ECONOMIC PLANNING
Economic planning is a deliberate and conscious attempt by the government to formulate descion s on
how resources shall be allocated among different factors to achieve a desired economic outcome. It
involves a coordinated effort to guide and manage various aspect f an economy to promote growth
stability and development
A ccording to professor ROBBINS, Economic planning is the corrective control of private sectors and
exchange.
A according to HAVEK, it refers to the direction of productive activity by the central authority.
Economic planning typically encompasses the following:
Goal setting (defining specific economic objective for example achieving a certain level of
economic growth, reducing un employment and controlling inflation)
Resource allocation (determining how limited resources such as labor, capital, natural resources
will be distributed and utilized to meet the set goals)
Policy formulation (developing policies, regulations and strategies to influence economic
activities)
Implementation (putting policies into action into action)
Monitoring and evaluation (continuously assessing the progress towards achieving the planned
goals and making adjustments to policies and strategies.)
OBJECTIVES OF ECONOMIC PLANNING
This can vary by country and time period but some common objectives include:
1. To ensure a higher rate of economic growth. This can be seen through promoting
sustained and balanced economic growth so as to improve the standards of living for the
population for example the current development plan for economic growth is expected
to accelerate to above 6% in the middle term.
2. To modernize the economy. This means structural changes in economic activities that
can change the economy into a progressive and independent economy e.g. through
industrialization, urbanization and agricultural mechanization.
3. To make the economy self-reliant. This means reduction and ultimately elimination of
dependance on foreign aid, expansion and diversification of exports so as to earn foreign
exchange.
4. To render social justice to poor countries. This means improving access to education,
health care and social services to enhance wellbeing of the population.
5. To ensure price stability. This encompasses, controlling inflation to ensure stable prices
for essential goods and services
6. To ensure full employment of resources. This means efficient allocation of resources to
maximize productivity and minimize waste. It includes creating job opportunities and
reducing unemployment through targeted policies.
RATIONALE FOR ECONOMIC PLANNING
This is based on several key factors and objectives that aim to promote sustainable
economic development, stability and improved living standards.
The following are some of the main reasons for economic planning in uganda.
To promote economic growth and development. Economic planning seeks to
stimulate and sustain economic growth. Uganda’s government aims to raise the
country’s overall GDP and precipitate income, which can lead to higher living
standards and improved quality of life for its citizens.
To reduce poverty, through planning, the government addresses poverty by
creating opportunities, enhancing income distributions, implementing targets
social programs to uplift the proof.
To ensure efficient allocation of resources. Through planning, the government
allocates the scarce resources effectively among various sectors such as
agriculture manufacturing infrastructure, education to maximize their impact on
the economy.
To develop infrastructure. Through planning, the economy seeks to invest in
infrastructure such as roads energy and telecommunication which are essential
to the economy.
To promote industrialization. Uganda seeks to diversify its economy and reduce
dependance on agriculture through coming up with strategies to promote
industrialization and support growth of manufacturing sectors.
To promote human capital development to develop in education, health care
and skills development because a well-educated and healthy workforce can
contribute to higher productivity and economic growth
To promote regional development. through planning regional development can
be achieved by reducing regional disparities by directing investments and
development initiative to less developed areas of the country.
TYPES OF ECONOMIC PLANNING
Planning by Direction and Planning by inducement.
Planning by Direction; This refers to planning by the central authority, which
directs, orders the execution of the plan in accordance with pre-determined
targets and priorities. Such planning is comprehensive and it covers the
economy as a whole for example the government provides guidelines with
expected targets and priorities to be achieved in an economy.
Planning by inducement
This is the planning where there is manipulating of the markets. Here people are
associated at every step in the formation and implementation of the plans. In
other words, there is no compulsion between persuasion. There is free of
enterprise, freedom of consumption, freedom of production for example
employees are offered a bonus as a inducement to finish project on schedule.
Financial planning
This is the planning in which resources are allocated in terms of money. Financial
planning is thought to secure a balance between demands and supplies, avoid
inflation and bring about economic stability. For example create a budget that
you can live within, save emergency funds. Spend less than you earn, save for
retirement, save for college ,pay off your credit card debits
Physical planning
This refers to the planning through which the available real resources are
allocated in terms of raw materials, man power, machinery etc. and how they
have to be obtained so that bottle necks may be reminded during the plan for
example Kampala physical development plan such as Kampala capital city
authority(KCCA) which aims at sustainable physical development of the city for
example proper disposal of wastes and physical plans also includes house plans.
Prospective planning
This refers to long time planning in which long targets are set in advance for a
period of 15,20, 25years.such plans broader objectives and targets to be
achieved for example fore sight reduction system for long term.
Inductive planning and imperative planning
This refers to planning which is implemented by the state with an effort to solve
problem of imperfect information in market economies by coordinating private
and public investments through forecasting output targets.
Imperative planning,
Under this type of planning, all economic activities are controlled by the state.
there is complete control of government over the factors of production. Even
the private sector needs to strictly abide by the government policies and
decisions which are rigid.
Centralized and decentralized planning
Under centralized planning the entire planning process in the country is under
central planning authority, under the centralized planning system, planning is
made a restrictive prerogative of the central planning authority. This authority is
solely responsible for formulation of the plan and fixing the objectives, targets
and priorities
There is no economic freedom and the entire economic planning is under
bureaucratic control.
Decentralized planning, this refers to execution of the plan from grass roots. in
this type of planning, the central planning authority formulates the plan in
consultations with the different administrative unities for the central and state
schemes. The state planning authority formulates the plan for the district and
village levels.
Comprehensive and partial planning
The general planning which concerns its self with the major issues for the whole
economy is known as comprehensive planning for example the Parish
Development Modal project while as partial planning considers only few
important sectors in an economy for example Agricultural modernization
Democratic planning and totalitarianism
Democratic planning implies planning with democracy. people are involved at
every step in the formulation and implementation of the plan, here the plan
prepared by the planning commission is not accepted as such. It can be
accepted, rejected or modified by the parliament of the country.
Under totalitarianism planning, there is central control and direction of all
economic activities in accordance with a single plan. Consumption, production,
exchange and distribution of resources are all controlled by the state
References
https://www.brainkart.com
https://www.jstor.org
https://www.economicscity.com
