Lecture 9 : Economic Development Planning in

Ghana

Solomon Antwiagyei Kuffour

Department of Human Resource and General Studies

UCOMS, Kumasi Campus.

sakuffour@ucoms.edu.gh

August 10, 2021

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Outline of Lecture

The Concept of Economic Development

I Types of Development Plans

I The Objectives of a Development Plan
I Characteristics of a Development Plan
Rationale for Development Planning

Development Planning in Ghana

Challenges of Development Plan Implementation in Ghana

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Economic Development Planning in Ghana
The Concept of Economic Development

Recall;
Development is the process of enhancing quality of life through
production, provision and utilization of goods and services as well as
promoting quality of institutions and environmental sustainability.
Hence Development Planning;
... is a long-term national programme designed to achieve some
permanent structural changes in an economy.
... refers to all government activities - government budgeting,
management of public utilities and other public enterprises geared
towards achieving sustainable economic growth and development.
... can be described as a program, set of policies, or activities that seek to
build capacity for self-sustaining, long-term economic growth.
... is a document which details the overall strategy of the government for
the proper planning and development of a country.
Development planning have played a pivotal role in successful upliftment
of millions people out of poverty.
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Economic Development Planning in Ghana
Types of Development Plans

There are two main types of development plans;

1 An Indicative/Partial Plan
2 A Comprehensive Plan

(1) An Indicative/Partial Plan

... is a form of national economic planning in which a target is set for the
growth of national output over a series of years, usually about five.

... implemented by a state in an effort to solve the problem of imperfect

information in market economies by coordination of private and public
investment through forecasts and output targets.

Usually focuses on a particular sector; for e.g, the 5 - Year Development

Plan (1951 - 1956) focused on Education.

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Economic Development Planning in Ghana
Types of Development Plans Cont’d...

(2) A Comprehensive Plan

It is the most aggregate form of planning.

... covers the entire economy as a whole and explores the relationships
and consistency among growth targets, production, consumption, saving,
investment and net exports.

... refers to government’s guide to a community’s physical, social, and

economic development.
... comprises of to main plans;
1 Project Planning: involves drawing up of a plan based on cost-benefit
analysis to ensure that all the needed inputs are available at the right time
for a project to be executed.
2 Multi-Sectoral Planning: involves planning on how to allocate investments
in an efficient manner among the various sectors of the economy to
produce the desired output.
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Economic Development Planning in Ghana
Characteristics of a typical Development Plan

Usually a development plan includes time-based benchmarks.

It generally also includes the criteria that will be used to evaluate

whether or not the goals were actually met.
It is a long term programme; usually drawn to cover a period of 15 to 25
years.
I There are medium term plans; usually up to 5 years.
I Implementation is done on yearly bases since government budgets are for
one fiscal year at a time.

Development Plans cover the entire economy

I It seeks to find lasting solutions to the problems of the economy.

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Economic Development Planning in Ghana
Objectives of Development Planning

The main objective of a D-Plan is to;

I bring about a lasting change in the economy by;
F providing comprehensive sets of policy direction for economic growth
programmes and projects to improve the economy.

D-Planning arises because the market fails in the free market economy.
Thus;
I The price mechanism fails to allocate resources efficiently.

Every economy must solve the fundamental questions of what to produce,

how to produce and for whom to produce for the maintenance and growth
of the economic system.
In the free market economy, the price mechanism(forces of demand and
supply) resolves this basic problem.
Hence only goods and services that has demand would be produced and
only those who can afford will get them.
Note: Even a well functioning price mechanism cannot be relied on to
efficiently mobilize and utilize resources to achieve growth.
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Economic Development Planning in Ghana
Rationale for Development Planning

The four main reasons for which an economy needs a development plan
are:
1 The market failure argument
2 Resource Mobilization and allocation argument
3 Attitudinal or psychological argument, and
4 Foreign Aid argument.

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Economic Development Planning in Ghana
Rationale for Development Planning Cont’d...

1.The Market Failure Argument

Market failure refers to the situation where the market or price

mechanism is unable to allocate resources efficiently. Thus;
I The market fails to provide certain goods and services.
The conditions under which the market is said to have failed are;
1 The existence of public goods
2 Market imperfections;
3 Existence of externalities;
4 Imperfect information or information asymmetry;
5 Risk and Uncertainty;

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Economic Development Planning in Ghana
Rationale for Development Planning Cont’d...

1.The Market Failure Argument Cont’d...

1 The existence of public goods
I The free market fails to produce public goods since it is difficult to exclude
other users from enjoying once it is provided.
2 Market imperfections;
I No competition (monopolies) in the market make firms produce below
capacity and charge higher prices or produce undesirable goods once it is
profitable.
3 Existence of externalities;
I Prices do not reflect the positive or Negative spill overs from economic
activities.
4 Imperfect information or information asymmetry;
I A situation where one side of an economic relationship has better
information than others hence agents are not able to make informed
decisions.
5 Risk and Uncertainty;
I In situations where profit maximizing firms are uncertain about its profits
and returns, it fails to produce that good or service.
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Economic Development Planning in Ghana
Rationale for Development Planning Cont’d...

2. Resource Mobilization and Allocation Argument

Due to the inadequate supply of resources such as financial and skilled

labour,
I plans have to be made to mobilize and allocate them into productive areas
to benefit the whole economy.

3. Attitudinal or Psychological Argument

The public’s attitude and thinking do not change when private

individuals invest in the economy.

A detailed and publicized development plan can have a significant

attitudinal or psychological impact on the public;
I this attracts the maximum public confidence and support for economic
development.

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Economic Development Planning in Ghana
Rationale for Development Planning Cont’d...

4. Foreign Aid Argument

Developing countries draw development plans to show the priority areas

in the economy (areas that are considered more rapid economic
development).
Carefully drawn out development plans attract foreign donors to invest
because;
I the plan outlines the incentives and concessions available to potential
investors.

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Economic Development Planning in Ghana
Development Planning in Ghana

Among the several development plans has adopted from pre-independence are;
1 Guggisberg -year Development plan (1920-1930)
2 Nkrumah’s 10-Year Development Plan (1951-1961)
3 Nkrumah’s 7-Year Development plan (1963-1964 and 1964-1969/70)
4 Acheampong’s 5-Year Development Plan (1975/76 - 1979/80)
5 Vision 2020 (1996 - 2020)
I The First Phase Consolidation Period (1996 - 2000)
I The Long-Term Period (2001- 2020)
6 The Coordinated Programme for Economic and Social Development of
Ghana (2003 - 2012) : Within this plan, the GPRS was initiated to widen
opportunities for economic development and poverty reduction:
I Ghana Poverty Reduction Strategy (GPRS) I; issued in 2003.
I GPRS II issued in 2003 - 2008.

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Economic Development Planning in Ghana
Development Planning in Ghana: GPRS

GPRS I reflected a policy framework directed primarily at attainment of

the anti-poverty objectives of the UN’s Millennium Development Goals
(MDGs).

GPRS II focused on strategic shifts to accelerate growth and and achieve

middle-income status with the period of the D-Plan.

The main objectives of the GPRS were;

1 Enhancing Infrastructure;
F Creating enabling environment by investing massively in infrastructural
development to promote West African economic integration.
F Promoting access to telephones, internet and ICT in general.

2 Modernizing agriculture to promote Rural Development

3 Improving equitable access to quality education and health services.
4 Achieving good governance
5 Private Sector development to enable it play effective and efficient roles to
drive growth and reduce poverty.

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Economic Development Planning in Ghana
Challenges of D-Plans Implementation

Political Instability and political will which slow down economic growth
and development because D-Plans are aborted. Eg; the 1966 led to
abandoning the Nkrumah 7-Year D-Plan.

Lack of political commitment to continue Development Plans by previous

government even though there has been some considerable political
stability.

A successful D-Planning requires sufficient and reliable financial base but

not on uncertain sources like external trade balance, borrowing, grants or
aids as major sources of funds.

Inadequate availability of competent planning and implementation

agencies like project analysis, economists, engineers, geographers, etc.

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Economic Development Planning in Ghana
Challenges of D-Plans Implementation Cont’d...

D-Planning is carried out with little information and unreliable statistical

data;
I D-Planning requires accurate and sufficient managed by efficient
statisticians.

Over ambitions in drawing D-Plans and outlooks; not considering the

available human and material resources of the country.
Inadequate stakeholder’s participation ;
I Low cooperation of citizens
I Improper balance and coordination between the private and public sectors
of the economy.

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 End of Lecture.

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 All the best and See you in the next Lecture.

Thank you

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