MATERIAL AND MORAL INCENTIVES AS ECONOMIC POLICY INSTRUMENTS

The collapse of command economies in the Second World, and the monopoly of structural adjustment as prescribed development policy for the Third World, have thrust incentives to the center of debates about economic policy. As one political economist declares, “Few economists today would dispute the desirability of using incentives to invite and welcome the contributions of people's resources to the economy rather than employing commands and public appeals.” The British development economist Reginald Green puts it more pointedly: “The importance of incentives is not a matter open to debate, nor is the importance of material incentives and participation. The divergence is one which incentives are most cost effective and how to package them in specific contexts.”