Choosing public investments

Preparing and updating a public investment programme can seen as a matter of screening, projects being accepted if they meet satisfactory appraisal criteria at appropriate stages in their life cycle. New investment alternatives include both projects with detailed designs already worked out and those which are rough ideas needing further investigation. Projects at early stages of development would receive a less detailed screening while firm proposals for new projects would be subject to full-scale economic analysis before construction begins. Currently ongoing projects, whether funded by foreign aid or not, would not be exempt from continued economic scrutiny simply because costs have already been incurred, since their economic rationale may disappear as conditions change.

In practice, because many core and spending ministries lack the capability to appraise projects thoroughly, economic criteria are often neglected. Other considerations may take precedence over economic return: the power of interest groups, tied financing, the desire for prestige projects, unwillingness to write off sunk costs and stop bad projects, ministerial lobbying, corruption, inertia.