It is therefore argued that good governance is a precondition for poverty reduction by ensuring sustained growth. Additionally, “pro-poor” good governance reforms are supposed to enhance the scale and efficiency of service delivery to people living in poverty. The stabilization of property rights, the rule of law and the significant reduction of corruption—that is, the achievement of good governance goals—require fiscal capabilities not available in most developing countries. As structural and fiscal constraints prevent significant improvements in governance capabilities, market failures are likely to remain significant, and are unlikely to be significantly reduced by governance reforms.