RATIONALE FOR PLANNING (TODARO)

RATIONALE FOR PLANNING (TODARO)

WHY PLAN? -

1.     Planning is necessitated by a number of institutional and socio-economic conditions. Absence of Well-organized market: there is imperfection in the structure and operation of market. The capital market is also not properly organized, not conductive for efficient consumption and distribution of production for the social well being of the people.

2.     Need for Rapid institutional Transformation: Economic development is associated with structural and institutional changes i.e. transformation: there is therefore the need to create new institutions and the overhaul of old ones for rapid development.

3.     Need to allocate scarce resources into the most productive channels: Planning is not engaged in wasteful use of resources but channeling the resources towards a given massive attention to areas that required such resources for the improvement in the people's welfare is their basic needs.

4.     Psychological impact of Programmes of National objectives: Programmes of development plan often have tremendous impact on the people, psychologically when such programme are obtained, people will be encouraged to produced in the desired areas (through the provision of adequate incentives).

5.     Need to catch with advanced nations: western nations are highly developed. Thus African governments are striving to catch-up with the pace of development. So government embarked on deliberate fiscal and monetary policies, which have not lead to desired goals, hence government participates in economic activities.

6.     Lesson/Experience of Planned Economy: African Nations adopt the experience planned economy because of the advancement of planned economic in the last decades.

7.     Foreign Aid Argument: That development plans are made to secure foreign aids. With list of projects included in the plans, government can solicit for foreign assistance and persuade donors that their money will be efficiently utilized.