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The paper deals wich some conceptual and analytical issues in the area of international development financing. The major lending modalities of the multilateral financial institutions (HFIs) include project and adjustment lending. While project lending could be viewed as the modality for augmenting investment, the role of adjustment lending would be to facilitate adjustment of policies and institutions in developing countries. The purpose of this paper is to highlight the major conceptual issues in assessing the impact of project and adjustment lending focusing on the areas of commonality and points of departure in the two modalities. No attempt is made to infer implications for the procedures and policies of the HFIs. At the outset, a brief review of the evolution of project and adjustment lending would be instructive. Imperfections in the world capital markets led to the initial impetus for lending by the HFIs in developing countries for sound investment purposes. Lending through project loans with sufficiently high rates of return to service the loan and contribute to economic growth was advocated for two reasons. First, project loans were considered a good conduit for the transfer of technology to developing countries without adequate technical capacity to plan and execute projects. Second, capital accumulation was viewed as crucial to increasing growth rates. In the 1970s, it was recognized chat some project investments would not yield their potential rates of return without policy reforms. Poor policy environments were not conducive to effective operations of projects. For example, the crucial link between public utility pricing and project profitability was recognized and addressed through policy dialogue on subsectoral issues. Suggestions for policy reforms were limited to addressing issues related to project viability.

The paper begins with a broad overview of shadow prices emphasizing their close relationship with the policy environment. This is followed by the description of an analytical framework which integrates shadow prices and policies. The analytical framework is then used to highlight some of the major project evaluation shadow pricing rules. The interrelationship between project investment and public policy reforms emerges from this discussion. The paper ends with a description of some major research issues that need to be considered in assessing public choice between project investment and policy reforms. This agenda for research will help in determining whether the approach described in the paper can be operationalized in terms of quantification and measurement. While the main thrust of the paper is on the analytical aspects, a brief review of actual practice provides the interface with the analytics in indicating the research agenda.

The main purpose of this paper is to develop an integrated framework of analysis to examine the points of departure of economic from financial analysis of projects. This framework is sufficiently general to encompass the characteristics of various sectors of an economy. Differences in project boundary, externalities and policy distortions together provide the raison-d'etre for economic analysis. Once this is recognized, the transition from financial to economic analysis is clear cut as indicated in the following important conclusions drawn from the paper. First, only in cases where there are no externalities, project boundaries are similar between financial and economic analysis, and competitive internal markets exist can FIRR be used as a proxy for FIRR. Second, when issues of project boundary and externalities become important, public intervention is likely. Consequently, the weight of project boundary and externalities in determining the EIRR becomes critical. Low FIRRs anc high EIRRs are likely in projects with significant externalities. However, a comparison of FIRR and 'EIRR' based or. financial profitability adjusted for price distortions and differences in project boundary may. in this case, provide some clues of relating financial price to willingness to pay. Third, in cases where issues of project boundary and externalities are known to be important but quantification and valuation of all benefits and costs are not possible, the project analyst will have little option but to estimate an FIRR. and indicate qualitatively that net benefits associated with differences in project boundary and externalities are likely to be positive. Fourth, the statement that whenever an FIRR can be calculated an EIRR can also be calculated is in general not correct. Even if an 'EIRR' associated with financial profitability adjusted for policy introduced distortions can be estimated, it may be meaningless as a proxy for economic viability if issues linked to project boundary and externalities are important. Fifth, the statement that the FIRR is a lower bound estimate for EIRR has no basis when issues of economic pricing, project boundary and externalities are important. Sixth, FIRR should not be used as a proxy for assessing economic viability even when full cost recovery including capital cost has been used to establish the pricing principle for the public utility undertaking the investment project under consideration.

The purpose of this paper is to cake che second approach and co describe a framework for estimating che foreign exchange and fiscal effects of an investment project whose ex-ante viability is being assessed using the efficiency criterion. The aethodoiogy and empirical content of efficiency analysis will be che starting point for determining additional information and methodology to determine che seated impacts. The paper begins by describing che meaning of economic viability and alternative ways of expressing it. This discussion is followed by che relationship between economic, financial and fiscal variables. While che economic variables associated with a project are directly linked to che foreign exchange impact of a project, che financial variables provide che scarring point for determining che fiscal effeccs. The fiscal impact can be derived from che relationship between economic and financial variables. The methodological framework developed is illustrated through a simple numerical illustration.

The paper begins by providing a brief account of the integrated framework of analysis that is developed. Against this background, the details of the approach are taken up in succeeding sections. First, it describes che disaggregation of production and income generation by landholding category in the with and without project situations. Second, given the generation of income by landholding category, the relationship between income, expenditure and calorie intake is established. Third, the core of the paper deals with expenditure distribution and the estimation of relative and absolute poverty. A numerical example is used throughout the paper to demonstrate the application of the approach developed. The example is for illustrative purposes only.

The paper deals wich some conceptual and analytical issues in the area of international development financing. The major lending modalities of the multilateral financial institutions (HFIs) include project and adjustment lending. While project lending could be viewed as the modality for augmenting investment, the role of adjustment lending would be to facilitate adjustment of policies and institutions in developing countries. The purpose of this paper is to highlight the major conceptual issues in assessing the impact of project and adjustment lending focusing on the areas of commonality and points of departure in the two modalities. No attempt is made to infer implications for the procedures and policies of the HFIs. At the outset, a brief review of the evolution of project and adjustment lending would be instructive. Imperfections in the world capital markets led to the initial impetus for lending by the HFIs in developing countries for sound investment purposes. Lending through project loans with sufficiently high rates of return to service the loan and contribute to economic growth was advocated for two reasons. First, project loans were considered a good conduit for the transfer of technology to developing countries without adequate technical capacity to plan and execute projects. Second, capital accumulation was viewed as crucial to increasing growth rates. In the 1970s, it was recognized chat some project investments would not yield their potential rates of return without policy reforms. Poor policy environments were not conducive to effective operations of projects. For example, the crucial link between public utility pricing and project profitability was recognized and addressed through policy dialogue on subsectoral issues. Suggestions for policy reforms were limited to addressing issues related to project viability.

The paper begins with a broad overview of shadow prices emphasizing their close relationship with the policy environment. This is followed by the description of an analytical framework which integrates shadow prices and policies. The analytical framework is then used to highlight some of the major project evaluation shadow pricing rules. The interrelationship between project investment and public policy reforms emerges from this discussion. The paper ends with a description of some major research issues that need to be considered in assessing public choice between project investment and policy reforms. This agenda for research will help in determining whether the approach described in the paper can be operationalized in terms of quantification and measurement. While the main thrust of the paper is on the analytical aspects, a brief review of actual practice provides the interface with the analytics in indicating the research agenda.

The main purpose of this paper is to develop an integrated framework of analysis to examine the points of departure of economic from financial analysis of projects. This framework is sufficiently general to encompass the characteristics of various sectors of an economy. Differences in project boundary, externalities and policy distortions together provide the raison-d'etre for economic analysis. Once this is recognized, the transition from financial to economic analysis is clear cut as indicated in the following important conclusions drawn from the paper. First, only in cases where there are no externalities, project boundaries are similar between financial and economic analysis, and competitive internal markets exist can FIRR be used as a proxy for FIRR. Second, when issues of project boundary and externalities become important, public intervention is likely. Consequently, the weight of project boundary and externalities in determining the EIRR becomes critical. Low FIRRs anc high EIRRs are likely in projects with significant externalities. However, a comparison of FIRR and 'EIRR' based or. financial profitability adjusted for price distortions and differences in project boundary may. in this case, provide some clues of relating financial price to willingness to pay. Third, in cases where issues of project boundary and externalities are known to be important but quantification and valuation of all benefits and costs are not possible, the project analyst will have little option but to estimate an FIRR. and indicate qualitatively that net benefits associated with differences in project boundary and externalities are likely to be positive. Fourth, the statement that whenever an FIRR can be calculated an EIRR can also be calculated is in general not correct. Even if an 'EIRR' associated with financial profitability adjusted for policy introduced distortions can be estimated, it may be meaningless as a proxy for economic viability if issues linked to project boundary and externalities are important. Fifth, the statement that the FIRR is a lower bound estimate for EIRR has no basis when issues of economic pricing, project boundary and externalities are important. Sixth, FIRR should not be used as a proxy for assessing economic viability even when full cost recovery including capital cost has been used to establish the pricing principle for the public utility undertaking the investment project under consideration.

The purpose of this paper is to cake che second approach and co describe a framework for estimating che foreign exchange and fiscal effects of an investment project whose ex-ante viability is being assessed using the efficiency criterion. The aethodoiogy and empirical content of efficiency analysis will be che starting point for determining additional information and methodology to determine che seated impacts. The paper begins by describing che meaning of economic viability and alternative ways of expressing it. This discussion is followed by che relationship between economic, financial and fiscal variables. While che economic variables associated with a project are directly linked to che foreign exchange impact of a project, che financial variables provide che scarring point for determining che fiscal effeccs. The fiscal impact can be derived from che relationship between economic and financial variables. The methodological framework developed is illustrated through a simple numerical illustration.

The paper begins by providing a brief account of the integrated framework of analysis that is developed. Against this background, the details of the approach are taken up in succeeding sections. First, it describes che disaggregation of production and income generation by landholding category in the with and without project situations. Second, given the generation of income by landholding category, the relationship between income, expenditure and calorie intake is established. Third, the core of the paper deals with expenditure distribution and the estimation of relative and absolute poverty. A numerical example is used throughout the paper to demonstrate the application of the approach developed. The example is for illustrative purposes only.

The purpose of the paper is to explore the determinants of the supply of manufactured exports from India. Export subsidies are included in the determinants. The author assumes a traditional trade model in the framework of analysis with no differentiation. (DÜI-Sen)