Applying Welfare Economics : An Ex Ante Cost-Benefit Analysis of a Government of Sri Lanka-World Bank Funded Project to Improve the Quality and Relevance of Undergraduate Education in Sri Lanka

This paper contains an ex ante cost-benefit analysis of a new World Bank project aimed at improving the quality and relevance of undergraduate education in Sri Lanka (the IRQUE project). The paper outlines a range of potential economic and social benefits that can accrue through this IRQUE project, and applies the techniques of ex ante cost benefit analysis to quantify the net benefits. The analysis concludes that, over a wide range of alternative cost-benefit scenarios, the project has the potential to yield considerable economic and social benefits. The paper also examines the fiscal impact and sustainability of the project and shows that, under relatively modest assumptions about public expenditure on university education, the project has a high degree of fiscal sustainability. The actual economic and social impact, in contrast to the potential benefits, depends on the operation and implementation experience of the project. Sound economic research and analysis is needed to measure these actual benefits. The ex ante cost benefit analysis contained in this paper provides a baseline against which the performance of the project can be measured over time