(Donation)

Abstract: The research has confirmed that there is extensive intervention with market forces by governments in LDCs, which has turned the domestic terms of trade against agriculture and has significant efficiency and income distribution effects. Methodologies which include the use of nominal and effective protection coefficients, domestic resource cost, and net economic benefit coefficients, producer and consumer subsidy equivalents and producer and consumer surpluses - are evaluated in terms of their capacity: (a) to provide Bank staff with operationally useful instruments of analysis; (b) to offer appropriate advice to client country governments and their planning institutions concerned with pricing policies; and (c) to help bridge the methodological gap between project cost-benefit analysis on the one hand and sector and country economic work on the other hand. While the microeconomic methodologies have their limitations, they do provide useful tools of analysis, especially for countries which have sets of national parameters (accounting prices and conversion factors), which can also be used in project cost-benefit analysis.