Project versus Sector Rates of Return
Harry Patrinos Price Gittinger February 2000
Rates of Return to Investment in Education (percent)
Social Prim. Sec. Higher 18 12 11 16 12 11 18 13 12 11 10 8 24 18 11
17 13 11
Region Asia Europe/Mid. East/N.Africa Latin America/Caribbean OECD Sub-Saharan Africa World
Private Prim. Sec. Higher 31 17 19 17 17 21 26 17 20 17 12 13 40 27 28
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” Not Applicable
“Sector” Rates of Return
Pre-1990s
ECON Reports 1992
2000
Evolution of the Application of Cost-Benefit Analysis in Projects
“Rate of Return” Not Applicable
“Sector” Rates of Return
“Sector” RoR and “ProjectSpecific” C/B 2000
Pre-1990s
ECON Reports 1992
Priorities and Strategies, 1995 First Economics of Education Course
Evolution of the Application of Cost-Benefit Analysis in Projects
“Rate of Return” Not Applicable
“Sector” Rates of Return
“Sector” RoR and “ProjectSpecific” C/B
Project Specific RoR
Pre-1990s
ECON Reports 1992
Priorities and Strategies, 1995 First Economics of Education Course
2000