Shadow prices for economic appraisal of projects : an application to Thailand
AHMED, S. | EM1
The study reviews past estimates of shadow prices in Thailand and their use in World Bank appraisals. Applying the Squire-van der Tak methodology, it proceeds to estimate conversion factors for project analysis in Thailand. Efficiency conversion factors were estimated for broad categories of commodities, as well as for selected sub-categories, including construction, electricity, transportation and rice. Estimates were also made of the shadow wage rate and of the opportunity cost of capital and land, drawing on an assessment of factor markets in Thailand. An annex also provides estimates of social conversion factors allowing for growth and income distribution considerations. Besides providing up-to-date estimates of shadow prices (conversion factors) for use in economic (and social) analysis of projects in Thailand, the study provides a case study of application of the Squire-van der Tak methodology. It also confirms the findings of other studies that Thailand is a country with relatively undistorted prices, as indicated by the fact that there is relatively little dispersion in conversion factors and that most of them are close to unity.
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