Cost-benefit Analysis and Rates of Return of Development Projects: An International Comparison
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Note: In this paper we analyse data on the rates of return of investment projects sponsored by three international institutions: the European Union, the European Bank for Reconstruction and Development, the World Bank. The focus of the paper is on the evaluation of the variability of ex-ante economic rates of return, of financial rates of return and ex-post or re-estimated economic rates of return. We propose a framework of analysis of rates of return variations across projects, sectors, financing institutions, of the wedge between economic and financial, and of the gap between ex-ante and ex-post returns. In principle the same framework could be used for comparing rates of return variability of development projects across countries, time of approval or exit, or other relevant sampling criterion. We discover a pattern of variations across sectors. And we find that cost-benefit analysis generates larger variability of rates of return than financial analysis.
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References listed on IDEAS
- Jonathan Isham & Daniel Kaufmann, 1999. "The Forgotten Rationale for Policy Reform: The Productivity of Investment Projects," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 149-184.
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- Nicholas Stern, 2002. "A Strategy for Development," World Bank Publications - Books, The World Bank Group, number 15213.
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More about this item
Keywords
Investment projects; International Institutions; Rates of return; Cost-benefit;All these keywords.
JEL classification:
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
- O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis
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