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How do we identify if an institution or development policy works?
Institutions and policies have goals. Successful policies and institutions meet stated objectives in a specified time period.
Evaluating the impact of an institution or policy development needs knowing of:
a. The measurement and meaning of development. What type of indicators is use, GDP or Real GDP per person ($ppp), UN MDGs and HDI?
b. That development is a multidimensional complicated procedure.
• Institutions as like government do not work into isolation and cannot bring regarding development alone.
• This is highly unlikely that just one policy is an essential and adequate condition for growth, let alone development.
c. That each country is so dissimilar in terms of factor endowment, infrastructure, culture, social capital and colonial experience and many more that similar given policy will have a different impact into various countries. One size does not suit all.
(present value) Suppose an entrepreneur considers to invest in a project. It needs a cash investment $I at year t = 0. If she/he invests, the project will generate an annual cash
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