Economic Analysis of Education Projects Appropriate Private-Public Roles: Implications for Project Analysis

1
Economic Analysis of Education ProjectsAppropria
te Private-Public Roles Implications for Project
Analysis

• Shantayanan Devarajan
• February, 2000

2
Three questions good economic analysis should
answer

• What is the rationale for government
  intervention?
• Market failure (public goods, externalities)
• Redistribution
• What is the appropriate instrument?
• What is the fiscal cost?

3
Market for EDUCATION
MC
Price
social MB
private MB
Quantity
0
Q
Q
4
Determinants of infant mortality in Malaysia
5
(No Transcript)
6
Market for EDUCATION
private MC
Price
social MB
private MB
Quantity
0
Q
Q
7
Education in Papua New Guinea
MC
MC
SMB
SMB
PMB
PMB
Secondary
Primary
8
Market for EDUCATION
private MC
Price
social MB
private MB
Quantity
0
Q
Q
9
Fiscal ImpactCNCA Morocco
1989
67
20 of basic education
1990
76
1991
90
160 of preventive health
1992
107
Average
85
0
60
120
Subsidy, millions of dollars
10
RedistributionLeyte-Luzon Geothermal Project
80 cost recovery
30
29.7
Net present value ( millions)
9.2
0
-11.3
-31.8
-30
-52.3
-60
1.0
1.1
1.2
1.3
1.4
Marginal cost of public funds