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UNIDO: United Nations Industrial Development Organization Approach

UNIDO approach is one of the methods of calculating Social cost benefit analysis
(SCBA)
In fact very popular.

Normally we calculate financial benefits from a project while evaluating it,


but this method calculates economic benefits from the project.

Although earlier it was commonly used by government organizations but now it is


being used by private players also.

In this analysis the monetary priced are replaced by shadow prices.


Shadow prices are prices at perfect market conditions, also called as economic
prices.
Thus the market prices are replaced by the Economic prices and then the benefit or
returns are calculated.

In addition to this, adjustment is made for


Externalities
(+ve like road facility, hospital facility etc.
or -ve externalities like pollution)

Savings
(a rupee saved is valued more than a rupee consumed)

Redistribution of income
(a rupee distributed to poor is valued more than a rupee distributed to rich)

Taxes are not considered and merits.


Then finally the economic rate of return is calculated by the same method as IRR is
calculated.