This chapter analyzes various elements of good governance so that students are familiar with the various aspects of good governance and its importance. It elaborates the six Worldwide Governance Indicators (WGI)-voice and accountability; political stability and absence of violence; government effectiveness; regulatory quality; rule of law; and control of corruption. Good governance has been the demand of the aid agencies because despite the flow of a huge amount of aid, many countries of the global south fail to achieve much success in economic and political development. Being influenced by New Public Management (NPM) theory, good governance requires the development of a competitive private sector for improvement in the functions of government. New Public Management also includes privatization, quality management, comprehensive performance standards, decentralization, openness, e-governance, competitive bidding, and deregulations. The World Bank in its Millennium Development Goals (MDGs) has put good governance as one of the major goals.