Economic Analysis, a Practical Application of Opportunity Costs: the Angolan Case

Only available on StudyMode
  • Download(s) : 51
  • Published : April 27, 2013
Open Document
Text Preview
SAMUEL CANDUNDO

“Economic Analysis, a Practical Application of Opportunity Costs: The Angolan Case”

Economic Analysis, a Practical Application of Opportunity Costs: The Angolan Case

Table of Contents No index entries found. Introduction ................................................................................................................................... 2 Conceptual Discussion Involving the Opportunity Costs ............................................................. 3 Characterization of Angolan Economy ......................................................................................... 5 Projects Evolving High Opportunity Costs ................................................................................. 13 Construction of Four New Football Stadiums ......................................................................... 14 Construction of Five New Multi-use Arenas .......................................................................... 15 Opportunity Costs Derived from Bad Quality of the Restoration Projects ............................. 16 A New Perspective for Managing the Recovery Effort .............................................................. 17 Conclusion ................................................................................................................................... 19 Bibliographic References ............................................................................................................ 20

Page 1 of 22

Economic Analysis, a Practical Application of Opportunity Costs: The Angolan Case

Introduction
Since the end of the civil war, Angola has embarked in massive rebuilding projects and modernizing infrastructures. Some of these projects are essentials such as roads, dams, water supply, and basic sanitation. But, other projects are clearly an attack to the concept of opportunity costs, and weighting the cost and benefit from the perspective that resources are always scarce; never should be undertaken. The economists tend to forget these types of intangible expenses or ignored in the decision making processes. Ferrano and Taylor (2005), in a survey to participants in the Allied Social Science Association (ASSA) in Philadelphia, demonstrated that even PhD economists lack effective understanding of the concept of opportunity costs. In reading the book “Introduction to Economic Analysis” by McAfee and Johnson (2006), the topic of opportunity costs touched me personally, due to my observations on how in Angola authorities are using scarce resources. As a result, I think that the notion of opportunity costs has been neglected and ignored in most, if not all, the projects implemented in Angola since independence, whether by public sector or by private initiatives. I was compelled to discuss the implications surrounding opportunity costs, cost-benefit analysis, scarce resources, because these can be easily neglected, which happens to be the reality of wasting resources in Angola. Thus, I strongly believe that a discussion about opportunity costs, even in academia could be one way to warn people about the implications considering the opportunity costs in projects and other endeavor they get involved, be it public or personal. However, the negative impact of opportunity costs would be better evidence if I could present real life projects or case in which opportunity costs were neglected. Presently, I am unable to collect data to support my arguments. Such data kept secret, and any criticism on the way projects and funds are used, are seen and interpreted as hostility to the Government. So, I will be limited to explicitly and implicitly describe and estimate possible opportunity costs. That is, most of the examples from my arguments Page 2 of 22

Economic Analysis, a Practical Application of Opportunity Costs: The Angolan Case

are based on personal experience and observations. Additionally, my critical analyses are on the policies and...
tracking img