ECONOMIC PLANNING LECTURE TWO TYPES OF PLANNING Introduction

ECONOMIC PLANNING LECTURE TWO: TYPES OF PLANNING

Introduction • The first phase of development planning in Africa spanned the 1960 s and was characterized by centralized planning with three to five year planning phases. • During this period, at least 32 African countries had a national development plan. • These plans were in different forms: Long – term, medium term, short term etc.

Long-term Economic Plans • Long-term economic plans, also known as perspective plans, are plans that last for a period of 10 to 30 years • They are also known as ‘perspective plans’. • The basic philosophy behind long-term planning is to bring structural changes in the economy. • Under long-term planning, there is greater freedom of choice and there is a wide scope of planning

Examples of Long-term Plans in Ghana • The Guggisberg 10 year development plan (1920 -1930)Gold Coast • The main aim of this plan was to provide the Gold Coast with an advanced physical and social infrastructure. • 10 -year development plan proposed for the period 1946 -56. • This was aimed at improving on the existing physical infrastructure and extending the provision of social services. • This plan was however caught up in political developments of the time and was revised after the CPP won the elections in 1951 into the 1951 -1961 ten-year development plan • Its new objective was to mobilize resources for the development of economic and productive resources in order to ensure a higher standard of living for Ghanaians • Recent talks of a 40 year development plan

Long-term plans: Merits Ø Educative – In the process of its formulation, long-term planning offers an opportunity for educating the public on the country’s major challenges and prospects for the long-term; – This educative process further helps in the preparation of more realistic medium- and shortterm plans; – The knowledge gained leads to an improved understanding of the process of economic development.

Ø Explanatory • A long-term plan is useful in enlightening the decision makers and plan implementers; • The information made available under long-term planning facilitates the integration of shorterterm plans into a longer-term framework; • The above, in turn, equips the planning authority to make adequate preparations for the solution of potential future problems; • Perspective plans also make it possible for planners to assess the long-term implications of medium-term and short-term decisions.

Ø Emboldening • The reduction in future-policy uncertainty leads to confident decision-making on shorter-term plans – By making future choices and reducing the uncertainty surrounding future policy choices, perspective plans enable decision-makers to act boldly/confidently in respect of decisions regarding shorter-term plans. • Where the public’s understanding is won, there could be less hesitation in respect of shorter-term plans.

Long-term plans: Limitations of long-term planning • Uncertainty regarding the future; • The possible termination of the plan in the event of a change in government.

Medium- term plans • An economic plan that has a duration of roughly 3 -10 years; • Merits/rationale/significance Ø It serves as a link between short-term and longterm plans Ø Economic merits i. The duration coincides with that of various important projects, such as road construction; ii. The duration is long enough for the remedying of lapses in the early years of the plan.

Ø Psychological – A generation can experience the benefits of a number of medium-term plans; – A generation can make use of the multiple experiences of a medium-term plan. Ø Political – It facilitates the gaining of the citizenry’s cooperation.

Medium-term plans in Ghana • Nkrumah’s 7 year development plan (1963/64 -1970). • designed within the guidelines of the socialist Program of Work and Happiness of the Convention People's Party. • The plan was designed to “assure Ghana has a rapid rate of economic progress without destroying that social justice, that freedom and equality, which is a central feature of our traditional way of life. • Specific issues to be addressed: – Accelerated rate of economic growth – Modernisation of agriculture • What are some of the demerits of Medium term plans?

Short-term Economic Plans • These are economic plans that usually have a duration of one year. These plans are also known as ‘controlling or action plans’. • Since such plans are annual in nature, it’s very much linked to the government’s annual budget. • The main objective of short-term plans is to raise revenue, and attain specific short-term economic targets. • Often derived from medium- and long-term plans • The long-term and medium-term plans provide the framework, with the actual activities taking place in the one -year periods of the short-term plans. • Its main merit is that it is likely to be completed • Demerits/ Weaknesses? ?

Short-term Economic plans in Ghana • After the overthrow of Nkrumah in 1966, the National Liberation Council drafted the two year development plan from 1968 -1970 • The main objective of the plan was to move the country from stabilization to development. • However, Midway through the two year plan, there was a transition to civilian rule headed by the Progress Party who also drafted a 1 year development plan from July 1970 to June 1971.

Summary: LT, MT and ST Plans v. Long-term plans clarify the perspective and vision of a society; v Medium-term plans concretize society’s aspirations, often in quantitative terms, for the shorter period; v Short-term plans provide for action.

Regional Economic Plans • Regional planning is planning for a region; • It is the drawing up of a consistent plan for a country sub-divided into regions; • It is planning that is carried out within the framework of a national scheme in order to meet the special needs of a region; • Regional planning is planning for a specific region(s) within the framework of a country’s aspirations.

Rational for Regional Planning • Special/peculiar needs A region(s) may have special needs that require separate attention; • Special capabilities and/or resources Some regions are endowed with special capabilities or resources; • Can you think such initiatives in Ghana?

• The existence of regional industries that have local inputs and demand; • Initiative and cooperation • A regional plan can serve as a rallying point for stimulating local initiative and/or cooperation for the execution of a national plan; • A pilot scheme- trying out a goal on a pilot basis ü Any Demerits? Discuss

National Plans • National planning refers to planning that encompasses an entire country; • Since the geographical coverage of national planning coincides with the political boundaries of a nation, national planning is distinctively established by a central authority

National Plans: Rationale • It is the only type of planning that must exist before one can meaningfully talk about regional or international planning; • Where there is a national plan, regional and international planning cater to the needs of the national plan; • National planning facilitates a more effective utilization of a country’s resources; • In the name of patriotism or nationalism, it is arguably less challenging to seek people’s cooperation for the mobilization of resources.

National Plans: Critique § Critique of national planning i. It discourages the opening up of the economy to international trade; ii. Can be overly ambitious iii. It can be fraught with an unhealthy hatred/cynicism towards former colonial masters.

International Plans International planning refer to planning that involves/covers more than one country. § Forms of international planning – Cooperation among a group of countries in order to derive mutual assistance; – Examples: ECOWAS, COMESA, and AU, EURO § Activities that are planned at the global level, mainly through UN agencies; – Examples: FAO, WHO, UNESCO, and UNICEF Merits/ Demerits? Discuss