Economic Development Planning
Definition of Economic Development Planning
Economic planning may be defined as government conscious formulation of economic policies for the equitable allocation of resources to all sectors of the economy in order to achieve rapid economic development. Development planning involves the drawing up of strategies by the government to achieve quick overall economic growth and development.
Types of Economic Planning
- Comprehensive Economic Planning
- Partial Economic Planning
- Authoritarian Economic Planning
- Democratic Economic Planning
- Financial Economic Planning
- Physical Economic Planning
1. Comprehensive Economic Planning: This type of planning covers all the main aspect of a country’s economy such that it integrates the planning efforts of all levels of government
2. Long term/Perspective Planning: This type of planning is set for 20-25 years. It is a blueprint of development to undertaken over a long period of time.
3. Authoritarian Economic Planning: This type of planning mostly takes place in a centrally-planned or controlled or socialist economic system where the formulation and execution of economic plans are exclusively done by the government
4. Rolling planning: In every year there will be new formulated plans inline with the requirements of the economy, if the set target is not meant for the stipulated year it can be rolled over to the next year
5. Financial Economic Planning: This is a form of planning that involves the monetization of all resources allocations to all sectors of the economy. That is the allocation of resources to all sectors of the economy is done in monetary terms.
6. Physical Economic Planning: In this type of planning the allocation of resources is done in terms of equipment materials and necessary manpower required for smooth executive of development plans.
7. Partial Economic Planning: Planning of this nature only takes care of a part or sector of a country’s economy like the Agriculture industry, public and private sectors. Each of the sectors of the economy draws up and executes its plan independent of the other sector of the economy
8. Democratic Economic Planning: This is a type of planning that the task of formulation and execution of economic plans are assigned to a body of experts
Reasons/Objectives of Economic Planning
1. Balance of Payment: To improve the balance of payment position of the country, which when achieved can reduce the reliance on other countries.
2. To attract foreign investment: Since developed countries give aid to other developing countries, It is mostly based on the proposals of the development plan which deals with specifics.
3. Improve the standard of living: It improves the standard of living by raising the level of income and productivity within the economy.
4. Price Stability: Stable prices could be maintained by the use of appropriate monetary and fiscal policy embodied in the plan.
5. To reduce income inequality: Policies may be included in the plan which will improve the masses thereby leading to a more even distribution.
6. To maintain full employment: It helps to maintain or reduce the level of unemployment within the economy, which is mostly achieved by increasing available job opportunities by increasing the number of industrial, commercial, and agricultural concepts (firms)
Sources of Finance for Economic Development
i. Revenue received from the use of government amenities
ii. Fund received from direct and indirect tax
iii. Governments borrowing internally or externally.
iv. Adoption of revenue raised from the country’s endowment e.g. Crude oil etc