This paper presents the findings of an analysis of rural infrastructure investment program in Huong Khe district, Ha Tinh province. Through the conversion factors from the Central Bank of Vietnam, the monetization process was conducted for both types of rural roads & bridges and irrigation systems. | JOURNAL OF SCIENCE, Hue University, Vol. 70, No 1 (2012) pp. 255-263 FROM THEORY TO APPLICATION: USING THE ECONOMIC INTERNAL RATE OF RETURN (EIRR) FOR ASSESSING THE PROFITABILITY EFFICIENCY OF THE RURAL INFRASTRUCTURE INVESTMENTS IN HUONG KHE DISTRICT, HA TINH PROVINCE Nguyen Van Toan1, Thai Thanh Ha2, Nguyen Ngoc Chau3 1 2 Hue University National Academy of Public Administration 3 College of Economics, Hue University Abstract. This paper presents the findings of an analysis of rural infrastructure investment program in Huong Khe district, Ha Tinh province. Through the conversion factors from the Central Bank of Vietnam, the monetization process was conducted for both types of rural roads & bridges and irrigation systems. Then, several key assumptions were made to arrive at the economic profitability efficiency level, with the values being 96% for roads and bridges and for irrigation canals respectively, using the theoretical concept of the Economic Internal Rate of Return (EIRR). On the basis of the findings, discussions were made and lessons to be learnt for both academicians and practitioners were drawn from this paper. The paper also implies that the following factors are crucial for the success of rural development program. They are related to (1) selection of the right rural infrastructure investment to maximize the economic benefits; (2) participatory community monitoring; and (3) the support from local authorities for Operation and Maintenance. Keywords: Economic Internal Rate of Return; Rural infrastructure; Huong Khe district; Ha Tinh province. 1. Introduction and rationale for using EIRR in assessing rural infrastructure investment The Economic Internal Rate of Return is a rate quantity, an indicator of the efficiency, quality, or yield of the investments. This is in contrast with the net present value (NPV), which is an indicator of the value or magnitude of an investment [1]. The EIRR analysis was introduced to relieve some concerns over .
