FROM THEORY TO APPLICATION: USING THE ECONOMIC INTERNAL RATE OF RETURN (EIRR) FOR ASSESSING THE PROFITABILITY EFFICIENCY OF THE RURAL INFRASTRUCTURE INVESTMENTS IN HUONG KHE DISTRICT, HA TINH PROVINCE

Authors

  • Nguyễn Văn Toàn Đại học Huế
  • Thái Thanh Hà
  • Nguyễn Ngọc Châu

Abstract

This paper presents the findings of an analysis of rural infrastructure investment program in Huong Khe district, Ha Tinh province. Through the conversion factors from the Central Bank of Vietnam, the monetization process was conducted for both types of rural roads & bridges and irrigation systems. Then, several key assumptions were made to arrive at the economic profitability efficiency level, with the values being 96% for roads and bridges and 12.43% for irrigation canals respectively, using the theoretical concept of the Economic Internal Rate of Return (EIRR). On the basis of the findings, discussions were made and lessons to be learnt for both academicians and practitioners were drawn from this paper. The paper also implies that the following factors are crucial for the success of rural development program. They are related to (1) selection of the right rural infrastructure investment to maximize the economic benefits; (2) participatory community monitoring; and (3) the support from local authorities for Operation and Maintenance.

Keywords: Economic Internal Rate of Return; Rural infrastructure; Huong Khe district; Ha Tinh province.

References

. ADB, Proposed Loan Socialist Republic of Viet Nam: Development of the Northern Chu and Southern Ma Rivers Irrigation System Project, 2011.

. ADB, Guideline for economic analysis of water supply project, 1998.

. Federal State of Macronesia, Omnibus Infrastructure Development Project, final report, 2004.

. IFAD, Evaluation manual – methodology and process, Office of Evaluation, 2009.

. HRDP, Ha Tinh Rural Program Completion Report, 2007.

. JBIC, Financial Internal Rate of Return revisited, 2009.

. World Bank http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTDECPROSPECTS/0,,contentMDK:21574907~menuPK:7859231~pagePK:64165401~piPK:64165026~theSitePK:476883,00.html

. Ha Tinh Statistical Year Books 2008-2012.

Published

2013-09-26