Governance has three core functions: (1) To identify what is the "optimal" institutional structure; (2) To man­age institutions, which implies monitoring, sustaining, fine-tuning, and facilitating of all these activities (3) to change the existing institutions or bring about newer ones to close the gap between the existing and the "optimal" structures. Institutions are the formal and informal rules, including norms and practices. Organizations are not institutions but actors within institutions. Institutions often include mar­kets too. However nonmarket or meta-market institutions are also required for AKST investments because of multiple forms of market failures. Some of these market failures are observable in any R&D investment requiring institutional interventions such as patent rules. In general, market fail­ures arise from the public good nature of some forms of AKST, implying that it is very difficult or costly to exclude people from using a technology (Norton, 1991; Stiglitz, 2000).
         The framework for assessing governance of AKST sys­tems comprises of a set of characteristics that the outcomes of institutional interventions mediated through good gover­nance is expected to have. These are briefly discussed below to provide clarity of the analytical framework:
•   Good governance should address identifiable market failure problems, in order to allocate public resources in areas where uncoordinated action of private indi­viduals would be inadequate or inappropriate. None­theless, correcting market failure is only justified where the losses from the failure are higher than the cost of correcting it, including both direct and indirect costs of institutional intervention. Where there are multiple forms of market failure occurring at different points of the technology development process, each failure must be addressed accordingly.
•   Where agricultural growth is not the constraining factor to poverty reduction or to attaining economic growth, prioritization of appropriate intervention among sectors or between agricultural research and other interven­tions within agriculture is another important outcome. There may be cases where factors other than R&D be­come binding constraints to agricultural competitive­ness (Garelli, 1996). The appropriate level of resource allocation for agricultural R&D is also related to secto­ral prioritization (Tabor et al., 1998). AKST decisions are made by many actors; each of them takes into ac­count the expected action of others. For example, poor and small developing countries may want to depend on international technology transfer and this may be the best option for certain technologies in order to avoid unnecessary and costly duplication of efforts (Tabor et al., 1996). However, such dependence may not always be possible for tropical countries, whose commodities (crops, livestock, fisheries, and forests) are unlikely to be cultivated or raised in the industrialized world.
•   Good governance should ensure that institutions and organizations (as well as individuals who work within these organizations) serve the intended purpose effec­tively and efficiently under all conditions. The achieve­ment of efficiency in research investments is complex due to problems of economies (some times disecono-

mies)  of scale and scope, which determines the re­quired  degree  of specialization  or  diversification  of specific research organizations.  These considerations may also lead to contracting out or contracting in of specific activities, and also the extent of decentraliza­tion in decision-making. The role of governance is to enable the internalization of such efficiency concerns in decision-making. This requires design of institutions with: (1) The ability to shape specific objectives to suit socioeconomic realities. This implies that there should be mechanisms to discontinue research programs that are no longer acceptable to stakeholders. (Sometimes inefficient institutions may continue to persist due to path dependence and lock-ins. Meanwhile, efficient in­stitutions have a built-in ability to adapt to changing realities through feedback.) (2) The ability to meet the objectives with reasonable assessment of risk and un­certainty. (3) The ability to assess current and potential future demands of AKST investments. (4) The ability to carry out assignments and tasks in the most efficient manner, which entails producing given output at the cheapest possible cost or achieving maximum output for a given cost. Higher institutional efficiency can be achieved by aligning the incentives of actors to be in tune with institutional objectives, which in turn should change with evolving economic environment.
•   Good governance should aim at following procedures that ensure transparency and accountability for mini­mizing mistakes and errors of judgment to ensure that broader societal priorities are reflected in decision mak­ing without being captured by distributional struggles of narrow interest groups. For example, although local scientists may be better informed about national agri­cultural priorities, their decisions on funding priority may be biased towards maximizing the flow of funds to their own area of work (Tabor et al., 1998).

There can also be process-based criteria for good gover­nance, where the concern is not only on outcomes but also on how these outcomes are produced. For example, par­ticipation of specific stakeholders can be viewed as impor­tant for efficiency or effectiveness of outcomes but also as an important element on its own, with the assumption that pursuing participation is good irrespective of its impact on efficiency or effectiveness. Thus there have also been argu­ments that good governance should follow certain proce­dural correctness which should permit
•   Negotiation of diverse interests and the identification of common interests;
•   Negotiation of clear rules and norms among multiple stakeholders, their effective implementation and the set­ting-up of control mechanisms for compliance to these rules and norms;
•   Equitable access to resources (economic/financial, hu­man, natural, social, physical) and AKST; •     Participation in strategic decision-making of all relevant stakeholders;
•   Adequate equilibrium among power forces in decision-making and implementation of strategic decisions, and
•   Capacity to influence policy making.