Friday, 27 May 2011


Department of Economics
University Of Lagos, 2011
+234 803644990; +234 8096683620
Planning is defined as a conscious effort of the govt to move the economy from its present state to a desired state. Planning involves the deliberate attempt of the govt to effect changes in some major parameters in the economy.
Common issues in all definitions are:
1.    Set of tools,
2.    A time frame
3.    Setting goals achievable within a time frame.
Development planning process involves 5 stages:
1.    Setting policy targets
2.    Developing strategy
3.    Resource allocation
4.    Implementation
5.    Monitoring & evaluation
Rationale for development planning:
1.    Market failure
2.    Resource mobilization & allocation
3.    Attitudinal or psychological factors
4.    Foreign aid or assistance
A model is a reflection, representation or abstraction of reality. Therefore, planning models refer to essential tools in the planning process. Planning models can be quantitative or qualitative, sectoral or economy-wide, static or dynamic.
Models serve as useful means for:
1.    Formulating plans
2.    Investigating trade-offs between targets
3.    Ensuring internal consistency
4.    Providing information against likely economic alternatives for economic growth.
5.    Analyzing different plans better
Planning models are needed for:
1.    Forecasting (i.e. projecting into the future)
2.    Consistency checks (i.e. ensuring economic/technical feasibility)
3.    Optimization (i.e. getting maximum from the economy)
The suitability of any model depends on:
1.    The use to which it is put
2.    The structural characteristics
3.    The computational feasibility of the model
Basic model can be categorised in terms of:
1.    Mathematical structure (i.e. is it static or dynamic?)
2.    Policy focus (i.e. based on policy of the govt)
Aggregate model: deals with the whole economy, e.g. Harrod-Domar
Sectoral model: deals with a particular sector of the economy, e.g. Friedman-Mahanalobi
Input-output model was used to prepare Vision 2020.
Problems of plan implementation are:
1.    There is divergence between theory & practice
2.    There is divergence between private & social costs
Reasons for plan failure are:
1.    Plans are often over-ambitious
2.    Insufficient & unreliable data
3.    Unanticipated economic disturbance
4.    Institutional weakness & dichotomy
5.    Lack of political will
Characteristics of planning in Nigeria are:
1.    The plans were highly decentralized
2.    They were project-based
3.    The plans were public-sector dominated
4.    They were based on the expectation of foreign resources
5.    The structure of the plans were in favour of administration against the productive sector
6.    All the plans experienced a great shortfall in terms of financial performance.

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