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It has long been emphasized that some programs seem to work in some countries and not in other countries. However, the defeat of structural adjustment programs (SAPs) in the developing countries arose the bilateral and multilateral institutions debates around the concept of governance since 1990. This study contributes to the research in development economics field and aims to verify the effect of governance on poverty alleviation using a group of 81 developing countries. For this purpose, we build a “Composite Governance Index” (CGI) for each country from the existing Worldwide Governance Indicators by using the Principal Components Analysis (PCA) method and then we review the empirical relationship between poverty and the effective use of governance which is reflected by the CGI that we built. In this study, we evaluate also the effect of several variables on poverty reduction by using an econometric panel data simulation for a sample of 81 developing countries over 2005 and 2010. The results obtained in this study are confirmed by the recent theoretical and empirical literature through different studies.