Economic Analysis of Education Interventions

The economic analysis of a project helps select and design projects that contribute to the welfare of a country. Various tools of economic analysis help determine the economic and fiscal impact of the project, including the impact on society and the major stakeholders involved, as well as the project’s risks and sustainability. A good economic analysis answers the following questions:

What is the objective of the project?
This helps identify tools for the analysis. A clearly defined objective also helps in identifying the possible alternatives to the project.

What will be the impact of the project?
This question concerns a counterfactual as the difference between the situation with or without the project is crucial for assessing the incremental costs and benefits of the project.

Are there any alternatives to the project? If so how would costs and benefits of the alternatives to achieve the same goal compare to the project in question?

Is there economic justification of each separable component of the project?

Who gains and who loses if the project is implemented?
The analysis has to make sure that the most benefit accrues to the poor.

What is the fiscal impact of the project?

Is the project financially sustainable and what are the risks involved?

Are there any other externalities? What is the environmental impact of the project?