Project Evaluation as an Aid to Planning: How Successful has the Innovation Been?
During the late 1960s and early 1970s development economics came to put a great deal of emphasis on comprehensive methods of social cost-benefit analysis for the appraisal of investment projects. Project planning was seen as a complement to, even a substitute for, economy-wide planning models that had become fashionable in the fifties and sixties. It was widely believed that these models did not provide adequate guidance for investment decisions. In contrast, it was felt, social cost-benefit analysis of projects held out the greatest promise for efficient investment decisions. The application of the method would not only ensure an efficient allocation of resources: it also emphasised growth by permitting an appropriately high valuation of savings, which were relatively scarce. Moreover, the method was able to take equity into account by assigning distributional weights to benefits accruing to different income and social groups. The purpose of this short paper is to argue that the promise that this innovation held out has been less than fulfilled, and to suggest reasons for this.
KeywordsShadow Price Project Evaluation True Objective Shadow Prex Comprehensive Method
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