planning Ch4.pdf - Chapter Four Quantitative Development Planning Techniques Chapter content 9 Introduction development policy and planning overview 9

planning Ch4.pdf - Chapter Four Quantitative Development...

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Chapter Four: Quantitative Development Planning Techniques Chapter content: 9 Introduction: development policy and planning overview 9 Characteristics of development planning models 9 Aggregate consistency models Harrod-Domar model Two-gap model 9 Disaggregated consistency models Main-sector and multi-sector models: input-output analysis 9 Social accounting matrix 9 Programming approach to planning: linear programming 9 Computable general Equilibrium 1 Abraham S.
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Quantitative Dev’t Planning Techniques (cont..) 4.1. Introduction : Development policy & planning overview o The role of the state in the development process is one of the oldest topics in the economics literature, and controversy continues over the relative merits of the market mechanism as opposed to state intervention. Indeed, the r/ship b/n governments and markets is perhaps the central issue in economic development. The question, however, is not a simple choice between laissez-faire and state intervention. o Since intervention is inevitable, the important question is about the nature and quality, rather than the extent of the state’s intervention in the economy . 2 Abraham S.
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Introduction (cont…) A variety of types of market failures have been observed: Indivisibilities in capacity all resulted in mkt outcome w/c economies of scale, deviate from perfectly competitive, monopoly and oligopoly, allocative efficiency, welfare externalities maximizing equilibrium. In addition, inadequate infn on future dd each act as constraint on private lack of infrastructural capital & investment decisions, & thereby high cost input supplies reduce the economy’s growth rate. These market failures call for state intervention as they are inhibiting both efficient allocation of resources & the dynamic growth process. It was believed that the problem of market failure is more severe in areas of infrastructure & industrialization. 3 Abraham S.
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ntroduction (cont…) ¾ Following these problems, the form of gov’t policy adopted by LDCs was direct public sector investment. This requires the gov’t to raise the level of saving raising saving requires establishing a frame work for policy analysis appropriate to mixed economies of LDCs. Thus, the form of policy analysis adopted was “development planning”. The adoption of development planning approach to economic policy formulation leads to the production of national development plans. The planning exercise typically involves the use of planning models. 4 Abraham S.
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Introduction (cont…) Planning Models : specifies in quantitative terms the r/ship b/n objectives, constraints and policy instrument variable. It is used to calculate a feasible or consistent solution, defined as a set of values for the policy instruments that satisfies the specified objectives and does not exceed the predetermined constraints.
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