A.I.D. manual for project economic analysis

with an important tool for choosing among competing uses for its limited development resources. This manual on project economic analysis, prepared for and by A.I.D., utilizes the "economic efficiency" approach to economic analysis, i.e., although it includes analysis of a project"s national-level income impacts, it does not examine other macroeconomic effects such as income redistribution or savings increases. The manual is organized so that the introductory chapter establishes the relationship between economic analysis and the project cycle. Chapter II presents the principles to be followed in conducting the analysis. These include the basic approach to be followed, the process of defining the boundaries of the analysis, the identification of costs and benefits, the determination of their value, the measurement of project viability, and the performance of sensitivity and risk analyses. Chapter III takes the principles presented in the previous chapter and demonstrates their application using specific numerical examples. Chapter IV discusses issues specific to five sectors: agriculture, transportation, health care, finance, and training and education; case studies for an agricultural research and development project and for a line of credit and equity investment in a development finance company are presented. Also included are an extensive bibliography, a glossary, and an annex on cost-effectiveness analysis. (Author abstract, modified)