Cost-Benefit Analysis in Developing Countries: What’s Different?

Euston Quah

No 1205, Economic Growth Centre Working Paper Series from Nanyang Technological University, School of Social Sciences, Economic Growth Centre

Abstract: There are both similarities and differences between conducting cost-benefit analysis in developed and developing countries . While the fundamental principles and theory underlying cost-benefit analysis maybe the same , the methodologies and the estimation techniques that are most appropriate in each context may substantially differ . The incompleteness and deficiencies of the labour , goods, and financial markets in developing economies may render revealed preference approaches to valuation unsuitable and inferior to stated preference models . But yet , even stated preference models are difficult to operationalize in developing countries where the literacy rates may not be too encouraging to allow for complete understanding of such valuation methods . It is largely because of the latter’s complexity that the paper here suggests the newer method of adapting to the damage schedules approach to yield meaningful and more straightforward valuation of non-market goods and services . Understanding the differences in applying cost-benefit analysis to developed and developing countries will go a long way to helping policy makers make informed decisions.

Keywords: Cost- benefit analysis; public project evaluation; policy economics; valuation methods; reviewed preference; related preference (search for similar items in EconPapers)
JEL-codes: D61 E6 H43 Q5 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2012-05
New Economics Papers: this item is included in nep-dev
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Citations: View citations in EconPapers (2)

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