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Secondary effects and project appraisal (Inglês)

A general classification of secondary effects has been developed to resolve definitional confusion surrounding the concept of secondary effects of development projects and to illustrate the situation that gives rise to inadequate attention to secondary effects in four common project appraisal methods. The confusion is associated with overlapping of the usual categories of costs and benefits, namely, primary versus secondary effects, direct versus indirect effects, tangible versus intangible effects, commensurable versus incommensurable effects, private versus social effects, and financial versus economic effects. Current definitions do not make it clear which elements are specific to each category of benefits or effects. Inadequate attention to secondary effects detract from the validity of the four most commonly used appraisal methods, namely, the minimum-cost method, cost-savings method, induced output method, and national income method. To overcome the short-comings affecting these methods, more use should be made of shadow prices, multiplier analysis, objective functions, sectoral or national income models, measures of consumer surplus, and sensitivity analysis. 10 references.

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