Curry and Weiss - Introduction

Curry and Weiss - Introduction - xiv Preface to the Second...

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xiv Preface to the Second Edition The authors take this opportunity to acknowledge the excellent work of Jean Hill who once again helped us in producing the manuscript despite her other responsibilities. Introduction Project analysis involves estimating and comparing the beneficial effects of an investment with its costs. Such a comparison is done within a broader economic framework that provides the basis on which full costs and benefits are identified and valued. Project analysis originated more than 60 years ago, the main ideas developing simultaneously in different places. The last 30 years has witnessed an extensive application of project analysis methods, particularly in developing countries. This introductory chapter provides a brief outline of the basic ideas of project analysis and situates them in the broader process of project planning. Basic ideas The basic ideas of project analysis have a long history, but they became clear only with the first applications. These occurred simultaneously in different economic contexts. In the United States in the 1930s a problem was formulated in relation to water resource investments. The costs of investing in and running such projects were relatively straight- forward to estimate; what was not so straightforward was an estimate of the benefits water resource investments would generate. The beneficial effects distributed between many different types of user first had to be identified, and then valued. Moreover, there was no market in water provision which could yield an appropriate price to value water. At this time, guidelines were established for estimating the benefits and costs of water resource projects. In the context of a capit- alist economy in recession, this use of project analysis can be described as extending quasi-market criteria to an area of infrastructure services where the full characteristics of a competitive market could not be established.
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2 Project Analysis irl Uevelopit~g Courrtries This use of project analysis can also be viewed from a closely related but different perspective. It is no accident that this application was in the provision of services within the public sector. In a capitalist economy there is competition for resources between the public and private sectors; investments in the public sector often need to be resourced from incomes generated in the private sector. To justify public sector investments, it is useful to show that they also have pro- ductive effects. Project analysis can be used, therefore, not simply to analyse the effects of a project, but to justify it in relation to the alter- natives available. In the 1930s also the first use of project analysis was made in the Soviet Union. The introduction of central planning at the end of the 1920s provided the investment framework; the overall rate of invest- ment and its distribution between sectors was determined through the central planning mechanism. The emphasis was placed on expanding material production rather than social service sectors. However, within
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This note was uploaded on 03/15/2010 for the course AGR 812 taught by Professor Bahani during the Spring '09 term at Canisius College.

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Curry and Weiss - Introduction - xiv Preface to the Second...

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