TOPIC 18: ECONOMIC PLANNING ~ ECONOMICS FORM 6
Planning can be done by government producers or consumers in the following ways.
Planning is the conscious or deliberate government efforts/ action to influence direct and control economic variables. Economic variables are those economic phenomenon which affects economic activities or cause economic changes example of these variables are investment, inflation, population changes etc.
Is the process of decision on how to use/ allocate available economic resources to produce goods and services, it is concerned with the decision of how to produce, when to produce and for whom to produce. So as to satisfy human want while maximizing profit if producer aimed at maximizing profit.
Is the process of making decision on how to use available resources (income) in consuming /purchasing goods and services in order to maximize utility /human wants?
PLANNING IN ECONOMIC SYSTEMS
Economic planning differs depending on economic system under which economic planning performed mostly differs on objectives/goals and who make that plans in the following ways.
Under capitalist economic system no central planning, planning are done by individual firm/ company/ person through price mechanism. Those means price mechanism influence allocation of economic resources and influence the process of making decision of what to produce to whom to produce where to produce etc. under capitalist economic central government play the role of providing conducive environment or indication to the private sector but not ready to made decisions. Instead concerning with protection of order and economy at large most of plan in capitalist is partial plans.
In socialist countries there is central planning that is government concerned with formulation and implementations of various economic planning on behalf of its citizens. Most of plans in socialist is comprehensive in nature they cover the entire nation because the aim of plains is to improve living standard of all people or equitable development.
Under mixed economic system there are both government plans and price mechanism. That means government plans allocation of resources in some area while individuals also make decision /plains for their firms. Under this system government plans for improvement of an economy and creating economic stability while private company/ firm plans for their own benefits especially for profits maximization.
CLASSIFICATION OF PLANNING
A/ Classification by Coverage
This is the type of planning in which all sector in an economy are taken into consideration and conducted by central government in order to meet the entire economy. This planning takes into amount sectoral priority and interdependence. Such plans cover both private and public sector. Example of this plan is annual national budget.
2. Partial Planning
The alternatively known as (secretarial planning). This is the types of planning that cover only one sector in an economy that means government plans to develop and influence only one sector in an economy. Example of such planning is basic industrialization plan/ program of 1995 – 2000 this is the plan in which government intends to industrial sector in an economy over 25 years.
B/ Classification of Planning According To Time Taken To Accomplish Intended Objectives
This is the type of planning that cover I take a period up to 2 years for the objectives or intended goals to be achieved for example annual budget which cover 1years of implementation.
2. Medium Term Planning
This is the type of plans that take a period of 2 up to 7 years for the objectives to be achieved. For example villagelization of 1972.
3. Long Term Planning
This is the type plans that take a duration of time or long term for objectives to s 20 years or beyond that period. Example of such plan is import substitution strategy of 1995- 2000.
C/ Other Classifications
This is the type of government planning in which plans / objectives are formulated by the central government but implementation done by local government or societies. That means central government form plans then direct it to local government and society for implementation to achieve predetermined goals.
This also is the government plans formulated by local government but implemented by central government. That means local government formulate objectives/ goals and send off to central government in which central government direct and influence resources in order to implement such plans.
Is the type of economic planning in which central government prepare a plan of indicating all sectors /firms what and how to allocate resources and provide conducive environment on what to do. Indicative planning most occurs under capitalist economy in which government indicate private sectors what to do / how to make decisions and government are not concerned with ready maker decision instead provide conducive environment for private sector and order ruling its citizen.
This is the type of economic planning which is prepared by government and also implement the planning. Thus plans are more comprehensive, systematic, and rigid but more efficient
This is the type of planning which is prepared by expert body called planning authority outside the government. It is based on the system of free market economy.
THE OBJECTIVES OF ECONOMIC PLANNING
When government formulates economic planning there are several objectives, the government would like the country to achieve, these objectives may include the following:-
BASIC IMPLICATION OF PLANNING/ THE PLANNING PROCESS
The planning supposed to be continuous process and the main stages / implications of economic planning are:-
CHARACTERISTICS OR PROPERTIES OF ECONOMIC PLANNING
Any economic plan should have the following features in common:
A development plan should set out strategies and policies this is the means by which objectives can be achieved which are normally translated into specific targets.
A development plan must cover the whole economy or sometime may identify sector in an economy (partial)
A good economic plan typically covers a specific period of time. Let say one year or 5 year for objectives to be accomplished that means short run or long run period.
(e) A planning machinery.
This is the number of ministries, institutions, firms or individuals even authority established for the purpose of formulating, execution and evaluation of the economic plan.
(f) Internally consistent.
The economic plans attempts to presents a centrally coordinated, internally consistent set of principle and policies chosen as optional means of implementing the strategy and objective.
Note; among all above characteristics of the successfully economic plans must have enough resources both human, financial and other resources.
DISADVANTAGES OF ECONOMIC PLANNING
ADVANTAGES OF ECONOMIC PLANNING
A development plans. Is a wide range of document of the government formulated in order to achieve long-term objectives in which primary objectives is to improve economic development.
Development plan mostly classified into three main levels
Macro level planning
This is government plan which take into consideration the whole economy i.e. all economic variables. In developing country these plan cover a time of about 4 to 5 and above years.
Macro planning involves Annual plans and perspective plan in which perspective plans cover a long period of time.
Secondary level plans
These are those plans that do not cover the whole country they may cover either one sector or Region this includes
Secretarial plan – this is the detailed plan for a specific sector of an economy for example plans for improvement of agricultural sector.
Regional plan – this is economic plan which focus its intention to a particular region or area within a country.
Tertiary level plans
This is the plans which deal with identification of possible projects informs of cost and benefit and their implementation so as to improve performance of that project.
Tertiary plans either natively called projects plans
THE STRUCTURE OF PLANNING IN TANZANIA
The structure of planning in Tanzania is two ways in the sense that, the economic plans are either initiated or formulated at the top by the government authorities and routed downwards for implementation with or without modification (centralized planning)
In the other hands other economic plans are initiated originate from the button and they are routed upwards for implementation (decentralized planning). All these plans are well coordinated and integrated and prepared for the whole economy.
At the present the planning process are under the ministry of planning and once planning have been worked out by the planning expert of the government, they need to be discussed and get approved by parliament which then endorse the resources which are necessary for the implementation of the plan. And during the course of implementation the economic plan are evaluated constantly so as to assess its performance in order to amends necessary things for the aim of achieving the desired goals or objectives.
THE PHASES OF ECONOMIC PLANNING IN TANZANIA
Since independence, Tanzania has passed through two main phases of economic planning
PHASE I: ECONOMIC PLANS
The first phase comprise of all the economic plans from 1961 to early 1980’s these plans were emphasis on ‘’equity” as were guided by the Arusha declaration
The phase I economic plan were aimed at fighting the main three things, illiteracy, disease and poverty.
Since Arusha declaration aimed at converting Tanzania into socialist and self reliant country hence various measure were taken to ensure all major means of production are owned by the government. Therefore consisted of the 1st, 2nd and 3rd five years development plans. In general these plans were aimed at rising per capital income so as to improve living standard, man power development, rising life expectancy so as to create self reliant.
PHASE II: ECONOMIC DEVELOPMENT PLANS
These plans cover all plans that take place between 1980’s to present, the phase II economic plans emphasize efficient of the government and performance of the economy. The phase two economic plans are in hand and in guidance of international done such as IMF and World Bank. The phase II economic survival programmer (NSSP) structural adjustment programmer (SAP’S) etc.
HANDICAPS / HINDRANCES TO SUCCESSFUL PLANNING IN LDC’S LIKE TANZANIA