ABSTRACT
The investment decision is characterized by several salient features which mark it for special attention by economists, corporate directors and central planners. The 1969 Standard Methodology is the latest version of the Soviet response to this need for a uniformity of criteria and procedures in defining investment projects. It offers no solution to the vital question of optimizing the share of investment in GNP, only a solution to the question of effecting an optimal allocation of the amounts earmarked for investment. The comparative cost is used to determine the effectiveness of cost-reduction type projects. It is simply a measure of the cost of different ways of producing a given output. As the same Soviet writer has put it, it is used to determine ‘how to produce.’ A decision on the project just considered can also be made by determining its IRR, that is, the rate earned on the unrecovered balance of the investment over the course of its life.
