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Management article
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Reference no. 75211
Published by: Harvard Business Publishing
Published in: "Harvard Business Review", 1975

Abstract

Foreign countries use social return analysis because traditional market price evaluations do not apply to developing countries. Weak competition and government intervention send out incorrect price signals that will not predict adverse effects. Social cost/benefit analysis attempts to adjust to the separate prices of project outputs and inputs in an effort to set prices correctly. Social evaluation determines how efficiently projects use domestic resources, but does not evaluate the dynamic effects of a project or its political implications.

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Abstract

Foreign countries use social return analysis because traditional market price evaluations do not apply to developing countries. Weak competition and government intervention send out incorrect price signals that will not predict adverse effects. Social cost/benefit analysis attempts to adjust to the separate prices of project outputs and inputs in an effort to set prices correctly. Social evaluation determines how efficiently projects use domestic resources, but does not evaluate the dynamic effects of a project or its political implications.

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