ECONOMIC DEVELOPMENT PLANNING (2013-p.

2)

This is a deliberate government attempt to influence, direct, and in some cases control economic
choices and activities so as to achieve certain objectives of development over a given period of time. OR

It is a deliberate government effort to formulate decisions on how productive resources shall be

allocated among different uses in order to attain targeted economic objectives over a given period of
time.

TYPES OF PLANS

(A) CLASSIFICATION OF PLANS BY COVERAGE.

i) Comprehensive plans /macro plans are those that cover the whole economy/ are those that cover all
the sectors of the economy. (2016-p-2, 2005-p.1)

Comprehensive planning is where plans are drawn to cover the whole economy.

Merits of a comprehensive plan.

 Creates more employment opportunities.

 It promotes infrastructural development.
 It encourages balanced regional development.
 It widens the tax base.
 It promotes optimal utilization of resources.
 It reduces sectoral imbalances in the economy.

Why is it difficult for your country to draw comprehensive plans?(leave 5 lines)

ii) Partial / micro/sectoral plans are those that cover one part of the economy /one that covers few
sectors/one sector of the economy. (2010-P.1)

Give three demerits of partial planning(2016_P.1)(leave 5 lines)

iii) Project plan, it is one that covers a specific project e.g. water projects, power dam projects.

b) CLASSIFICATION OF PLANS BY TIME ELEMENT.

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i) Annual plans (1year) are those that are designed to cover one year. E.g. National budget.

ii) Operative plans (2- 9 years), are those that are designed to achieve their objectives in the short and
medium term usually between two and nine years.

iii) Long term plans /perspective plans, are those in which long term targets are set in advance for a
period of ten or even more years. (2016-P.2, 2009-P.1)

C) CLASSIFICATION OF PLANS ACCORDING TO HIERARCHY (METHOD OF PLANNING)

i) Centralized planning (top -bottom planning) it is one whereby economic decision making and
implementation of plans is undertaken by a central body or government and it includes all the various
sectors of the economy.

ii) Decentralized planning (bottom-top planning), it is one whereby economic decision making and the
implementation of plans in line with set targets is undertaken by local governments/local authorities
instead of the central government. (2010-P.1)

iii) Indicative planning, this is a type of planning where the central government draws up plans, provides
the necessary information and incentives to the private sector without interfering in their affairs.

iv) Imperative planning, it is a type of planning where plans are prepared and implemented by the
central authority in consultation with the various organs, offices, agencies.

v) Directive planning, this is the type of planning carried out in command economies where all resources
and economic units are predominantly controlled by the state.

CHARACTERISTICS/FEATURES OF A GOOD PLAN :( 2008-P.1)

 It should be comprehensive. It should cover the whole economy/all sectors of the economy.
 It should have an operational time limit.It should specify the duration in which it will be
accomplished).
 It should be easy to implement in terms of cost effectiveness and management/it should be
economically feasible.
 It should encourage the participation of the people especially where it is being implemented.
 It should consider the available resources/should have proportionality in allocating resources.
 It should be internationally relevant, it should address global issues and trends.
 It should be socially relevant. As planners formulate the plans, they need to bear in mind the
norms and values of the society they are planning for in order to reduce resistance by people.
 It should be consistent; the aims of the plan should match with the available resources.
 It should suit the local technology and therefore it should use as much local labour as possible/it
should be socially relevant.

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  The objectives of the plan should be very clear to all people who are involved in the plan
formulation and implementation. Unclear objectives breed ambiguity.
 It should be compatible, in order to avoid clashes of policies and ideologies especially at the
time of implementation.
 It should be simple; a good plan should be easy to understand.
 It should be sequenced; there should be order in its implementation to avoid confusion.
 It should be politically accepted, in order to avoid unnecessary resistance from the politicians
and the general public.

THE PLANNING PROCESS

Planning is the continuous process which involves the following major stages;

 Identification of goals and objectives of planning i.e. Define what is to be achieved

 Plan formulation; identify specific areas needed for planning such as income distribution etc.
 Setting plan target, this shows what the plan aims at achieving after a certain period of time e.g.
provision of clean water to all in 20 years to come.
 Setting plan strategies; it shows the ground on which to base the plan as well as to implement it.
 Plan adoption; this is where the plan is forwarded to the financing authorities or decision
makers for approval.
 Plan implementation; this refers the transformation of the plan into actual work.
 Plan evaluation / appraisal; this is an attempt to find out whether the plan is fulfilling its
intended objectives.

PRINCIPLES OF PLANNING

Explain the principles of economic development planning(2018_P.1).

Principle of acceptability; A plan should be socially, economically, internationally and politically

desirable.

Principle of relevancy, A plan should address the actual desired needs of the people.

Principle of economic feasibility; a plan should be achievable

Principle of comprehensiveness;a plan should cover the entire economy/all sectors of the economy.

Principle of consistency, the plan should be in line with targets and objectives of development.

Principle of compatibility; projects in the plan should be related to promote linkages

Principle of optimality; the plan should ensure that the planned resources are fully utilized.

Principle of sequencing; implementation of projects should be done in an orderly manner/there should

be orderliness in the implementation of plans to avoid confusion.
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Principle of simplicity, a plan should be easy to understand by both formulators and implementers.

THE NEED FOR PLANNING

Questions.

1. Why does your country carry out economic planning?

2. Explain the reasons why development planning is necessary.(2010-p.1)
3. What is the rationale for development planning in your country?
4. Why is there need for centralized planning in your country?

Uganda carries out economic planning for the following reasons;

1) To allocate the scarce resources by ensuring that resources are optimally utilized and put to the
best use basing on the priorities of the economy.
2) To control the rate of unemployment by putting in place ways and means that may be used to
step up the levels of economic activities and resource exploitation which in turn create more
employment opportunities.
3) To correct deficiencies (defects) of price mechanism such as monopoly by setting up anti-
monopoly laws.
4) To control income inequalities by putting in place measures that help to redistribute income
such as progressive taxation.
5) To improve balance of payment position by identifying ways that can help to increase the
quantity, quality and variety of exports to the competitive international markets.
6) To reduce unnecessary competition which is at times wasteful and this is done through the
establishment of government monopoly firms in order to reduce duplication of
activities/services.
7) To control inflation and maintain stability in prices through encouraging investment and thus
raise economic growth so as to avoid shortages.
8) To encourage involvement of the people in the development process. This calls for making plans
that involve people right from the formulation stage through the implementation stage in order
to ease the attainment of objectives with little or no resistance.
9) To ensure harmonious and consistent use of resources in order to create linkages between key
sectors. This helps the economy to be self-sustaining.
10) To solicit for foreign aid. Donor countries usually want to see concrete plans of what they are
going to finance in order to ensure that their money will not be put to waste/ Donors have
particular areas they want to fund and thus would like to see that such areas are provided for in
the plan before they can extend aid.
11) To identify areas suitable for public and private investment. Government takes responsibility of
mobilizing the resources for investment in areas appropriate for government investment. In
areas where private investment is needed, government offers incentives to attract private firms

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 to invest/ Government may also encourage partnerships with the private firms so that the public
and private sectors complement each other. (PPP)
12) To control population growth rate by encouraging the use of family planning methods.
13) To reduce economic dependence by developing strategies that encourage exploitation of local
resources and development of human resources in order to minimize reliance on external
resources and foreign skills.
14) To determine the rate of economic growth by forecasting the rates of growth necessary to attain
the desired objectives.
15) To relate current circumstances to future trends. Planning identifies current challenges and
shows planners what needs to change and thus create a vision of what the country should be
like in the future.

Questions:

Explain the role of planning in an economy

Examine the role of planning in an economy

ROLE OF PLANNING IN AN ECONOMY (2005-p.1)

Positive role:

1) It allocates the scarce resources by ensuring that resources are optimally utilized and put to the
best use basing on the priorities of the economy.
2) It controls the rate of unemployment by putting in place ways and means that may be used to
step up the levels of economic activities and resource exploitation which in turn create more
employment opportunities.
3) It corrects deficiencies (defects) of price mechanism such as monopoly by setting up anti-
monopoly laws.
4) It controls income inequalities by putting in place measures that help to redistribute income
such as progressive taxation.
5) It improves balance of payment position by identifying ways that can help to increase the
quantity, quality and variety of exports to the competitive international markets.
6) It reduces unnecessary competition which is at times wasteful and this is done through the
establishment of government monopoly firms in order to reduce duplication of
activities/services.
7) It controls inflation through encouraging investment and thus raises economic growth so as to
avoid shortages of goods and services.

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 8) It encourages involvement of the people in the development process. This calls for making plans
that involve people right from the formulation stage through the implementation stage in order
to ease the attainment of objectives with little or no resistance.
9) It ensures harmonious and consistent use of resources in order to create linkages between key
sectors. This helps the economy to be self-sustaining.
10) It is a strategy of soliciting for foreign aid. Donor countries usually want to see concrete plans of
what they are going to finance in order to ensure that their money will not be put to waste/
Donors have particular areas they want to fund and thus would like to see that such areas are
provided for in the plan before they can extend aid.
11) It identifies areas suitable for public and private investment. Government takes responsibility of
mobilizing the resources for investment in areas appropriate for government investment. In
areas where private investment is needed, government offers incentives to attract private firms
to invest/ Government may also encourage partnerships with the private firms so that the public
and private sectors complement each other. (PPP)
12) It controls population growth rate by encouraging the use of family planning methods.
13) It reduces economic dependence by developing strategies that encourage exploitation of local
resources and development of human resources in order to minimize reliance on external
resources and foreign skills.
14) It determines the rate of economic growth by forecasting the rates of growth necessary to attain
the desired objectives.
15) It relates current circumstances to future trends. Planning helps to identify current challenges
and shows planners what needs to change and thus create a vision of what the country should
be like in the future.

NEGATIVE ROLE

1) It encourages bureaucracy and red tape which cause delays in the formulation and
implementation of plans.
2) It limits consumer sovereignty since in most cases it is the government to formulate the plans
not the local people.
3) It fuels corruption because of a weak administrative and implementation machinery.
4) Planning is costly in terms of formulation and implementation of plans.
5) It encourages wastage of resources because the production of commodities is not in line with
what consumers want.
6) It promotes inefficiency in production which leads to provision of poor quality goods and this is
due to lack of competition.
7) It distorts the working of price mechanism especially where there is use of centralized planning
that involves government in formulating and implementing plans.

Question:

Explain the role of decentralized planning in your country.

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 1. It favours local interests of the area into consideration because it is drawn by the local people
themselves. Since people know better what they actually want, it saves the country from
drawing plans which are irrelevant to the people.
2. It is appropriate where the country is large and therefore it relieves the government the hard
task of planning for the whole country.
3. It facilitates the exploitation of available local resources, due to the fact that the local people
know what they have and how to exploit such resources.
4. It creates more employment opportunities, through ensuring that each region has wide spread
economic activities. An increase in economic activities necessitates the need to hire more
labour.
5. It creates a sense of belonging amongst the people who in turn develop a commitment to the
implementation of the plan. It makes it easier for people to own up the plan and thus eases plan
implementation.
6. It reduces the bureaucratic tendencies associated with centralized planning, since the planning
process is closer to the people, it makes implementation of plans faster and easy.
7. It encourages specialization between the central and local authorities, since each engages in
particular issues of running the country. This increases efficiency in service delivery.
8. It ensures efficient tax collection, since each region identifies potential sources where revenue
can be raised.
9. It encourages more equitable distribution of incomes, since there are more income generating
economic activities engaged in by various people around the country.
10. It reduces rural urban migration and its associated evils, because the imbalances between the
rural and urban areas are reduced due to an increase in economic activities.
11. Feedback between planners and the implementers’ of plans is easy because of reduced
bureaucracy.
12. It reduces regional imbalances, since each region carries out its planning and it caters for itself.

Justify the need for decentralized planning in your country

To reduce rural urban migration and its associated evils because the imbalances between the
rural and urban areas are reduced.
To…………………………………………….

LIMITATIONS OF DECENTRALISED PLANNING

 Limited planners at a regional level.

 Some regional plans are too ambitious to achieve.
 Corruption at a regional level which undermines the implementation of plans.
 Difficulty of reconciling regional and national objectives.
 Poor infrastructure which limits private investment in some regions.

FACTORS THAT LIMIT EFFECTIVE IMPLEMENTATION OF DEVELOPMENT PLANS IN DEVELOPING

COUNTRIES; (2008-p.1, 2009-p.1,2011-p.2 2014-p.1)

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 1. Inadequate funds to formulate and implement plans. This makes it difficult to pay planners
during formulation and implementation/it makes it difficult to purchase the necessary materials
necessary to facilitate planning.
2. Inadequate information/ necessary data. This implies that planners base their decisions on
insufficient data, and this makes it difficult to assemble the necessary equipment needed to
facilitate plan formulation and implementation.
3. Non- responsive private sector, the private sector is slow in responding to the incentives
provided by the government in the economy which makes plan formulation and implementation
difficult. Even when government plays its part to facilitate the private sector, it does not take
the opportunities created.
4. Limited political will of the people and government. Government takes long to provide the
necessary funds needed to facilitate the formulation and implementation of plans.
5. Limited skilled personnel. This tends to compromise the quality of plans formulated and the
effectiveness of their implementation. Sometimes foreign skilled manpower is used but it is
inadequate due to limited knowledge of the local conditions.
6. Over ambitious plans. Sometimes the plans are often beyond the means of the countries to be
attained in the stated time. This implies that there are wonderful plans on paper but which are
hard to implement.
7. Dependence on foreign aid. Foreign aid is usually inadequate to finance the plans and it is not
very reliable because the donors can withdraw it before completion of the plan formulation and
implementation.
8. Corruption. A large proportion of money set aside for plan formulation and implementation is
misused and diverted to personal use which limits funds needed in the formulation and
implementation of plans.
9. High inflation rates. This makes it hard to formulate reliable plans and implementation becomes
difficult due to variations in predictions and realities. Therefore estimates of the future planned
projects are difficult to predict.
10. Natural calamities. Such calamities put pressure on people and government to spend in areas
where they had not planned to spend. This implies diversion of resources from the planned
activities to handling the effects of natural calamities.
11. Political instabilities. This leads to diversion of resources meant for plan formulation and
implementation to financing wars in order to ensure peace and harmony in the economy.
12. Interference by politicians. Many politicians use their influence to direct resources to their
home areas even when the resources should have been deployed in different areas and uses.
Such interference is at both formulation and implementation levels whereby political
considerations are put before technical and economic reasons.
13. Under developed infrastructure. It limits easy movement of goods and planners and this makes
plan formulation and implementation difficult.
14. High population growth rate. This leads to diversion of resources meant to facilitate plan
formulation and implementation towards the maintenance of dependants.

Explain the constraints to economic development planning in Uganda.

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Factors that affect the implementation of development plans in your country (2013-p.2)

1. Availability of funds, adequate funds make it possible to pay planners and this facilitates plan
implementation, however inadequate funds make it difficult to pay planners and this limits plan
formulation and implementation.
2. Availability of data/information, adequate data enables planners to base their decisions on
sufficient data and this enables them to assemble the necessary equipment needed for plan
formulation and implementation, but inadequate data forces planners to base their decisions
on inaccurate data which makes it difficult to assemble the necessary equipment needed at both
formulation and implementation stages.
3. The degree of responsiveness of the private sector, a quick responsive private sector is in
position to take on the incentives offered by the government and this makes plan formulation
and implementation easy, but a non-responsive private sector is slow in responding to
incentives offered by the government and this makes plan formulation and implementation
difficult.
4. The level of government commitment, a high level of commitment by the government to
achieving the set plan makes it easy for the government to provide funds necessary to facilitate
plan formulation and implementation but a low level of government commitment to achieving
the set plan delays the provision of funds necessary to facilitate plan formulation and
implementation.
5. The degree of political interference, a low level of political interference implies that political
considerations are not put before technical and economic reasons, which means that the
planned resources are directed to priority areas and this makes plan formulation and
implementation easy, however, a high level of political interference implies that resources are
redirected to areas that had not been planned for, which limits plan formulation and
implementation.
6. The efficiency of the implementation machinery/the labour skills, use of highly skilled labour
promotes efficiency which enables formulation of quality plans and this enables effective
implementation of plans but use of unskilled labour breeds inefficiency which compromises the
quality of plans and this limits effective plan formulation and implementation.
7. The political atmosphere, political stability enables effective plan implementation because it
limits diversion of resources meant for planning to financing wars, however political instability
leads to diversion of resources meant for plan formulation and implementation to financing
wars.
8. The level of accountability, a high degree of accountability limits the misuse of funds meant for
planning and this implies effective formulation and implementation of plans, however a low
degree of accountability leads to misuse and diversion of funds meant for planning to personal
use, which limits plan formulation and implementation.
9. The rate of inflation/the price levels, a high rate of inflation makes plan formulation and
implementation difficult because it brings variations in predictions and realities, however a low
rate of inflation makes it possible to make future predictions and estimates and this makes plan
formulation and implementation easy.
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 10. The degree of ambitiousness of planning, a low level of ambitiousness of planning implies that
the planned resources are within the means of the country to achieve and this makes it easy to
formulate and implement plans. However over ambitious plans are hard to formulate and
implement because there are beyond the means of the country to be achieved.
11. The degree of dependence on external resources/or aid for planning, a low level of
dependence on foreign aid makes plan formulation and implementation easy because it limits
uncertainties regarding the availability of funds, but a high dependence on foreign aid makes
plan formulation and implementation difficult since foreign aid is unreliable, tied and uncertain.
12. The level of dependence on nature. Low level of dependence on nature limits the diversion of
funds meant for planning to handling effects of natural calamities and this enables proper plan
formulation and implementation. However, high level of dependence on nature leads to
diversion of resources from planned activities to handling effects of natural calamities and this
limits plan formulation and implementation.
13. The level of infrastructural development. Well developed infrastructure facilitates easy
movement of goods and planners to different areas and this makes plan formulation and
implementation easy, however, low level of infrastructural development discourages the
movement of goods and planners to different areas and this makes plan formulation and
implementation difficult.
14. The population growth rate. A high population growth rate leads to diversion of resources
meant for plan formulation and implementation towards the maintenance of dependants and
this limits planning. However a low population growth rate limits the diversion of resources
meant for plan formulation and implementation and this facilitates planning.

Explain the measures that should be taken to improve economic development planning in Uganda.
(2016-P.2)

1. Raise sufficient funds, this should be done in order to facilitate payment of planners and thus
make it possible to formulate and implement plans.
2. Ensure proper data collection, this should be done in order to enable planners’ base their
decisions on sufficient data so as to avoid making mistakes at both formulation and
implementation stages.
3. Sensitize the private sector on her role in planning, this can encourage it to respond to the
incentives provided by the government and thus make plan implementation easy.
4. Provide skills to planners, this may be done in order to promote efficiency and thus not
compromise the quality of the formulated plans and thus ensure effectiveness of plan
implementation.
5. Avoid over ambitious planning, this can be done to ensure that plans are not beyond the means
of the country to be attained.
6. Minimize dependence on foreign aid, which is inconsistent, inadequate, tied e.t.c. This should
be done in order to ensure timely availability of funds necessary for plan formulation and
implementation.

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 7. Encourage proper accountability, this may be done to limit misuse and diversion of funds
meant for plan formulation and implementation to personal use.
8. Stabilize prices, this can be done in order to fairly accurately predict future costs and estimates
and thus make plan formulation and implementation easy.
9. Minimize dependence on nature, this may be done to reduce diversion of resources from the
planned activities to mitigating the effects of natural calamities.
10. Ensure stable political atmosphere, this can reduce diversion of funds meant for planning to
financing wars. It should also be done in order to ensure safety of planners during plan
implementation.
11. Discourage political interference in planning, this may be done in order to ensure that
resources are directed to priority areas and uses without bias towards political inclination.
12. Develop infrastructure, this should be done to reduce the cost and facilitate easy movement of
goods and planners to different areas and thus make plan implementation easy.
13. Ensure government commitment in planning, this can be done to ensure provision of adequate
funds to facilitate planners both at formulation and implementation stages.
14. Control population growth rate. This can be done to reduce the diversion of funds meant for
plan formulation and implementation towards the maintenance of dependants.

Explain the measures that are being taken to improve economic development planning in your
country.

Explain the measures that have been taken to improve economic development planning in your
country.

What are the pre-requisites for planning?

The following are the pre-requisites for planning.

There should be:

1. Adequate funds, to enable the payment of planners during formulation and implementation
stages.
2. Stable political atmosphere
3. Well-developed infrastructure
4. Responsive private sector
5. Low inflation rates
6. Efficient planning machinery
7. Adequate data
8. Limited dependence on foreign aid
9. Low rate of corruption/high degree of accountability
10. Limited political interference
11. Limited dependence on nature
12. High level of government commitment

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Ways of financing plans:
 Through borrowing from the central bank/printing and issuing money.
 By appealing for donations and grants.
 By raising revenue from taxes.
 Through sale of government securities/borrowing from the public.
 Through sale of government enterprises to raise revenue.

Prepared by Chris K Ssali@2019

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