus of development theory and practice has shifted from the trickle-down theories of economic growth, to growth with equity and to sustainable development. This has been accompanied by four phases in the evolution of the theory and practice of governance: traditional public administration to maintain law and order and promote national integration; development administration, public sector management and New Public Management (NPM) to improve effectiveness of development programmes and allow greater role of the market and competitiveness among the government entities; “from government to governance” to facilitate  the engagement of the actors from the government, civil society and the private sector in managing public affairs; and democratic governance to infuse the principles and values of democracy in  governance systems and processes. (Hyden 2011; Cheema 2005; Fredericksen 2005; UNDP 2002).

Academics view the concept of governance from their respective disciplinary perspectives: Public administration as public sector management and service delivery based on capacity development (Gellhom 1965);  Political science from the perspectives of regime type and quality, particularly vis-à-vis democratization and the sovereignty of the nation-state (Hyden 2011);  Sociology as social movements of the newly emerging power groups, such as NGOs and civil society activists (Alagappa 2004); and Anthropology and philosophy from the perspectives power discourses, subjectivity and governmentality (Foucault et al. 1991; Shore & Wright 1997).

The donor community has rapidly increased its support and advocacy for governance reform based on three assumptions: (1) development effectiveness requires efficient and transparent governance systems and processes; (2) democratic governance is based on a set of universally recognized values and principles such as political pluralism and rule of law; and (3) donors need to show results to their own tax payers which requires monitoring to show effective use of assistance (Cheema 2005). Donors and international development agencies, however, are not monolithic, with the United Nations, development banks and bilateral donors focusing on different dimension of governance ranging from public sector capacity to democratic institutions and human rights.

Faced with daunting social and economic problems, policy-makers in developing countries and civil society organisations have been experimenting with new approaches, modalities and tools to promote greater citizen engagement for an inclusive and responsive state. This has led to series of good governance practices and innovations at the national, sub-national and local levels.

The paper examines shifts in the theory and practice of governance for sustainable development based on the perspectives of four sets of stakeholders: academics, donors and international organizations, the civil society, and governments in developing countries. It discusses the emerging trends and issues in the practice of governance and argues that today the effectiveness of service delivery and access is the most critical governance challenge globally and in South Asia.

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