Estimating national economic parameters for Namibia using the shadow pricing approach

Abstract

This paper estimates national economic parameters to be used for project appraisal in Namibia. The shadow prices of capital, labour, and foreign exchange are derived. The results suggest that the economic opportunity cost of capital is 7.2%. The economic costs of Namibian labour as a share of financial costs are 32% for urban semi-skilled and unskilled labour, and 54% for rural semi-skilled and unskilled labour. The economic costs of foreign labour as a share of financial costs are 59%. The shadow exchange rate factor is estimated to be 4% for the Namibian economy. © 2013 Copyright Development Bank of Southern Africa.