The Structure of Incentives

  • Keith Griffin
  • Terry McKinley

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

Steam Income Expense Full Century Dine 

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Notes

  1. 4.
    See Michael D. Levin, ‘Accountability and Legitimacy in Traditional Cooperation in Nigeria’, in D. W. Attwood and B. S. Baviskar (eds), Who Shares? Co-operatives and Rural Development (Delhi: Oxford University Press, 1988).Google Scholar
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    See Mahabub Hossain, Credit for the Rural Poor: The Grameen Bank in Bangladesh, Bangladesh Institute of Development Studies Research Monograph No. 4, Dhaka, 1984.Google Scholar
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Copyright information

© Keith Griffin and Terry McKinley 1994

Authors and Affiliations

  • Keith Griffin
    • 1
  • Terry McKinley
    • 2
  1. 1.The Department of EconomicsUniversity of CaliforniaRiversideUSA
  2. 2.International Development Program of the School of International ServiceAmerican UniversityUSA

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