To
begin with, definiton of the term of regulation is critical for the understanding
of the idea of how the SWFs are governed. Regulation characterized as the
proclamation of standards by government joined by instruments for controlling
and requirement, for the most part pressumed to be performed through a
specialist public agency or the direct intervention of the state in the economy
in any frame or again the greater part of the systems of social control or
impact influencing all parts of conduct from whatever source, regardless of
whether they are deliberate or not.

 

Another
definiton of the regulation is the managed and centered control practiced by a
public agnecy over exercises that are accepted by a community.

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Beside from the
definition of regulation, it is very important the understand of good
governance features. There are five different criterias to be used as key tests
to evaluate whether a regulatory act can be counted as ‘good’.

Regulation can be
classified as good must have:

i.                
Supported by the
legislative authority,

ii.              
Convenient scheme of
accountability,

iii.            
Equal and accessible
procedures,

iv.            
Regulator is acting with
satisfactory expertise,

v.              
Action is efficient overall.

 

Apart from their
definition, it can be easily claimed that good governance occurs only where
legitimacy already contains all of the discussed criterias. Legitimacy in its
simplest form is the authority given to a person ( public or private, legal or
natural ) by the one(s) particular person’s virtual authority for practical
reasons. Moreover it is the satisfaction of the people which have the power to
remove an authority – a legal or natural person- from its regulatory position.

 

It comes from
social contract theory but we can easily say that it comes from the fear of
chaos and the belief as that the governor/ruler that takes its power from the
people in its wider sense is more eager to response the needs of that people on
their behalf if and that is accountable to them. Legitimacy can be supposed
that already covers efficiency and accountability. As in the example of a
government losing its legitimacy once economy starts falling down although it
is selected with the majority of the votes of the public. As long as a country
has excess or continues to growing even a dictator does not lose its power
though he or she is corrupted in all the ways which is in the example of rich
Middle East countries. Because of this, accountability is -although it is used
as a finance term- economy. In shortly, legitimacy is economy.

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