Project versus Sector
Rates of Return
Harry Patrinos
Price Gittinger
February 2000
Rates of Return to Investment in
Education (percent)
Social Private
Region Prim. Sec. Higher Prim. Sec. Higher
Asia 18 12 11 31 17 19
Europe/Mid. East/N.Africa 16 12 11 17 17 21
Latin America/Caribbean 18 13 12 26 17 20
OECD 11 10 8 17 12 13
Sub-Saharan Africa 24 18 11 40 27 28
World 17 13 11 26 18 20
Project versus Sector Rates
of Return
In education, we typically measure rates
of return for education sector
that is, society’s benefit or average benefit
across all individuals
even though we typically have only labor
market earnings
Project versus Sector Rates
of Return
In other sectors, rates of return are for
project
i.e., specific intervention that is being
considered
benefits stream used is project specific
Project versus Sector Rates
of Return
Move towards estimating project specific
rates of return in education
still, not all benefits captured
but we need to measure benefits of most
important or largest component in project
project specific returns relevant for sector
investment projects
Social Rate of Return
Sector versus Project
Asia Secondary 12%
Indonesia Eastern Islands Junior Secondary
Non-agriculture 28%
Agriculture >0%
Evolution of the Application of
Cost-Benefit Analysis in Projects
“Rate of Return”
Not Applicable
Pre-1990s 2000
Evolution of the Application of
Cost-Benefit Analysis in Projects
“Rate of Return” “Sector” Rates
Not Applicable of Return
Pre-1990s ECON 2000
Reports
1992
Evolution of the Application of
Cost-Benefit Analysis in Projects
“Sector”
“Rate of Return” “Sector” Rates RoR and
Not Applicable of Return “Project-
Specific” C/B
Pre-1990s ECON Priorities and 2000
Reports Strategies,
1992 1995
First Economics
of Education
Course
Evolution of the Application of
Cost-Benefit Analysis in Projects
“Sector”
“Rate of Return” “Sector” Rates Project
RoR and
Not Applicable of Return Specific
“Project-
RoR
Specific” C/B
Pre-1990s ECON Priorities and 2000
Reports Strategies,
1992 1995
First Economics
of Education
Course