Matakuliah
Tahun
: <<EKONOMI PEMBANGUNAN>>
: <<2009>>
Planning, Markets, and the Role of the State
Pertemuan 11
If we could first know where we are, and
whither we are tending, we could better judge
what to do, and how to do it.
(Abraham Lincoln)
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Material Outline
• The nature of development planning
• The rationale for planning in developing
economic
• Problems of implementation and plan failures
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The Nature of Development Planning: Basic
Concepts
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Economic Planning
An economic Plan
Partial Economic Plan
A Comprehensive plan
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The rationale for planning in developing
economics
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Market Failure
Resource Mobilization and Allocation
Attitudinal or Psychological Impact
Foreign Aid
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Characteristics of the planning process
1. Starting from the political views and goals of the government,
planning attempts to define policy objectives, especially as
they relate to the future development of the economy
2. A development plan sets out a strategy by means of which it
is intended to achieve these objectives, which are normally
translated into specific targets
3. The plan attempts to present a centrally coordinated,
internally consistent set of principles and policies, chosen as
the optimal means of implementing the strategy and
achieving the targets and intended to be used as framework
to guide subsequentday-to-day decisions
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Characteristics of the planning process
4. It comprehendsthe whole economy (hence it is
“comprehensive”, in contrast to “colonial” or “public sector”
planning)
5. To secure optimality and consistency, the comprehensive
plan employs a more or less formalized macroeconomic
model to project the intended future performance of the
economy
6. A development plan typically covers a period of, says, five
years and finds physical expression as a medium-term plan
document, which may, however, incorporate a longer-term
perspective plan ang be suplemented by annual plans.
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Basic Planning Models
1. Aggregate growth Models
Involving macro economics estimates of planned or
required changes in principal economic variables
2. Multi sector Input – output Models
As certain the production, resource, employment, and
foreign- exchange implications of a given set of final
demand targets within an internally consistent framework
or inter industry product flows
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The Crisis Planning
Problems of Implementation and Plan Failures
1) Factor Prices, Choice of Technique, and
Employment Creation
2) Rural – Urban Imbalances and migration
3) Demand for Education and the employment
problem
4) Structure of the Economy
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Reasons for Plan Failures
• Deficiencies in Plans and their Implementation
• Insufficient and Unrealiable Data
• Unanticipated Economic Disturbances, External
and Internal
• Institutional Weaknesses
• Lack of Political Will
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