Institutional development: incentives to performance

Abstract

Economic progress requires institutions with the ability to make effective use of the human and financial resources available. In developing countries, however, government agencies, public enterprises, and other public and private organizations often lack that ability. The author illustrates the importance of institutional performance in economic development and explores ways to increase the effectiveness of such institutions. Firmly grounded on contemporary theories, the book indicates that many of the commonly accepted principles of management and organization need to be modified, and new approaches developed. It describes various measures that managers and governments can adopt to improve performance in individual enterprises, sectors of the economy, and the country as a whole. He discusses in depth the managerial approach used in the training and visit system of agricultural extension. Ways of balancing economic, technical, and institutional factors in program design and reducing the complexity of projects are also considered. The author examines the reasons usually cited for their successes and failures. He then introduces two alternative factors that seem to offer better explanations of the patterns of institutional development. The first is specificity; the second factor is competition, which in addition to the traditional economic concept includes various pressures that can serve as surrogates for competition in the absence of a competitive market.

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