The economic analysis of sector investment programs

Abstract

This paper discusses the economic analysis of sector investment or expenditure programs, collectively referred to as SIPS. There are many different views as to what actually constitutes a SIP. For the purposes of this paper, the essential feature of a SIP that is focused on is that the Government, World Bank, and other donors jointly finance an agreed-upon forward sectoral expenditure program. A SIP may also have many different objectives. Again, for the purposes of this paper, a critical objective of a SIP is to improve the development impact of public expenditures in the sector. Suthiwart-Narueput focuses on how to use economic analysis to help sector investment programs improve the development impact of public spending. He uses Kenya as a case study. The paper is organized as follows. Section 2 proposes a methodology for the economic analysis of SIPS which emphasizes evaluating the sectoral expenditure program based on principles of public expenditure analysis. Particular emphasis is placed on identifying the rationale for public intervention and improving cost-recovery. Section 3 discusses alternative methodologies, e.g., cost-benefit analysis. Section 4 applies the proposed methodology to the Kenya Agricultural SIP. Section 5 concludes.Business Environment,Environmental Economics&Policies,Health Economics&Finance,Decentralization,Economic Theory&Research,Environmental Economics&Policies,Business in Development,Business Environment,Health Economics&Finance,Poverty Assessment