Incentives and human resource management: the critical missing link in public sector reform in developing countries

Why have civil service reforms in developing countries had limited success? This paper examines civil service reforms (CSR) in developing countries, and explores the reasons for the lack of success of CSR. In addition, it reviews the empirical facts on the employment and incentive structure of the civil service and examines the literature on incentives to draw lessons for the CSR process. It argues that one of the reasons for the lack of success of CSR is that inadequate attention was paid to developments in the theory of incentives in organizations. The paper concludes that managing human resources must be at the center of any public sector reform effort, rather than technology or market forces, and highlights the important role of leadership, vision and a clear mandate for reform.