The paper proposes a way to adapt the standard cost-benefit analysis (CBA) technique to make it more suitable for analysing the feasibility of projects in new sub-sectors, when project success hinges on simultaneous investments in complementary activities to be undertaken by different private investors. New elements in the method include an estimation of expected profitability for a prospective new sub-sector as a whole, and an assessment of the sub-sector’s technological capacity environment. The method could be used as a tool for project planners to gain insight into the likely feasibility of stimulating initiatives aimed at promoting viable private sector investment in new economic areas. It should also help them to direct their resources to those key areas within new sub-sectors where central intervention and central co-ordination is most needed to overcome critical constraints to innovation to private investors. The method is illustrated with an example of a small-scale sisal processing project in Tanzania.
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