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Introduction
In order to have a better understanding of the subject matter, it is important to know its
definition, its objectives and the rationale for economic planning especially in
underdeveloped countries
Learning outcomes
At the end of this topic, you should be able to:
 Understand the meaning of economic planning;
 Explain the rationale/importance of planning in an underdeveloped economy;
 Discuss the objectives of planning.
 Influence of development theories on planning
 Key elements of economic planning
1.1
Definition of Economic Planning
Planning involves setting targets or goals which an individual, organization, community or
the economy as a whole seeks to meet within a certain period of time. Economic planning
therefore is an aspect of planning which involves policies, proposals and overall strategies of
allocating all the country’s labour, foreign exchange, raw materials and other resources
between the various branches of the economy.
According to Hayek, planning means setting the direction of productive activities by a central
authority. To Prof. Lewis, “planning is sometimes used to describe the means which the
government uses to try to enforce upon private enterprises the targets which have been
previously determined”. In the view of Jhingan (2011), economic planning is a deliberate
direction and control of the economy by a central authority for the purpose of achieving
definite targets and objectives within a specified period of time
Also, Todaro and Smith (2011), define economic planning as a deliberate and conscious
attempt by the state to formulate decisions on how the factors of production shall be allocated
among different users or industries, thereby determining how much of total goods and
services shall be produced at a particular point in time.
In the light of the above definitions, it should be understood that there has to be a vision,
mission, targets and timing periods for a definite plan to be actualized. As agreed by the
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