The Structure of Incentives

Keith Griffin and Terry McKinley
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Keith Griffin: University of California
Terry McKinley: American University

Chapter 2 in Implementing a Human Development Strategy, 1994, pp 11-31 from Palgrave Macmillan

Abstract: Abstract The structure of incentives in an economy has a pervasive influence on the pace and pattern of development. Public expenditure is, of course, important, and in some cases decisive, but in the great majority of developing countries the public sector employs directly only a small fraction of the labour force and produces substantially less than half of all goods and services in the economy. Most people obtain their livelihood in the private sector, and most goods and services originate there. What is produced, how much is produced and what methods of production are used are questions decided largely in the private sector and primarily in response to the set of incentives which the private sector faces. The set of incentives, in turn, is strongly influenced by public policy, both directly and indirectly, and hence in formulating a human development strategy a good place to begin is by examining the structure of incentives.

Keywords: Labour Market; Human Capital; Comparative Advantage; Physical Capital; Informal Sector (search for similar items in EconPapers)
Date: 1994
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-23543-8_2

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DOI: 10.1007/978-1-349-23543-8_2

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