Social benefit-cost analysis and telecommunications investment in developing countries

Abstract

Telecommunications expansion can make an important contribution to the social and economic development of less-developed countries. But that in itself does not mean that telecommunications projects should receive top priority in a country's investment budget. This is because projects in other sectors can also make strong claims to being vital for development. This situation points to a basic problem for development planners: how to allocate scarce resources between competing projects which more than exhaust the available investment budget. The analytical technique that has been developed in answer to this policy problem is a significant extension of social benefit-cost analysis. A pertinent question at this point is: how has the application of the new technique affected budgets for telecommunications investment in developing countries? This paper addresses that question by considering how the World Bank has applied social benefit-cost analysis in the area of telecommunications.