The Little-Mirrlees Manual of Industrial Project Analysis in-
Developing Countries is divided into two parts; the first of which is
addressed "to the senior administrator or politician, who should
understand the broad lines of what is implied by operating a system of
social cost-benefit analysis"; and the second "to those who will
actually make project evaluations, and teach others how to make them".
In fact, the two parts make an integral whole, since the first part of
the book raises several broad issues the answers to which are given in
the second part. For instance, on page 44 the "senior administrator or
politician" is told of the dilemma of the choice between
employment-generating and rein¬ vestment-generating projects; a project
which employs a lot of labour will get higher marks because it results
in a lot of consumption by the poor now. But the incomes generated by
such a project will be almost entirely spent. There will, therefore, be
little savings generated and so such a project will contribute little to
further investment, which, in turn, yields future consumption", while a
capital-intensive project with a high reinvestment rate makes a greater
contribution to the future, but a smaller one to present welfare. Unless
the "senior administrator or politician" is willing to read difficult
and often obscure discussions in Partll (Ch. 13) he will have no idea
how to go about resolving the dilemma. There is little fear, however,
that the nonprofessional reader will get through Part I, not to speak of
Part II. To be sure, the authors give a warning that "some of the
chapters of Part I may be a little academic for the senior man who has
become familiar with economics by practical exposure and does not want
to feel that he is going back to school", but they grossly underestimate
the gap between the layman's ability to cope with abstract concepts and
their "own ability to use plain English. I wonder what the intelligent
layman is to make of the following passage which occurs on page 41 and
which I chose almost at random:
Transport Infrastructure Project Evaluation Using Cost-benefit Analysis