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Social Rates of Return in Pakistan's Large-scale Manufacturing Sector

Author

Listed:
  • SHAMIM A. SAHIBZADA

    (Pakistan Institute of Development Economics, Islamabad)

  • MIR ANNICE MAHMOOD

    (Pakistan Institute of Development Economics, Islamabad)

Abstract

The paper attempts to estimate social rates of return in Pakistan's large-scale manufacturing sector. As cut-off rates, they can help in the selection of public and i>rivate sector projects and can also be used as' estimates of the Accounting Rate of Interest (ARI) which can then be used as test discount rates in the economic analysis of projects. In the context of Pakistan, our study makes an important contribution in that whereas the discount rates hitherto used in the country for an economic appraisal of projects have all been determined arbitrarily,1 we, in this study provide first ever rates that have been arrived at empirically. For example, the discount rate used in both private and public sector investment projects for a considerable period of time was arbitrarily fixed at 12 percent. The reason given for choosing this estimate was that it was based on the rate used by lending institutions on the loans they advanced to various development-oriented agencies.

Suggested Citation

  • Shamim A. Sahibzada & Mir Annice Mahmood, 1986. "Social Rates of Return in Pakistan's Large-scale Manufacturing Sector," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 25(4), pages 891-906.
    • Handle: RePEc:pid:journl:v:25:y:1986:i:4:p:891-906
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