POVERTY-ORIENTED COST-BENEFIT APPROACH TO THE ANALYSIS OF DEVELOPMENT-PROJECTS

This essay presents a form of cost-benefit analysis where benefits are defined in terms of contributions to basic human capabilities. This capabilities approach to project analysis is contrasted with the US Agency for International Development's logical framework approach, the World Bank's economic cost-benefit approach, and distributionally sensitive economic cost-benefit analysis. I argue that international development agencies' concessional resource transfers could contribute more to the well-being of the world's poor if guided by this cost-benefit approach than they do under current arrangements. The notion of capabilities as fundamental requirements for well-being has been developed by Amartya Sen.