Cost–Benefit Analysis and the Rates of Return of Infrastructure Projects: Evidence from International Organizations |
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Authors: | Chiara Del Bo Massimo Florio |
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Institution: | 1.Department of Economics, Business and Statistics,Università degli Studi di Milano,Milan,Italy |
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Abstract: | In this paper we analyse data on the rates of return of investment projects sponsored by three international institutions:
the European Union (EU), the European Bank for Reconstruction and Development (EBRD), the World Bank (WB). The focus of the
paper is on the variability of ex-ante economic rate of returns (ERR), of financial rates of return (FRR, available for EU
and EBRD) and ex-post or re-estimated economic rates of return (RERR, available for WB only), along with the co-financing
rate (EU). We propose a framework of analysis of FRR and ERR variations across projects, sectors, financing institutions and
time, of the wedge between ERR and FRR, and of the gap between ERR and RERR. Our main conclusions are that the informational
content of projects’ rates of return is valuable and is needed for cost–benefit analyses, and that sectors, countries, time
and funding institutions explain much of the variability of these rates. We advocate the collection of standardized and comparable
data since our framework could be used for comparing rates of return variability of development projects across countries,
time of approval or completion, or any other relevant sampling criterion. |
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Keywords: | |
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