Project planning and income distribution, Softcover reprint of the original 1st ed. 1979
Studies in Development and Planning Series, Vol. 9

In the past few years several manuals dealing with project planning for the developing countries have been published. One may therefore ask why another study on this subject has been written. The answer is that the manuals, in my opinion, do not deal adequately with the income distribution aspects of projects. This study was written to demonstrate how traditional project plan­ ning criteria can be expanded to include income distribution considerations. Part I of the study (Chapters I through 6) discusses conventional project planning criteria. Chapter I serves as an introduction by reviewing some of the broader principles of the analysis. Chapters 2 and 3 examine in detail the valuation of benefits and costs, paying particular attention to the problems that arise in making such valuations in developing countries. While Chapter 4 is concerned with the rules to be followed for maximizing the net benefits of a single project, Chapter 5 reviews the techniques for maximizing the net benefits of a series of projects. Chapter 6 deals with a number of different topics, ranging from the practical problems posed by linkages and externalities to an examin­ ation of the usefulness of international lending agencies and problems related to divergencies from situations of internal and external balance. Part II is concerned with income distribution, and begins in Chapter 7 with a review of the concept of a social welfare function.

I — The Conventional Project Planning Criteria.- 1. Some Basic Issues.- 1.1. Background.- 1.2. Benefits and Costs.- 1.3. Shadow Prices and Opportunity Costs.- 1.4. Optimal Policies and Actual Policies.- 1.5. National Planning and Project Planning.- 2. The Valuation of Benefits.- 2.1. The Consumer Surplus Concept.- 2.2. The Compensated Demand Curves.- 2.3. Social Welfare and the Consumer Surplus.- 2.4. Intermediate Products.- 2.5. Domestic Prices and Border Prices.- 3. The Valuation of Costs.- 3.1. Inputs.- 3.2. Foreign Exchange.- 3.3. Labor.- 3.4. Capital.- 4. The Analytics of Project Planning.- 4.1. The Optimal Scale of a Project.- 4.2. The Optimal Timing of a Project.- 4.3. Further Examples of Consumer Surplus Analysis.- 4.4. Non-Optimal Situations.- 5. Project Ranking.- 5.1. Compound and Discount Formulas.- 5.2. The Internal Rate of Return and the Present Value Methods.- 5.3. Single Period Budget Constraints.- 5.4. The Modified Internal Rate of Return.- 5.5. Multiple Period Budget Constraints.- 5.6. Uncertainty.- 6. Miscellaneous Problems.- 6.1. Linkage Effects.- 6.2. Externalities.- 6.3. Foreign Labor and Capital.- 6.4. Macro-economic Imbalances.- II — Income Distribution Aspects.- 7. Social Welfare and Benefit-Cost Analysis.- 7.1. Compensation Tests.- 7.2. The Concept of a Social Welfare Function.- 7.3. Objections to the Concept.- 7.4. The Need for a Positive Approach.- 8. Intertemporal Income Distribution Aspects.- 8.1. The Concept of a Social Discount Rate.- 8.2. The Value of the Social Discount Rate.- 8.3. The Shadow Price of Investment Concept.- 8.4. Comparison of the UNIDO and OECD Criteria with the Traditional Criterion.- 8.5. Criticism of the UNIDO and OECD Criteria.- 9. Interpersonal Income Distribution Aspects.- 9.1. Project Planning and the Distribution of Income between Persons.- 9.2. The Marginal Utility of Income Schedule.- 9.3. The Derivation of Social Income Distribution Weights.- 9.4. Redistribution Through Project Design.- 9.5. Redistribution Through Project Selection.- 9.6. Review of the Different Transfer Mechanisms.- 9.7. Annex: The St. Petersburg Paradox.- 10. Social Benefit-Cost Analysis in Practice.- 10.1. Introduction.- 10.2. Malaysia — Land Settlement.- 10.3. Malaysia — Irrigation.- 10.4. West Africa — Mechanical Clearing versus Hand Clearing of Jungle Forests.- 10.5. Pakistan — Farm Tractors.- 10.6. Implications of the Analysis.- 10.7. Annex: Sensitivity Testing of the Social Rates of Return of the Discussed Examples.- Concluding Remarks.- Summary.- Annex A — Compound and Discount Tables.- Annex B — Social Weights.- References.