Course: Economic Development of Pakistan-I (4659)
Semester: Autumn, 2021
Assignment No.1
Q.l
Explain in detail the concept of Economic Development and Economic planning with reference to
Pakistan. Give arguments.
In developing economies, however, this is not so simple. Here a case is often made for entry of the central bank
in some selected fields to promote the development of the economy; besides ensuring the growth of a sound
banking structure to cope with the increasing needs of credit. Commercial bankers take this as an encroachment
on their field.
They argue that the major part of the Central Bank’s funds comprise the reserves of the commercial banks
meant for safeguarding their safety (liquidity). It would be immoral on the part of the central bank to compete in
business with the commercial banks with their money. In view of the co-operation that the central bank often
seeks from commercial banks for carrying out its policies, the central bank should not invite hostility from them
by giving them unjust competition through its special privileges as the bankers’ bank and the banker of the
government.
In spite of these arguments, opinion has gone in favour of undertaking of some commercial business by the
central bank, especially in underdeveloped economies. A small amount of business can hardly affect the
liquidity position of the ‘creator of liquidity’. It is not at all necessary that the central bank uses the commercial
banks’ funds for this. It can set up a separate department for commercial business and create resources also.
In fact, it may organize a special agent bank as its favoured child for doing the arduous business necessary for
economic development often avoided by commercial banks. Further, if the central bank feels that the steering
wheel of credit control in its banks is loose and not functioning satisfactory, it may gain an edge of
manoeuvrability by keeping in touch with the market through a limited amount of business.
Besides, in an agriculturally depressed economy like India, the central bank may take up the onus of developing
a bill market, granting direct loans, or discounting good bills of exchange. As regards direct loans, it may be a
bit difficult to democrat clearly the central bank’s field vis-a-vis that of the commercial banks.
The difficulty is removed if the central bank, while doing ordinary commercial business keeps in mind that in
its operations, the public interest and not profit-earning motive, prevails; what it can get done through
commercial banks it never undertakes doing itself.
The various quantitative and qualitative instruments of credit control should be judiciously used by the central
bank. No doubt, the bank has the drastic weapons of reserve ratio requirements, open market operations or
changes in the bank rate, etc. but none of them is fool-proof.
After all, it is bank official on the spot who can judge between the credits asked for socially desirable
productive purposes or credit being taken in the name of bona-fide purposes, but to be used for some anti-social
actions. Unless the commercial bank and the central bank provide willing co-operation, the one will be
weakened and the other will be frustrated. This is why moral persuasion must be preferred now to direct action.
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Course: Economic Development of Pakistan-I (4659)
Semester: Autumn, 2021
The relationship between the commercial banks and the central bank has to be based on reciprocity. The
commercial banks should conform to the spirit of central bank directives rather than letters. On the other side,
the central bank should invariably satisfy the genuine needs of the commercial banks in times of stresses and
strains. A moral code of conduct between the two will have to be evolved, accepted and followed.
The central bank has been described as the "lender of last resort," which means it is responsible for providing its
nation's economy with funds when commercial banks cannot cover a supply shortage. In other words, the
central bank prevents the country's banking system from failing.
However, the primary goal of central banks is to provide their countries' currencies with price stability by
controlling inflation. A central bank also acts as the regulatory authority of a country's monetary policy and is
the sole provider and printer of notes and coins in circulation.
Time has proved that the central bank can best function in these capacities by remaining independent from
government fiscal policy and therefore uninfluenced by the political concerns of any regime. A central bank
should also be completely divested of any commercial banking interests.

Central banks carry out a nation's monetary policy and control its money supply, often mandated with
maintaining low inflation and steady GDP growth.

On a macro basis, central banks influence interest rates and participate in open market operations to
control the cost of borrowing and lending throughout an economy.

Central banks also operate on a micro-scale, setting the commercial banks' reserve ratio and acting as
lender of last resort when necessary.
Historically, the role of the central bank has been growing, some may argue, since the establishment of
the Bank of England in 1694.1 It is, however, generally agreed upon that the concept of the modern central bank
did not appear until the 20th century, in response to problems in commercial banking systems.
Between 1870 and 1914, when world currencies were pegged to the gold standard (GS), maintaining price
stability was a lot easier because the amount of gold available was limited. Consequently, monetary expansion
could not occur simply from a political decision to print more money, so inflation was easier to control. The
central bank at that time was primarily responsible for maintaining the convertibility of gold into currency; it
issued notes based on a country's reserves of gold.
At the outbreak of World War I, the GS was abandoned, and it became apparent that, in times of crisis,
governments facing budget deficits (because it costs money to wage war) and needing greater resources would
order the printing of more money. As governments did so, they encountered inflation.
After the war, many governments opted to go back to the GS to try to stabilize their economies. With this rose
the awareness of the importance of the central bank's independence from any political party or administration.
During the unsettling times of the Great Depression and the aftermath of World War II, world governments
predominantly favored a return to a central bank dependent on the political decision-making process. This view
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Course: Economic Development of Pakistan-I (4659)
Semester: Autumn, 2021
emerged mostly from the need to establish control over war-shattered economies; furthermore, newly
independent nations opted to keep control over all aspects of their countries—a backlash against colonialism.
The rise of managed economies in the Eastern Bloc was also responsible for increased government interference
in the macroeconomy. Eventually, however, the independence of the central bank from the government came
back into fashion in Western economies and has prevailed as the optimal way to achieve a liberal and stable
economic regime.
Q.2
During 1960’s, the agricultural sector faced the problem of low productivity. The main causes were
the inadequate supply or vital agricultural inputs. Discuss all other factors responsible for low
productivity.
Economic growth has raised living standards around the world. However, modern economies have lost sight of the
fact that the standard metric of economic growth, gross domestic product (GDP), merely measures the size of a
nation’s economy and doesn’t reflect a nation’s welfare. Yet policymakers and economists often treat GDP, or
GDP per capita in some cases, as an all-encompassing unit to signify a nation’s development, combining its
economic prosperity and societal well-being. As a result, policies that result in economic growth are seen to be
beneficial for society.
We know now that the story is not so simple – that focusing exclusively on GDP and economic gain to measure
development ignores the negative effects of economic growth on society, such as climate change and income
inequality. It’s time to acknowledge the limitations of GDP and expand our measure development so that it takes
into account a society’s quality of life. According to him, the estimate of national income should be the sum of
private consumption, investment and government spending. He rejected Kuznets’ version, which included
government income, but not spending, in his calculation. Keynes realized that if the government’s wartime
procurement was not considered as demand in calculating national income, GDP would fall despite actual
economic growth taking place. His method of calculating GDP, including government spending into a country’s
income, which was driven by wartime necessities, soon found acceptance around the world even after the war was
over. It continues to this day. But a measure created to assess wartime production capabilities of a nation has
obvious drawbacks in peacetime. For one, GDP by definition is an aggregate measure that includes the value of
goods and services produced in an economy over a certain period of time. There is no scope for the positive or
negative effects created in the process of production and development. For example, GDP takes a positive count
of the cars we produce but does not account for the emissions they generate; it adds the value of the sugar-laced
beverages we sell but fails to subtract the health problems they cause; it includes the value of building new cities
but does not discount for the vital forests they replace. As Robert Kennedy put it in his famous election speech in
1968, “it [GDP] measures everything in short, except that which makes life worthwhile.”
Environmental degradation is a significant externality that the measure of GDP has failed to reflect. The
production of more goods adds to an economy’s GDP irrespective of the environmental damage suffered because
of it. So, according to GDP, a country like India is considered to be on the growth path, even though Delhi’s
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Course: Economic Development of Pakistan-I (4659)
Semester: Autumn, 2021
winters are increasingly filled with smog and Bengaluru’s lakes are more prone to fires. Modern economies need a
better measure of welfare that takes these externalities into account to obtain a truer reflection of development.
Broadening the scope of assessment to include externalities would help in creating a policy focus on addressing
them.
GDP also fails to capture the distribution of income across society – something that is becoming more pertinent in
today’s world with rising inequality levels in the developed and developing world alike. It cannot differentiate
between an unequal and an egalitarian society if they have similar economic sizes. As rising inequality is resulting
in a rise in societal discontentment and increased polarization, policymakers will need to account for these issues
when assessing development.
Another aspect of modern economies that makes GDP anachronistic is its disproportionate focus on what is
produced. Today’s societies are increasingly driven by the growing service economy – from the grocery shopping
on Amazon to the cabs booked on Uber. As the quality of experience is superseding relentless production, the
notion of GDP is quickly falling out of place. We live in a world where social media delivers troves of
information and entertainment at no price at all, the value for which cannot be encapsulated by simplistic figures.
Our measure of economic growth and development also needs to adapt to these changes in order to give a more
accurate picture of the modern economy.
Economists have had an enormous impact on trade policy, and they provide a strong rationale for free trade and
for removal of trade barriers. Although the objective of a trade agreement is to liberalize trade, the actual
provisions are heavily shaped by domestic and international political realities. The world has changed
enormously from the time when David Ricardo proposed the law of comparative advantage, and in recent
decades economists have modified their theories to account for trade in factors of production, such as capital
and labor, the growth of supply chains that today dominate much of world trade, and the success of
neomercantilist countries in achieving rapid growth. Almost all Western economists today believe in the
desirability of free trade, and this is the philosophy advocated by international institutions such as the World
Bank, the International Monetary Fund, and the World Trade Organization (WTO). And this was the view after
World War II, when Western leaders launched the General Agreement on Tariffs and Trade (GATT) in 1947.
However, economic theory has evolved substantially since the time of Adam Smith, and it has evolved rapidly
since the GATT was founded. To understand U.S. trade agreements and how they should proceed in the future,
it is important to review economic theory and see how it has evolved and where it is today.
In the seventeenth and eighteenth centuries, the predominant thinking was that a successful nation should export
more than it imports and that the trade surplus should be used to expand the nation’s treasure, primarily gold
and silver. This would allow the country to have a bigger and more powerful army and navy and more colonies.
One of the better-known advocates of this philosophy, known as mercantilism, was Thomas Mun, a director of
the British East India Company. In a letter written in the 1630s to his son, he said: “The ordinary means
therefore to increase our wealth and treasure is by Foreign Trade, wherein wee must ever observe this rule; to
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Course: Economic Development of Pakistan-I (4659)
Semester: Autumn, 2021
sell more to strangers yearly than wee consume of theirs in value. . . . By this order duly kept in our trading,
.that part of our stock which is not returned to us in wares must necessarily be brought home in treasure.”
Mercantilists believed that governments should promote exports and that governments should control economic
activity and place restrictions on imports if needed to ensure an export surplus. Obviously, not all nations could
have an export surplus, but mercantilists believed this was the goal and that successful nations would gain at the
expense of those less successful. Ideally, a nation would export finished goods and import raw materials, under
mercantilist theory, thereby maximizing domestic employment.
Then Adam Smith challenged this prevailing thinking in The Wealth of Nations published in 1776. Smith
argued that when one nation is more efficient than another country in producing a product, while the other
nation is more efficient at producing another product, then both nations could benefit through trade. This would
enable each nation to specialize in producing the product where it had an absolute advantage, and thereby
increase total production over what it would be without trade. This insight implied very different policies than
mercantilism. It implied less government involvement in the economy and a reduction of barriers to trade.
Thirty-one years after The Wealth of Nations was published, David Ricardo introduced an extremely important
modification to the theory in his On the Principles of Political Economy and Taxation, published in
1817. Ricardo observed that trade will occur between nations even where one country has an absolute
advantage in producing all the products traded.
Ricardo showed that what was important was the comparative advantage of each nation in production. The
theory of comparative advantage holds that even if one nation can produce all goods more cheaply than can
another nation, both nations can still trade under conditions where each benefits. Under this theory, what
matters is relative efficiency.
Economists sometimes compare this to the situation where even though a lawyer might be more proficient at
both law and typing than the secretary, it would still pay the lawyer to have the secretary handle the typing to
allow more time for the higher-paying legal work. Similarly, if each country specializes in the products where it
is comparatively more efficient, total production will be higher and consumers will have more goods to utilize.
Smith and Ricardo considered only labor as a “factor of production.” In the early 1900s, this theory was
further developed by two Swedish economists, Bertil Heckscher and Eli Ohlin, who considered several factors
of production. The so-called Heckscher-Ohlin theory basically holds that a country will export those
commodities that are produced by the factor that it has in relative abundance and that it will import products
whose production requires factors of production where it has relatively less abundance. This situation is often
portrayed in economics textbooks as a simplified model of two countries (England and Portugal) and two
products (textiles and wine). In this simplified portrayal, England has relatively abundant capital and Portugal
has relatively abundant labor, and textiles are relatively capital intensive whereas wine is relatively labor
intensive. With these conditions, both nations would be better off if they freely traded, and under such a
situation of free trade, England would export textiles and import wine. This would maximize efficiency,
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Course: Economic Development of Pakistan-I (4659)
Semester: Autumn, 2021
resulting in more total production of textiles and wine and cheaper prices for consumers than would be the case
without trade. Through empirical studies and mathematical models, economists almost universally believe that
this model holds equally well for multiple products and multiple countries.
In fact, economists consider this law of comparative advantage to be fundamental. As Dominick Salvatore says
in his basic economics textbook International Economics, the law of comparative advantage remains “one of the
most important and still unchallenged laws of economics. The law of comparative advantage is the cornerstone
of the pure theory of international trade.”
The law of comparative advantage also holds equally well for many factors of production. In addition to labor
and capital, other factors of production include natural resources such as land and technology, and these can be
subdivided. For example, land can be land for mining or land for farming, or technology for making cars or
computer chips, or skilled and unskilled labor. Additionally, over time factor endowments may change. For
example, natural resources, such as coal reserves, may be used up, or a country’s educational system may be
improved, thereby providing a more highly skilled labor force.
Furthermore, some products do not utilize the same factors of production over their life cycle. For example,
when computers were first introduced, they were incredibly capital intensive and required highly skilled labor.
Over time, as volume increased, costs came down and computers could be mass produced. Initially, the United
States had a comparative advantage in production; but today, when computers are mass produced by relatively
unskilled labor, the comparative advantage has shifted to countries with abundant cheap labor. And still other
products may use different factors of production in different countries. For example, cotton production is highly
mechanized in the United States but is very labor intensive in Africa. The fact that factors of production may
change does not nullify the theory of comparative advantage; it just means that the mix of products that a nation
can produce relatively more efficiently than its trade partners may change.
Traditional economic theories expounded by Ricardo and Heckscher-Ohlin are based on a number of important
assumptions, such as perfect competition with no artificial barriers imposed by governments. A second
assumption is that production occurs under diminishing or constant returns to scale, that is, the costs of
producing each additional unit are the same or higher as production increases. For example, to increase his
wheat crop, a farmer may be forced to use less-fertile land or pay more for laborers to harvest the wheat,
thereby increasing the cost of each additional unit produced.
Another key assumption of traditional economic theory is that basic factors of production—such as land, labor,
and capital—are not traded across borders. Although Ohlin believed that such basic factors of production were
not traded, he argued that the relative returns to factors of production between countries would tend to be
equalized as goods are traded between the countries. Subsequently, Samuelson argued that factor prices would
in fact be equalized under free trade conditions, and this is known in economics as the factor price equalization
theorem. This might mean, for example, that international trade would cause wage rates for unskilled workers to
fall in the high-wage country in relation to the rents available from capital and to the same level as wages in the
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Course: Economic Development of Pakistan-I (4659)
Semester: Autumn, 2021
low wage country, and for wages to rise in relation to the rents available from capital in the low-wage country
and equal to the level of the country where labor was less abundant.
In static terms, the law of comparative advantage holds that all nations can benefit from free trade because of
the increased output available for consumers as a result of more efficient production. James Jackson of the
Congressional Research Service describes the benefits as follows: Trade liberalization, “by reducing foreign
barriers to U.S. exports and by removing U.S. barriers to foreign goods and services, helps to strengthen those
industries that are the most competitive and productive and to reinforce the shifting of labor and capital from
less productive endeavors to more productive economic activities.”
Many economists, however, believe that the dynamic benefits of free trade may be greater than the static
benefits. Dynamic benefits, for example, include the pressure on companies to be more efficient to meet foreign
competition, the transfer of skills and knowledge, the introduction of new products, and the potential positive
impact of the greater adoption of commercial law. Thus trade can affect both what is produced (static effects)
and how it is produced (dynamic effects).
Terms of Trade
Another important concept in international trade theory is the concept of “terms of trade.” This refers to the
amount of exports needed to obtain a given amount of imports, with the fewer amount of exports needed the
better for the country. The terms of trade can shift, either benefiting a country or reducing its welfare.
Assume that the United States exports aircraft to Japan and imports televisions, and that one airplane can
purchase 1,000 televisions. If one airplane now can purchase 2,000 televisions, the United States will be better
off ; alternatively, its welfare is diminished if it can only purchase 500 televisions with a single airplane.
A number of factors can affect the terms of trade, including changes in demand or supply, or government
policy. In the example given just above, if Japanese demand for aircraft increases, the terms of trade will shift in
the United States’ favor because it can demand more televisions for each airplane. Alternatively, if the
Japanese begin producing aircraft, the terms of trade will shift in Japan’s favor, because the supply of aircraft
will now be larger and the Japanese will have alternative sources of supply.
Under certain conditions, improvements in a country’s productivity can worsen its terms of trade. For example,
if Japanese manufacturers of televisions become more efficient and reduce sale prices, Japan’s terms of trade
will worsen as it will take more televisions to exchange for the airplane.
A country can also adopt a beggar-thy-neighbor stance by deliberately turning the terms of trade in its favor
through the imposition of an optimum tariff or through currency manipulation. In his economics textbook,
Dominick Salvatore defines an optimum tariff as
that rate of tariff that maximizes the net benefit resulting from the improvement in the nation’s terms of trade
against the negative effect resulting from reduction in the volume of trade. . . . As the terms of trade of the
nation imposing the tariff improve, those of the trade partner deteriorate, since they are the inverse. . . . Facing
both a lower volume of trade and deteriorating terms of trade, the trade partner’s welfare definitely declines. As
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Course: Economic Development of Pakistan-I (4659)
Semester: Autumn, 2021
a result, the trade partner is likely to retaliate. . . . Note that even when the trade partner does not retaliate when
one nation imposes the optimum tariff, the gains of the tariff-imposing nation are less than the losses of the
trade partner, so that the world as a whole is worse off than under free trade. It is in this sense that free trade
maximizes world welfare.
If both countries play this game, both will be worse off. However, if only one country pursues this strategy, it
can gain at its partner’s expense.
The objective of reducing barriers to trade, of course, is to increase the level of trade, which is expected to
improve economic well-being. Economists often measure economic well-being in terms of the share of total
output of goods and services (i.e., gross domestic product, GDP) that the country produces per person on
average. GDP is the best measurement of economic well-being available, but it has significant conceptual
difficulties. As Joseph Stiglitz notes, the measurement of GDP fails “to capture some of the factors that make a
difference in people’s lives and contribute to their happiness, such as security, leisure, income distribution and a
clean environment—including the kinds of factors which growth itself needs to be sustainable.” Moreover,
GDP does not distinguish between “good growth” and “bad growth”; for example, if a company dumps waste in
a river as a by-product of its manufacturing, both the manufacturing and the subsequent cleaning up of the river
contribute to the measurement of GDP.
As the result of a multilateral round of trade negotiations under the GATT/WTO, tariffs are reduced during a
transition period but are not completely eliminated. In the United States’ bilateral or regional free trade
agreements (FTAs), however, parties to the agreement completely eliminate almost all tariffs on trade with each
other, generally over a transition period, which may be five to ten years.
Although reducing barriers to trade generally represents a move toward free trade, there are situations when
reducing a tariff can actually increase the effective rate of protection for a domestic industry. Jacob Viner gives
an example: “Let us suppose that there are import duties both on wool and on woolen cloth, but that no wool is
produced at home despite the duty. Removing the duty on wool while leaving the duty unchanged on the
woolen cloth results in increased protection for the cloth industry while having no significance for woolraising.”
Q.3
What are the major differences and similarities among development theories? Also explain their
contribution and limitations for the process of development.
Child development theories focus on explaining how children change and grow over the course of childhood.
Such theories center on various aspects of development including social, emotional, and cognitive growth.
The study of human development is a rich and varied subject. We all have personal experience with
development, but it is sometimes difficult to understand how and why people grow, learn, and act as they do.
Why do children behave in certain ways? Is their behavior related to their age, family relationships, or
individual temperaments? Developmental psychologists strive to answer such questions as well as to
understand, explain, and predict behaviors that occur throughout the lifespan.
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Course: Economic Development of Pakistan-I (4659)
Semester: Autumn, 2021
In order to understand human development, a number of different theories of child development have arisen to
explain various aspects of human growth.
Theories of development provide a framework for thinking about human growth and learning. But why do we
study development? What can we learn from psychological theories of development? If you have ever
wondered about what motivates human thought and behavior, understanding these theories can provide useful
insight into individuals and society.
Child development that occurs from birth to adulthood was largely ignored throughout much of human history.
Children were often viewed simply as small versions of adults and little attention was paid to the many
advances in cognitive abilities, language usage, and physical growth that occur during childhood and
adolescence.
Interest in the field of child development finally began to emerge early in the 20th century, but it tended to
focus on abnormal behavior. Eventually, researchers became increasingly interested in other topics including
typical child development as well as the influences on development.
Why is it important to study how children grow, learn and change? An understanding of child development is
essential because it allows us to fully appreciate the cognitive, emotional, physical, social, and educational
growth that children go through from birth and into early adulthood.
Some of the major theories of child development are known as grand theories; they attempt to describe every
aspect of development, often using a stage approach. Others are known as mini-theories; they instead focus only
on a fairly limited aspect of development such as cognitive or social growth.
There are many child development theories that have been proposed by theorists and researchers. More recent
theories outline the developmental stages of children and identify the typical ages at which these
growth milestones occur.1
Freud's Psychosexual Developmental Theory
Psychoanalytic theory originated with the work of Sigmund Freud. Through his clinical work with patients
suffering from mental illness, Freud came to believe that childhood experiences and unconscious desires
influenced behavior.
According to Freud, conflicts that occur during each of these stages can have a lifelong influence on personality
and behavior. Freud proposed one of the best-known grand theories of child development.
According to Freud’s psychosexual theory, child development occurs in a series of stages focused on different
pleasure areas of the body. During each stage, the child encounters conflicts that play a significant role in the
course of development.
His theory suggested that the energy of the libido was focused on different erogenous zones at specific stages.
Failure to progress through a stage can result in fixation at that point in development, which Freud believed
could have an influence on adult behavior.
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Course: Economic Development of Pakistan-I (4659)
Semester: Autumn, 2021
So what happens as children complete each stage? And what might result if a child does poorly during a
particular point in development? Successfully completing each stage leads to the development of a healthy adult
personality.
Failing to resolve the conflicts of a particular stage can result in fixations that can then have an influence on
adult behavior.
While some other child development theories suggest that personality continues to change and grow over the
entire lifetime, Freud believed that it was early experiences that played the greatest role in shaping
development. According to Freud, personality is largely set in stone by the age of five.
Erikson's Psychosocial Developmental Theory
Psychoanalytic theory was an enormously influential force during the first half of the twentieth century. Those
inspired and influenced by Freud went on to expand upon Freud's ideas and develop theories of their own. Of
these neo-Freudians, Erik Erikson's ideas have become perhaps the best known.
Erikson's eight-stage theory of psychosocial development describes growth and change throughout life,
focusing on social interaction and conflicts that arise during different stages of development.
While Erikson’s theory of psychosocial development shared some similarities with Freud's, it is dramatically
different in many ways. Rather than focusing on sexual interest as a driving force in development, Erikson
believed that social interaction and experience played decisive roles.
His eight-stage theory of human development described this process from infancy through death. During each
stage, people are faced with a developmental conflict that impacts later functioning and further growth.
Unlike many other developmental theories, Erik Erikson's psychosocial theory focuses on development across
the entire lifespan. At each stage, children and adults face a developmental crisis that serves as a major turning
point.
Successfully managing the challenges of each stage leads to the emergence of a lifelong psychological virtue.
Behavioral Child Development Theories
During the first half of the twentieth century, a new school of thought known as behaviorism rose to become a
dominant force within psychology. Behaviorists believed that psychology needed to focus only on observable
and quantifiable behaviors in order to become a more scientific discipline.
According to the behavioral perspective, all human behavior can be described in terms of environmental
influences. Some behaviorists, such as John B. Watson and B.F. Skinner, insisted that learning occurs purely
through processes of association and reinforcement.
Behavioral theories of child development focus on how environmental interaction influences behavior and is
based on the theories of theorists such as John B. Watson, Ivan Pavlov, and B. F. Skinner. These theories deal
only with observable behaviors. Development is considered a reaction to rewards, punishments, stimuli, and
reinforcement.
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Course: Economic Development of Pakistan-I (4659)
Semester: Autumn, 2021
This theory differs considerably from other child development theories because it gives no consideration to
internal thoughts or feelings. Instead, it focuses purely on how experience shapes who we are.
Two important types of learning that emerged from this approach to development are classical
conditioning and operant conditioning. Classical conditioning involves learning by pairing a naturally occurring
stimulus with a previously neutral stimulus. Operant conditioning utilizes reinforcement and punishment to
modify behaviors.
Piaget's Cognitive Developmental Theory
Cognitive theory is concerned with the development of a person's thought processes. It also looks at how these
thought processes influence how we understand and interact with the world.
Theorist Jean Piaget proposed one of the most influential theories of cognitive development.
Piaget proposed an idea that seems obvious now, but helped revolutionize how we think about child
development: Children think differently than adults.2
His cognitive theory seeks to describe and explain the development of thought processes and mental states. It
also looks at how these thought processes influence the way we understand and interact with the world.
Piaget then proposed a theory of cognitive development to account for the steps and sequence of children's
intellectual development.

Sensorimotor Stage: A period of time between birth and age two during which an infant's knowledge
of the world is limited to his or her sensory perceptions and motor activities. Behaviors are limited to
simple motor responses caused by sensory stimuli.

Pre-Operational Stage: A period between ages 2 and 6 during which a child learns to use language.
During this stage, children do not yet understand concrete logic, cannot mentally manipulate information
and are unable to take the point of view of other people.

Concrete Operational Stage: A period between ages 7 and 11 during which children gain a better
understanding of mental operations. Children begin thinking logically about concrete events but have
difficulty understanding abstract or hypothetical concepts.

Formal Operational Stage: A period between age 12 to adulthood when people develop the ability to
think about abstract concepts. Skills such as logical thought, deductive reasoning, and systematic
planning also emerge during this stage.
Bowlby's Attachment Theory
There is a great deal of research on the social development of children. John Bowbly proposed one of the
earliest theories of social development. Bowlby believed that early relationships with caregivers play a major
role in child development and continue to influence social relationships throughout life.3
Bowlby's attachment theory suggested that children are born with an innate need to form attachments. Such
attachments aid in survival by ensuring that the child receives care and protection. Not only that, but these
attachments are characterized by clear behavioral and motivational patterns.
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Course: Economic Development of Pakistan-I (4659)
Semester: Autumn, 2021
In other words, both children and caregivers engage in behaviors designed to ensure proximity. Children strive
to stay close and connected to their caregivers who in turn provide a safe haven and a secure base for
exploration.
Researchers have also expanded upon Bowlby's original work and have suggested that a number of
different attachment styles exist. Children who receive consistent support and care are more likely to develop a
secure attachment style, while those who receive less reliable care may develop an ambivalent, avoidant, or
disorganized style.
Bandura's Social Learning Theory
Social learning theory is based on the work of psychologist Albert Bandura. Bandura believed that the
conditioning and reinforcement process could not sufficiently explain all of human learning.
For example, how can the conditioning process account for learned behaviors that have not been reinforced
through classical conditioning or operant conditioning According to social learning theory, behaviors can also
be learned through observation and modeling.
By observing the actions of others, including parents and peers, children develop new skills and acquire new
information.
Bandura's child development theory suggests that observation plays a critical role in learning, but this
observation does not necessarily need to take the form of watching a live model.4
Instead, people can also learn by listening to verbal instructions about how to perform a behavior as well as
through observing either real or fictional characters displaying behaviors in books or films.
Vygotsky's Sociocultural Theory
Another psychologist named Lev Vygotsky proposed a seminal learning theory that has gone on to become very
influential, especially in the field of education. Like Piaget, Vygotsky believed that children learn actively and
through hands-on experiences.5
His sociocultural theory also suggested that parents, caregivers, peers and the culture at large were responsible
for developing higher-order functions. In Vygotsky's view, learning is an inherently social process. Through
interacting with others, learning becomes integrated into an individual's understanding of the world.
This child development theory also introduced the concept of the zone of proximal development, which is the
gap between what a person can do with help and what they can do on their own. It is with the help of more
knowledgeable others that people are able to progressively learn and increase their skills and scope of
understanding.
Q.4
“Economic development is the process whereby a country’s real per capita income or GNP
increased over sustained a period, through continuing increase in per capita productivity”.
Explain.
A country’s economic development is usually indicated by an increase in citizens’ quality of life. ‘Quality of
life’ is often measured using the Human Development Index, which is an economic model that considers
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intrinsic personal factors not considered in economic growth, such as literacy rates, life expectancy, and poverty
rates.
What is the difference between Economic Growth and Development? We will start by defining Economic
growth and development. Having economic growth without economic development is possible.
Economic growth in an economy is demonstrated by an outward shift in its Production Possibility Curve (PPC).
Another way to define growth is the increase in a country’s total output or Gross Domestic Product (GDP). It is
the increase in a country’s production.
Economic Growth Occurs When
1. There is a discovery of new mineral/metal deposits.
2. There is an increase in the number of people in the workforce or the quality of the workforce improves.
For example, through training and education.
3. There is an increase in capital and machinery.
4. There is an improvement in technology.
Economic Development Occurs When
Measures of economic development will look at:

An increase in real income per head – GDP per capita.

The increase in levels of literacy and education standards.

Improvement in the quality and availability of housing.

Improvement in levels of environmental standards.

Increased life expectancy.
Development alleviates people from low standards of living into proper employment with suitable shelter.
Economic Growth does not take into account the depletion of natural resources, which might lead to pollution,
congestion & disease. Development, however, is concerned with sustainability, which means meeting the needs
of the present without compromising future needs.
A. Economic Growth Definition
Economic Growth is an increase in a country’s output.
B. Economic Development Definition
Economic Development is an improvement in factors such as health, education, literacy rates, and a decline in
poverty levels.
Poverty has come down most when inequality has fallen, and there is high economic growth. Initial low levels
of inequality are associated with more negative elasticities of poverty reduction concerning growth. Higher
initial inequality results in less effect on poverty with an increase in economic growth.
1. Savings Rate
The marginal savings rate changes with decreasing or increasing income. The marginal savings rate is
the fractional decrease in saving that results from a decrease in income.
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2. Credit Market Constraints
The poor can’t get loans.
3. Political Economy
Governments pursue poor policies (redistribution policies) trying to reduce inequality, which results in
high inflation, high deficit, and lower growth. However, there doesn’t seem to any relationship between
inequality and economic growth empirically. But, higher economic growth leads to lower levels of poverty (not
the same as inequality)
Growth Effect
The positive growth of people’s income and no change in income leads to a decrease in the poverty level.
Q.5
Critically evaluate the fourth and sixth five years plan with reference to their programme
priorities and strategies.
The history of national economic planning in Pakistan is divided in the following periods:
1.
Period of economic coordination (1947-53)
2.
Period of planning board (1953-58)
3.
Period of Planning Commission (1958-68)
4.
Period of decline of Planning Commission (1968-77)
5.
Period of revival of Planning Commission (1978-88)
6.
Period of (1988-98)
7.
Period of restructuring of economy (1999-2008)
1. Period of economic coordination (1947 – 1953): Pakistan’s first planning board was established in
1950 with main emphasis on agriculture. Unfortunately, that plan was not well implemented on time.
There were no targets fixed for the plan and the planning machinery was so weak to tackle with
implementation. Therefore, the economic planning efforts during this period was a complete failure.
2. Period of planning board (1953 – 1958): The planning board of Pakistan was renamed as Planning
Commission in 1953. The planning commission was facing the following serious problems:
·
Shortage of trained staff,
·
Non-availability of accurate and reliable data,
·
Uncertain conditions in the planning machinery
·
It was regarded as a rivalry between Ministry of Finance and the State Bank of Pakistan
·
Political instability
·
Annual economic planning was never seriously followed
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·
Most of the economic advices were rejected by implementing authorities
·
Economic priorities were not given due importance
·
Budget decisions were also distorted
During this period, the First Five-Year Plan was made. Its implementation suffered due to rapid changes
in government and a lack of political support.
3. Period of planning commission (1958 – 1968): The third period of the planning process began in
October 1958 with the assumption of power by the military government of Ayub Khan. The new regime
chooses to make economic development through a marked economy and reliance of the private sector as
its primary objective. The new government gave proper attention to achieve the following targets:
·
Rapid industrialisation in the country,
·
Removal of food shortage,
·
Removal of political instability, and
·
To overcome the problem of deficit of balance of payment.
The status of the Planning Commission was raised to a Division in the President’s secretariat. The
President himself assumed the chairmanship of the Planning Commission and Deputy Chairman, with
the ex-officio status of a minister, was made the operational head of the Commission. Provincial
planning department was organised. The Planning Commission was also provided the secretariat for
National Economic Council (NEC) which looked after the day-to-day work of NEC and was also
responsible for final approval for annual development.
During this period the Second Five-Year Plan (1960-65) was made. It was so successful that Pakistan
led to an example for hunger nations of the world. But unfortunately Pakistan had to fight war against
India in 1965. Then there was a hue and cry against Ayub government and another government got the
power.
4. Period of decline of planning commission (1968 – 1977): This is the period of decline of Planning
Commission as an important decision-making body coincided with the fall of Ayub Khan’s
government. During the Yahya Khan period (1969 – 1971), the serious planning on national level was
completely ignored. The Third Five-Year Plan (1965 – 1970) was virtually abandoned by the Yahya
Khan’s government. In 1970, the Fourth Five-Year Plan (1970 – 1975) was made and it was also a big
failure because of the worst political conditions and instable government policies. In 1972, the newly
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elected government of Z. A. Bhutto decided to run the economy through annual planning, rather than
through a comprehensive five-year plan. During the same year, the Planning Commission was placed
directly under the control of Ministry of Finance as a Division. During the period from 1972 to 1977,
the Planning Commission, with very less powers, have very few favourable economic decisions. In
other words, the Planning Commission was powerless and ineffective.
5. Period of revival of planning commission (1978 – 1988): After taking charge of the government, the
Zia-ul-Haq’s regime emphasised on the needs of five-year plans. In early 1980s, the Zia government
took steps to revive the Planning Commission as an effective and authoritative economic decisionmaking body.
During this period, two Five-Year Plans were formulated, i.e., Fifth and Sixth. In 1978, the Fifth FiveYear Plan to cover the period of 1978 – 1983 was published. But the Government failed to pursue the
plan mainly because of uncertain political as well as economic conditions at that time. The Sixth FiveYear Plan was formulated in 1983 to cover the period 1983 – 1988. At that time, Dr. Mahbub-ul-Haq
was the Finance Minister. He formulated the plan and because of his great efforts, this plan was a
success. During his tenure, the Planning Commission has played a vital role in effectively formulating
and implementing the economic planning. Not only the Sixth Five-Year Plan, but also the annual plans
were formulated by the Planning Commission.
6. The period of (1988 – 1999): The period of 1988 to 1999 the period of political and economic
instability. During this period, four elected governments were dismissed by the President on the charges
of corruption. The role of Planning Commission was over-shadowed by political decisions. Its role was
just limited to the preparation and submission of reports. It has nothing to do with the implementation
of planning.
The Seventh Five-Year Plan was formulated during the Zia-ul-Haq period. But after his death, in 1988,
the newly elected government of Benazir Bhutto took over the charge and so the Seventh Five-Year Plan
has never been implemented. After the fall of Benazir’s government in 1990, Nawaz Sharif’s
government came into power. During his tenure, he introduced privatisation, deregulation, and
economic reform aimed at reducing structural impediments to sound economic development. His top
priority was to denationalise some 115 public industrial enterprises, abolishing the government's
monopoly in the financial sector, and selling utilities to private interests. Although the Nawaz Sharif
government made considerable progress in liberalising the economy, but it failed to address the problem
of a growing budget deficit, which in turn led to a loss of confidence in the government on the part of
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foreign aid donors. In 1993, the Nawaz Sharif government was dismissed by the President on the
charges of corruption. In the parliamentary elections of 1993, Benazir Bhutto, once again, became the
Prime Minister of Pakistan. Meanwhile, the so-called Seventh Five-Year Plan period came to an end.
In 1994, the Planning Commission publish the Eighth Five-Year Plan to cover the period 1993 – 1998.
In November 1996, once again, the PPP government was dismissed by the President on corruption
charges. The parliamentary election was held in 1997 and, once again, Mian Nawaz Sharif elected as
the Prime Minister of Pakistan. The targets of Eighth Five-Year Plan were also not well achieved. For
example, the target of wheat was set at 18.3 million tons which could not be achieved by 1996-97 when
its actual production was 16.6 million tons. It was achieved in the last year of the plan but it again
slipped down to 17.8 million tons in the following year. Similarly the target of non-traditional oilseeds,
grape and mustard was set at 0.4 million tons which was far below the national requirements. Likewise,
the projected plan period target of agricultural credit of Rs 80.5 billion could not be achieved as the
maximum credit given during the plan period was Rs 37.7 billion and most of which went to the
influential feudal lords and politicians rather than to the common farmers. The Ninth Five-Year Plan
was formulated by Nawaz Sharif government to cover the period 1998-2003. Following were the
priorities of Ninth Five-Year Plan:
(a) Maintenance of fiscal deficit at a sustainable level,
(b) Maintenance of GDP growth at 7% p.a.
(c) Investment in physical infrastructure,
(d) Export-led industrialisation,
(e) End of agriculture-water dichotomy,
(f)
Developing a civil society, etc.
7. Period of restructuring of economy (1999 – 2008): In October 1999, the Nawaz Sharif government
was dismissed with the military coup by Chief of Army Staff, General Pervez Musharraf. The entire
country was in a state of jeopardy. Before that, the businessmen have already lost their confidence due
to economic instability with the Nuclear Test, freezing of foreign currency accounts, devaluation of
rupee, and the Kargil War in 1998. Therefore, the targets of Ninth Five-Year Plan were never been well
implemented.
The era of General Pervez Musharraf is known as the era of economic and political restructuring.
During this era, the economy grew at an average growth rate of 5.1% (started from 2.6% in 2000-01 to
8.4% in 2004-05). President General Pervez Musharraf invited Mr. Shaukat Aziz to take charge of the
Ministry of Finance in November 1999. He very quickly assembled a team of highly trained economists
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and extremely talented civil servants. To address the issue of the severe macroeconomic crisis and place
the economy on a path of sustained higher growth, financial stability, and improved external balance of
payments, the economic team launched a comprehensive set of economic stabilization and structural
reform measures. The government believed that macroeconomic stability was vital for achieving higher
and sustained economic growth, creating employment opportunities and preventing people from falling
below the poverty line. It is with this view that a series of structural reform measures were initiated in
such areas as privatisation and deregulation, trade liberalization, banking sector reform, capital market
reform, tax system and tax administration reform, agriculture sector reform etc. As a result, Pakistan’s
economy started showing signs of improvement by 2000-01 well before 9/11. Manufacturing sector
grew 11% in 2000-01 against 3.6% in 1998-99, revenue collection increased to Rs. 396 billion against
Rs. 308 billion, debt servicing declined from 64% to 57% of total revenue, export increased from $ 7.8
billion to $ 9.2 billion. These are undeniable facts and well documented in official publications. These
improvements had taken place much before 9/11.
The present economic team under the stewardship of Shaukat Aziz has not only salvaged a near
bankrupt economy but has put it on a path of sustained high growth with financial stability and
considerably improved external balance of payments. Much has been done in the past five years. The
country has witnessed a decline in poverty to 24% in 2008 and other improvements in social indicators.
The up-gradation of Pakistan in the Human Development Index of the UNDP of 2005 was a vindication
of the policies pursued by the government during this period.
In 2005, the Government authorised the Planning Commission to issue the Tenth Five-Year Plan
namely ‘Medium Term Development Framework 2005-10’. The Medium Term Development
Framework (MTDF) 2005-10 had been conceived in the light of recent socio-economic performance of
the country, continuing supportive public policies and challenges and opportunities emerging from the
global economy. Wide-ranging economic and financial reforms have made the economy open,
liberalised and market friendly. As a result, private sector has begun to play an active role in shaping
structural changes in the economy. The principal objective of the MTDF was to attain high growth of
8.2 percent by the terminal year 2009-10 with a sustained annual average growth of 7.6 percent during
the five-year period without compromising macroeconomic stability. The second key objective was to
achieve higher level of investment to meet the targeted growth and to effectively address the perennial
issues of poverty reduction, employment generation, better access to basic necessities of life including
quality education and skill development for up grading the human resources, better health and
environment for the common man. The third crucial objective was to attract foreign investment to a
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level required to become a fast growing economy like Malaysia. Last but not the least, the MTDF
would focus on growth which is just and equitable.
The plan had also anticipated the share of manufacturing sector in GDP to increase from 18.3% in 200405 to 21.9% in 2009-10. It was also anticipated that the production base would be expanded through the
development of engineering goods, electronics, chemicals and other hi-tech industries. The Government
was also anticipating fastest growth of IT/Telecom sector. Pakistan had seen an explosive growth in
IT/Telecom sector in the last few years. The number of mobile phones achieved their 2007 targets two
years earlier, and the recent deregulation of LDI, WLL and other sections had served to provide faster,
better and wider coverage, all at lower cost. Nearly 60,000 IT professionals were operating in the
country with an annual turnover of Rs. 12 billion of which 15% was exported. The plan had also
estimated that major exports (gross) would increase from Rs. 14.05 billion in 2004-05 to Rs. 28.12
billion in 2009-10.
The MTDF projected a rising growth rate for the agriculture sector from 4.8% in 2005-06 to 5.6% in the
last year of the plan, i.e., 2009-10. The production of meat (beef, mutton, poultry meat) was anticipated
to increase from 2,275 thousand tonnes in 2004-05 to 3,124 thousand tonnes in 2009-10, and milk
production from 29,472 thousand tonnes in 2004-05 to 43,304 thousand tonnes in 2009-10. The
production of fisheries was projected at an average annual growth rate of 4.8 per cent. The fish
production increase was projected from 574 thousand tonnes in 2004-05 to 725 thousand tonnes in
2009-10.
With the fall of Musharraf's Government in August 2008, the MTDF 2005-10 failed to attract the new
Government's attention, and never been prioritized by the Government, therefore, most of its targets
were failed to achieve.
Planning Machinery in Pakistan
Following are the planning agencies in Pakistan:
National Economic Council (NEC):
The planning machinery in Pakistan is headed by the NEC as the supreme policy making body in the economic
sphere. It has the President as the Chairman and all Federal Ministers, incharge of development ministries and
provincial governors as members. In addition, a number of other persons are invited to attend the meetings of
the NEC as and when the agenda relates to matters concerning them.
Functions of NEC:
(a) To review the overall economic situation in the country
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(b) To formulate plans with respect to financial, commercial and economic policies and economic
development
(c) To approve the Five-Year Plans (MTDF), the Annual Development Plans (ADP), provincial
development schemes in the public sector above a certain financial limit and all non-profit projects.
It may appoint committees or bodies of experts as may be necessary to assist the council in the performance of
its functions. NEC discusses different cases and makes decisions. To ensure implementation of the decisions,
the secretary of each Ministry is expected to keep a record of all the decisions conveyed to him and to watch the
progress of action until it is completed. The Cabinet Secretary is also expected to watch the implementation of
the council decisions.
Executive Committee of NEC (ECNEC):
The body directly below the NEC is the ECNEC. It is headed by the Federal Minister for Finance, Planning and
Development. Its members include all Federal Ministers incharge of development ministries, provincial
governors or their nominees and provincial ministers, incharge of planning and development departments.
Functions:
(a) To set up development schemes (both in the public and private sectors) pending their submission to the
NEC.
(b) To allow moderate changes in the plan and sectoral adjustments within the overall plan allocation.
(c) To supervise the implementation of economic policies laid down by the Cabinet and the NEC.
Annual Plan Coordination Committee (APCC):
Another body concerned with economic policy is the APCC which is a purely advisory body responsible for
advising the Cabinet and the NEC regarding the coordination of policies. It is headed by the Secretary General,
Finance, Planning and Economic Coordination. All federal secretaries of development ministries, heads of
provincial planning and development departments and heads of the State Bank, the Board of Industrial
Management and PIDC are its members.
Below ECNEC is the CDWP which is responsible for the scrutiny and sanction of development projects. The
Secretary, Planning Division, is the president of CDWP. Its members include federal secretaries of the
concerned departments, federal finance secretary and chairman of the provincial planning and development
departments.
The development schemes of federal ministers costing over Rs. 10 million and of the provincial governments
costing over Rs. 50 million are submitted to CDWP for approval.
The responsibility for the overall economic evaluation of Annual Plans remains with the Planning Division
which places a report each year before the NEC evaluating economic achievements and failures. Mid-Plan
reviews outlining the progress of the Five Year Plan are also published by the Planning Commission.
A Critical Appraisal of Planning Machinery in Pakistan
Following are main hindrances in the way of effective planning in Pakistan:
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(a) Administrative obstacles of planning: One major obstacle which has stood in the way of establishing
a sound, efficient and independent planning authority is the lack of an effective administrative machinery as
this has greatly limited the tasks of development policy and planning. Some of the factors which still
continue to be major hindrances and act as administrative obstacles and bottlenecks to planning are
discussed below:
(i)
Lack of competent personnel: One of the major obstacles in the way of an effective planning
machinery is the lack of competent personnel. Good and highly qualified economists, technicians,
planners, etc. do not join government service because of lack salaries and facilities.
(ii) Dilatory procedures: In Pakistan, documents and files must follow a prescribed series of steps
through administrative layers. It has been pointed out that often there seems to be a disposition to
shift the file and documents from one office to another, or from one ministry to another. The
resultant delays are sometimes unbelievably long.
(iii) Lack of coordination: In many cases, the coordination of development activities has been
extremely difficult because responsibility for different aspects of a project or programme are divided
among many ministries and agencies. So it becomes, sometimes, very difficult to carry on
programme according to policy.
(b) Inadequate preparatory work on projects: When a potentially desirable project has to be identified, a
feasibility study has to be made to determine whether it is practicable and justified. A feasibility study
involves a detailed examination of the economic, technical, financial, commercial and organisational aspects
of a project.
According to Planning Commission of Pakistan, preparatory work on public projects in the country was
frequently lacking. So due to inadequate preparatory work on projects, our plans have been failed in
achieving their targets.
(c) Lack of implementation of plans: A major reason for the lack of implementation of the country’s
various five year plans has been the widespread failure of the governments of the day to maintain discipline,
implicit in their plan. What is planned and what is done in many cases bears little relationship to each
other. At times it almost appears that plans are prepared by a planning agency in one corner of a
government and policy is made by various bodies in other corners.
(d) Lack of evaluation of plan progress and project implementation: Flexibility is an essential element
of development planning because in many cases changes in economic conditions make deviations from
original plan unavoidable. A central planning agency must, therefore, constantly review and assess progress
in relation to events.
Unfortunately, whenever evaluation has been prepared by the country’s planning authorities, they have been
issued long after the end of the period to which they refer. In many cases the mid-term reviews of five year
plans have been published almost near the end of the plan period and the final reviews of the plan have
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come long after the new plan have been launched and, therefore, been of little use to formulating targets and
policies for the new plan. The need for a good reporting system on plan and project implementation is,
therefore, an essential prerequisite for a good evaluation system.
A development plan is essentially a forward looking policy framework which envisages a concrete and
prioritised but somewhat flexible programme of action to be launched in a dynamic situation to attain specified
economic and social objectives. A plan or a programme / project is ultimately as good as its implementation
since it is the actual achievement of the results in line with the targets and not merely the targets set or the
resources allocated that determine the degree of success or failure of the plan / programme as well as its impact
on the socio-economic life of the people. Thus, it is clear that only the technically, financially and
economically sound and viable projects, if properly executed in a coordinated manner, can provide a strong
edifice for the successful implementation of the plan.
Most of the developing countries still need to further evolve their development planning processes by redefining
their national objectives and searching for alternative strategies, programmes and projects because it has been
realised by most of them by now that the development planning adopted so far could not achieve the desired
results especially in the areas of social development and income distribution. Recent international experience
also shows conclusively that the formulation of technically sound, economically viable and administratively
feasible programmes / projects, their proper appraisal, implementation and management are amongst the
palpably weaker areas of development planning. In numerous instances, projects included in the development
plans have either not been optimally implemented or even if implemented, have failed to yield the expected
results on time. Similarly, such other factors like deliberate under-estimating of costs and over-pitching of
targets at the approval stage, coupled with recent increase in input prices, have adversely affected the overall
plan implementation in most of the LDCs.
In recent years, increasing attention is being devoted to more systematic processes of planning and decision
making as a means of addressing the concerns of developing countries about the pace and pattern of economic
growth, the failure to achieve planned objectives, and the continuing financial and economic crises. This
approach has reinforced the case for greater depth in and a more systematic and inter-related approach to the
monitoring, evaluation and follow-up of all public policy actions. This renewed urge is shared both by national
as well as international agencies in order to up-grade the developing countries’ status.
The United Nations International Development Strategy (UNIDS), therefore, emphasises that, to provide
increasing opportunities to all people for a better life, it is essential in the development planning to bring about
more equitable distribution of income and wealth for promoting both social justice and efficiency of production,
to raise substantially the level of employment, to achieve a greater degree of income security, to expand and
improve facilities for education, health, nutrition, housing and social welfare, and to safeguard the
environment. The International Development Strategy emphasises the importance of national evaluation
system. According to UNIDS, every developing country is needed to establish a reliable and independent
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evaluation machinery or strengthening the existing one, in order to ensure the implementation of development
programmes.
Plan Preparation and Implementation Cycle:
The process of development appraisal and performance evaluation is an intrinsic component of planning. The
standard plan preparation and plan implementation cycle includes:
(a) Establishment of goals, objectives and targets;
(b) Formulation of strategies;
(c) Formulation of operating plans composed of policies and specific measures necessary to achieve the
real targets;
(d) Implementation of policies and measures to the plan;
(e) Monitoring and evaluation of performance (both financial and physical) against targets;
(f)
Adjustment of targets and/or plans as may be indicated by actual accomplishments and related
developments.
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