Submitted to:
Sir Saeed Liaqat
Submitted By: Roll No
Muhammad Zubair 7451
Umer Raza 7490
Farhan 7452
Haq Nawaz 7464
Sohail 7453
There was no concept of economic planning before the 20th century
First time; Soviet Union introduced the idea of economic planning
in 1928. At the time of great depression of 1930 J, M, Keynes also
realizes the nations about the importance of economic planning.
In Pakistan, just after independence in 1948, for economic planning
a development Board was setup.
Planning is a technique, a means to an end being the realization of
certain predetermined and well-defined aims and objectives lay down
by a central planning authority. The end may to achieve economic,
social, political or military objectives.
Definition of economic planning
Definition of economic planning (con’t)
The concept of economic planning has obtained greater
Importance after the World War II, Now the question is
why do we need economic, planning and what role does
it play in the process of economic development of a
Country.
Planning is required to initiate and speed up
the process of economic development in
under development countries. The UDCs are
caught up in the vicious circle of poverty.
Only with economic planning they would be
able to break the vicious circle of poverty are
accelerate the tempo of their economic
development.
Commodity and factor markets are often badly
organized and the existence of distorted prices means
that producers and consumers responding economic
signals and incentives. Therefore, the government has
an important role to play integrating markets and
modifying prices.
The private enterprise cannot easily mobilize sufficient
financial resources needed for development purposes.
The Govt is in a far better position to find the necessary
resources through taxation, borrowing and deficit
financing. Therefore, for the utilization and
mobilization of such resources the Govt must plan.
The structural changes are desirable because of the following
factors:
To modernize the economy
To make the industrial sector foundation and back bone of the
economy
To pace the capital accumulation in the economy
The developing country’s often desire to change the
structure of their economy.
TO REMOVE GENERAL POVERTY
In Pakistan 23.9% population is very poor population.
To remove the poverty, effective economic planning
is needed. Planning authority should make such
plans, which are helpful to provide more jobs to
quickly growing population. While making the plan,
planning commission must concentrate to remove
the general as well as absolute poverty.
TO ACHIEVE SELF SUFFICIENCY
Today, self-sufficiency is the most important
need of developing countries. Through
development planning dependence on the
foreign debts an resources can be check. A
country with the help of economic planning
can install import substitution and exports led
industries.
To control inflation
• Valuable economic planning is also needed to
control inflation. Due to inflation there is
reduction in purchasing power that caused to
reduce the saving and investment. Economic
planning is very useful to control very high
and harmful inflation. In Pakistan rate of
inflation is 7.9%.
There are same social Costs that we have
to pay indirectly, no doubt in an industrial
area there is improvement in
infrastructure and living standard but on
the other hand due to industrial wastage
there is air and water pollution, industrial
diseases and industrial accidents etc.
Through economic planning treatment
plants must be install minimize the social
cost.
To control artificial shortages
To improve literacy rate
To, improve literacy rate, economic planning’s also
required. In developing countries like Pakistan low
literacy rate is 63 % that is almost 100% in advanced
countries. Through economic planning literacy rate
can be improve which leads to develop the efficiency,
of labour and improvement in the quality and
quantity of goods and services.
To eliminate instabilities
• In under developed countries, economies are
unstable. Sometime, private, enterprise,
itself .creates trade cycles, unemployment and
fluctuation in price level. All these are harmful
for a country. Through development economic
planning undesirable fluctuations can be
check to make economic development.
TO MAINTAIN POLITICAL
STABILITY
There is interdependence among various sectors
of, an economy. Development economic planning
is also helpful to maintain political stability.
Political stability is necessary for inflow of foreign
investment and economic development that can
achieve through economic planning.
To remove disparities
There are a lot of regional disparities & and income
disparities, which can be, remove through
economic planning, reduction of inequalities,
income, wealth, regions and economic
opportunities are the major aims of a modern
welfare state. All these aims can achieve with the
help of economic planning.
In developing countries, there is no regard for
labour. Industrialist highly exploits the
labour with hard work and low wage rate.
Through economic planning protection of
labour is possible. A planning authority must
take step to regulate the economic
development that its results will reach to the
labour also.
Developed infrastructure
LONG TERM ECONOMIC
GROWTH
The objective of, economic planning is to achieve
the long-term economic growth. Economic
growth and development is required for the
progress and prosperity of country. Long term
sustainable economic growth is impossible
without economic planning.
Creation of major economic changes
In developing countries there is need for some
major economic changes. These changes are
the symbol of economic development.
Economic planning is required for the change in
the structure of various sectors of economy,
international trade and urban & rural life styles.
Similarly, economic planning is needed to start
some major projects.
To expand domestic and foreign trade
The expansion of the domestic and foreign
trade requires not only the development of
agriculture and industrial sectors along with
socials and economic over heads but also the
financial institutions. This problem is solved
only by the economic planning and can
regulate the domestic and foreign trade in
the best interest of the country.
To protect worker's interests
A planning can step into so regulate the economic
growth of the country as to ensure to the actual
workers the fruits of their labour. The state is a more,
effective guardian of labour rights than self adjusting
and automatic economic forces.
To correct terms of trade
• It is the planning alone which can ensure that the terms of
trade remains favorable to a country. Foreign trade must
plan, if fruits of economic development are not to thrown
away. This aspect has been paid special attention by
planners every where.
To eliminate the wasteful competition
At any rate, there is nothing in the market
mechanism that establishes competition.
The market economy can also be helped to
function adequately with the positive
support of the planning authority.
PROPER COORDINATION
Only a planned economy provides proper
coordination and avoids unnecessary duplication
of staff and equipment. A planning authority can
take farsighted, decisions and produce a balance
economy.
To prevent artificial shortage
To eliminate social cost
By planning it is possible to eliminate
social costs which usually take the
farm of industrial diseases, accidents,
over crowding, in-sanitary conditions
and cyclical unemployment. These
social costs are by products of
capitalism. These are mitigated by
economic planning.
Industrial development
Without industrial development no
country can make progress. Planning
is necessary for the establishment of
new industries. We can find this
objective in various plans of Pakistan.
Population control
• When the size of population is greater
than the size of national resources, it
becomes dangerous for the economy. So
population can be controlled with effective
planning.
Social welfare programs
• Another objective of the planning is to
introduce the social welfare programs. In
Pakistan, during 8th five year plan various
facilities like housing, schooling,
transporting and water were provided to the
people. With such facilities a country can
make progress.
Self
Self sufficiency
sufficiency in
in food
food
• Self sufficiency in food provides a sound
and solid base for the economy. So this
objective can be achieved through
planning in the 8th five year plan the target
is proposed for the agriculture sector.
Elimination of regional disparity
• With planning, the regional economic
disparity can be removed. In plan special
funds are allocated for the development
of back ward areas.
Conclusion
• Today, economic planning is playing a very
important role in the economic development
of a country. With the help of economic
planning, objectives and targets are
formulated and then resources are mobilized
to achieve the fixed targets. Accordingly,
there is no concept of development without
successful economic planning.
HOW CAN WE MAKE ECONOMIC
PLANNING & POLICIES PRACTICALLY
IMPLEMENTABLE?
We can make Economic Planning & Policies Practically
Implementable with having…!
Realistic goals of the plan
Appropriate policies and instruments
Adequate information
Rational institutions
Suitable administrative and technical apparatus
Public co-operation
Planning commission
The planning commission should be
setup which should be organized in a
proper way. It should be divided into
number of divisions and sub-divisions
under such exports as economists,
statisticians, engineers etc.
Statistical data
• A survey is essential for the collection, of
statistical data and information with
regard to the total available material
capital and human resources of the
country. A central statistical organization
should be set up with a work of statistical
bureau for collecting statistical data and
information.
Objectives
• The plan may lay down some objectives
such as increase in national income and per
capita income, to provide employment
opportunities, to reduce inequalities, to
raise production, self reliance, etc. The
various objectives should be realistic and
flexible.
The targets and priorities should be fixed sector wise
and global in the plan. Global targets must be bold
and cover the every aspect of the economy. They
include the quantitative production targets. Global
and sector targets should be mutually consistent in
order to the required growth rate of the economy.
Mobilization of resources
• There are various internal and external resources
for financing a plan. Savings, profits, borrowings,
taxation and deficit financing are the principal
internal resources of finance for the public sector.
At the same time, they should encourage
corporate and individual savings of the private
sector.
Balanced plan
There should be balance between
saving and the investment, between
the available supplies of goods and
the demand for them, between the
demand for imports and the available
foreign exchange etc.
Incorrupt and efficient administration
• A strong, efficient and incorrupt
administration is required for the success
of planning. But this is what an
underdeveloped country lacks the, most
competent administrative staff which
should be appointed in various
departments which should first prepare
good feasibility reports of proposed
projects before starting them.
Economies in administration
• Every effort should be made to effect
economies in administration particularly, in
the expansion of ministries and state
departments. The people must feel
confident that every pie that they pay to
the government through taxation and
borrowing is properly spends for their
welfare and development.
Educational base
An educational base is essential for
a clean and efficient administration.
Planning must take care of the
ethical and moral standards of the
people. This is not possible unless a
strong educational base is built up.
A theory of consumption
Under developed countries should not
follow the consumption pattern of the
more developed countries. The theory of
consumption should be democratic and
prime attention must be given to goods
that are within the range of the model
income that can be purchased by the
typical family.
Public cooperation
• Public cooperation is considered to
be one of the important levers for the
success of the plan in a democratic
country. Economic planning should
be above party politics but it should
have the approval of all the parties.
The plan should be regarded as a
national plan when it is approved by
the representatives of the people.
For a clean and efficient administration, a solid
educational base is essential. Planning to be
successful must take care of the ethical and moral
standards of the people. Higher education is
needed to prepare useful plan. Without creating
honest and efficient human beings in the country
it would not be feasible to undertake economic
planning on a big scale.
We conclude that all-above points are necessary
to formulate the successful plan. Government
should first set the targets of plan and then
through mobilization of resources operate the
plan to success and desirable results.
