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

Author

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  • Euston QUAH

    (Division of Economics, Nanyang Technological University, Singapore 637332, Singapore)

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.

Suggested Citation

  • Euston QUAH, 2012. "Cost-Benefit Analysis in Developing Countries: What’s Different?," Economic Growth Centre Working Paper Series 1205, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
  • Handle: RePEc:nan:wpaper:1205
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    File URL: http://www3.ntu.edu.sg/hss2/egc/wp/2012/2012-05.pdf
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    References listed on IDEAS

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    1. Jack L. Knetsch & J. A. Sinden, 1984. "Willingness to Pay and Compensation Demanded: Experimental Evidence of an Unexpected Disparity in Measures of Value," The Quarterly Journal of Economics, Oxford University Press, vol. 99(3), pages 507-521.
    2. Kahneman, Daniel & Ritov, Ilana & Schkade, David A, 1999. "Economic Preferences or Attitude Expressions?: An Analysis of Dollar Responses to Public Issues," Journal of Risk and Uncertainty, Springer, vol. 19(1-3), pages 203-235, December.
    3. Dinwiddy,Caroline L. & Teal,Francis J., 1996. "Principles of Cost-Benefit Analysis for Developing Countries," Cambridge Books, Cambridge University Press, number 9780521479165, November.
    4. Kahneman, Daniel & Knetsch, Jack L., 1992. "Valuing public goods: The purchase of moral satisfaction," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 57-70, January.
    5. H. Semih Yildirim & George Philippatos, 2007. "Efficiency of Banks: Recent Evidence from the Transition Economies of Europe, 1993-2000," The European Journal of Finance, Taylor & Francis Journals, pages 123-143.
    6. Beal, Diana J., 1995. "A Travel Cost Analysis of the Value of Carnarvon Gorge National Park for Recreational Use," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 63(02), August.
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    Cited by:

    1. Raluca-Maria Bala, 2014. "A Proposal for Assessing the Economic Welfare Of Romania," Romanian Statistical Review, Romanian Statistical Review, vol. 62(3), pages 11-30, September.

    More about this item

    Keywords

    Cost- benefit analysis; public project evaluation; policy economics; valuation methods; reviewed preference; related preference;

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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