Good governance theory reacts to the failure of development policies. Underdeveloped economies are marginality ridden. They have financial surplus in the form of rent and labour. Rent is the basis for patronage; it subverts the law-bound state; and, it limits the autonomy of civil society. Labour surplus disempowers labour. The traditional objectives of governance such as autonomy of the market, the state, and the civil society are replaced by the search for synergies among these spheres. This requires skillful application of a combination of measures, particularly utilization of appropriate economic policies that empower the poor and reduce the pressure of rent. Participation also allows for the control of rent, especially at lower echelons of government. Centralization of decision-making may lead to greater accountability of state institutions and political organisations, including political parties. All measures in the non-market sphere, however, including state intervention into the market, are facing decreacing returns. Thus, the policy mix is decisive in determining the outcomes of development.