QS Study

Similarities and differences between the UNIDO approach and L-M approach

UNIDO Approach: This approach is mainly based on the publication of UNIDO (United Nation Industrial Development Organization) named Guide to Practical Project Appraisal in 1978.

L-M Approach: L.M.D Little and J.A.Mirlees have developed this approach for the analysis of Social Cost-Benefit in Manuol of Industrial Project Analysis in Developing Countries and Project Appraisal and Planning for Developing Countries.

Little-Mirriees and UNIDO similarities –

  1. The calculation of shadow price particularly for foreign exchange saving and unskilled labor is same in both methods.
  2. Both methods consider factors of equity.
  3. Both methods use DCF (Discounted Cash Flow) methods.

Little-Mirrlees and UNIDO dissimilarities

  1. UNIDO method also emphasis calculation of financial profitability of market prices along with SCBA but this is not so done in case of Little-Mirrlces method.
  2. Little-Mirrlees method measures cost and benefit in terms of international currency that is in border price or world price in $. UNIDO approach measure costs and benefits in terms of domestic currency.
  3. The numeracies in case of Little-Mirrlees approach measures cost and benefit in terms of uncommitted social income. On the other hand in UNIDO method it measures the same in terms of domestic consumption.
  4. UNIDO approach focuses efficiency, saving and redistribution of income stage by stage while Little-Mirrlees approach considers the same in totality.