Open AccessMethods of Project Analysis: A Review. By Deepak Lai. Baltimore and Lon¬don: The Johns Hopkins University Press. 1974. (World Bank Staff Occa¬sional Papers, Number 16.) 53 pp.Price $3.00.
Author(s) -
A. R. Kemal
Publication year - 1974
Publication title -
pakistan development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.154
H-Index - 26
ISSN - 0030-9729
DOI - 10.30541/v13i4pp.485-486
Subject(s) - scarcity , order (exchange) , ranking (information retrieval) , rank (graph theory) , economics , externality , value (mathematics) , nonmarket forces , social welfare , goods and services , welfare , economy , microeconomics , factor market , market economy , political science , finance , law , mathematics , statistics , combinatorics , machine learning , computer science
Project analysis is one of the most important and useful formsof applied welfare economics. In a perfectly competitive economy, withno externalities, it boils down to calculation of net present value orinternal rate of return to rank the projects. However, when there aredistortions in the market, social rankings will differ from the marketrankings, because in both the goods and factors markets, prices are nolonger the true indicator of the scarcity values. Thus, in order to rankthe projects socially, one will have to take account of the distortionspresent in the economy. Different methods, notably L.M. and U.N.I.D.O.,have been suggested to account for these distortions. Besides L.M. andU.N.I.D.O., methods recommended by Bruno and Kruger are worthmentioning. The book under review compares the different methods andconcludes that all the methods are basically the same in the sense thatif equivalent assumptions are made, they require the same informationand social ranking is the same.