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Regional Development and Management of Sunk Capital: Some Issues in Project Evaluation

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  • Gyles, Oliver

Abstract

Government intervention aimed at regional development can be justified where there are opportunities for profitable investement of public funds. Benefit: cost analysis can be an effective tool for economic evaluation of regional development project proposals, providcd the distinction between sunk costs and historical outlays is recognised. Because the cost of previous development is sunk, it is appropriate to value existing assets at their opportunity cost. In terms or ex ante project appraisal, historical outlays and current replacement costs are irrel...ant. The impact of "Rate of Return" capital management policy and renewals accounting on project viability is discussed in the perspective of regional development.

Suggested Citation

  • Gyles, Oliver, 1995. "Regional Development and Management of Sunk Capital: Some Issues in Project Evaluation," 1995 Conference (39th), February 14-16, 1995, Perth, Australia 170826, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare95:170826
    DOI: 10.22004/ag.econ.170826
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    Agricultural Finance; Public Economics;

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