Eco 441 Economic Planning I

COURSE
GUIDE
ECO 441
ECONOMIC PLANNING I
Course Team Dr. Akinade Olushina matthew (Course

Developer)-Senior Research Fellow
Economist Associate Research Firm
Prof. Ogunleye Edward Oladipo (Course Editor)

Department of Economics
Ekiti State University, Ado-Ekiti
NATIONAL OPEN UNIVERSITY OF NIGERIA

ECO 441 COURSE GUIDE
National Open University of Nigeria

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e-mail: [email protected]
URL: www.nou.edu.ng
All rights reserved. No part of this book may be reproduced, in any

form or by any means, without permission in writing from the publisher.
Printed 2018
ISBN: 978- 978-058-039-5
ii
CONTENT PAGE
Introduction……………………………………………....iv
Course Content …………………………………………..iv
Course Aims………………………………………………iv
Course Objectives…………………………………………v
Working through This Course…………………………….v
Course Materials…………………………………………vi
Study Units……………………………………………….vi
Textbooks and References……………………………....vii
Assignment File…………………………………………..xi
Presentation Schedule…………………………………….xi
Assessment………………………………………………..xi
Tutor-Marked Assignment (TMAs)……………………....xi
Final Examination and Grading………………………….xii
Course Marking Scheme…………………………………xii
Course Overview…………………………………………xii
How to Get the Most from This Course…………………xiii
Tutors and Tutorials……………………………………..xiii
Summary…………………………………………………xvi
iii
INTRODUCTION
ECO 441 is designed to introduce to you and to teach you the basics and
rudiments of Economic Planning. In this course, attention is given to the
theories, practices, processes and strategies of economic planning as
adopted by Nigeria, some selected developing countries and other
selected developed countries for desired economic growth and
development. It is basically concerned with the explanations of the
theories, processes and strategies involved in economic planning that
can be adopted by the central authority to exercise their conscious effort
of achieving definite targets and objectives within a specified period of
time. In this wise, economic planning incorporates all aspect of human
aspirations to accelerate the pace of a country‘s social, economic and
political development. More specifically, it is a study that shows the
strategic economic planning theories of deliberate control and direction
of the economy, by a central authority through various tools and sub-
systems within the main system, for the purpose of achieving definite
targets and objectives within a specified period of time.
You will be taught the rudiments and basics of economic planning

theories as it relates to the functionality of the economy for desired
Economic growth and development by the central planning authority to
achieve desired set goals and objectives in Less Developed Countries of
which Nigeria is one vis-à-vis the experiences of developed countries
like the United States of America, Soviet states, France, China,
India, Singapore, and Malaysia .
COURSE CONTENT
This course will expose students to the basics and rudiments of

Economic Planning. Topics covered include: meaning, terminologies
and contemporary issues, concept and approaches of economic growth
and development, economic development planning experience in
Nigeria and planning experiences in other countries of the World
COURSE AIMS
There are twelve (12) study units in the course and each unit has its
objectives. You should read the objectives of each unit and bear them in
mind as you go through the unit. In addition to the objectives of each
unit, the overall aims of this course are to:
iv
(i) introduce you to the meaning, principles, processes,

strategies and rationale of Economic Planning.
(ii) Teach you the relationship that exists between economic
development planning and price system.
(iii) Expose you to the challenges of economic development planning.
(iv) Give you the detailed analysis of national economic development
planning experience in Nigeria.
(v) Show you the objectives, achievements and shortcomings of
various national economic rolling plans in Nigeria.
(vi) Teach you planning experiences of United States of America,
France, China, India, Singapore, and Malaysia.
COURSE OBJECTIVES
To achieve the aims of this course, there are overall objectives which the
course is out to achieve though, there are set out objectives for each unit.
The unit objectives are included at the beginning of a unit; you should
read them before you start working through the unit. You may want to
refer to them during your study of the unit to check on your progress.
You should always look at the unit objectives after completing a unit.
This is to assist the students in accomplishing the tasks entailed in this
course. In this way, you can be sure you have done what was required of
you by the unit. The objectives serves as study guides, such that student
could know if he is able to grab the knowledge of each unit through the
sets of objectives in each one
The objectives of this course are to:
• allow students know the various theories, principles, practices,

processes and strategies of Economic Planning of less developed
and developed countries.
• educate students on different national economic rolling plans
embarked upon by different government in Nigeria to target a
sustained economic growth and development.
• educate learners on the need to adopt a realistic vision plan and
implementation as reflected in the progress of economic growth
and development of developed nations.
• allow students draw a comparison between economic
development plan of less developed and developed countries.
WORKING THROUGH THIS COURSE
To successfully complete this course, you are required to read the study
units, referenced books and other materials on the course.
Each unit contains self-assessment exercises called Student Assessment
v
Exercises (SAE). At some points in the course, you will be required to

submit assignments for assessment purposes. At the end of the course
there is a final examination. This course should take about 12weeks to
complete and some components of the course are outlined under the
course material subsection.
You have to work through all the study units in the course. There are
four modules and twelve study units in all.
COURSE MATERIALS
What you have to do and how you should allocate your time to each unit
in order to complete the course successfully on time are listed follows:
1. Course guide
2. Study unit
3. Textbook
4. Assignment file
5. Presentation schedule
STUDY UNIT
There are 12 units in this course which should be studied carefully and
diligently.
The breakdown of the four modules and twelve study units are as
follows:
Module 1: Economic planning: Meaning, Terminologies and

Contemporary Issues
Unit 1 Meaning of Economic planning

Unit II: Features and Types of Planning in developing nations
Unit III: Theories and Models of Economic Planning
Module 2: Concept and Approaches of Economic Growth and

Development
Unit 1: Economic growth and Economic development

Unit II Sustainable development
Unit III: The concept of under-development
vi
Module 3 Economic Development Planning Experience in

Nigeria.
Unit 1 The concept of national planning in Nigeria; Pre-

independence to SAP era
Unit II National economic plans during and after SAP era
Unit III Visions and policy statements of economic plans in
Nigeria
Module 4: Planning Experiences in other Countries of the World.
Unit 1: Planning experience of selected developed countries

Unit 2: Planning experience of India and Asian tigers
Unit 3: Comparisons of economic plan of less developed and
developed nations
Each study unit will take at least two hours, and it includes the
introduction, objectives, main content, self-assessment exercise,
conclusion, summary and references. Other areas border on the Tutor-
Marked Assessment (TMA) questions. Some of the self-assessment
exercise will necessitate discussion, brainstorming and argument with
some of your colleagues. You are advised to do so in order to
understand and get acquainted with historical economic event as well as
notable periods.
There are also textbooks under the reference and other (on-line and off-
line) resources for further reading. They are meant to give you
additional information if only you can lay your hands on any of them.
You are required to study the materials; practice the self-assessment
exercise and tutor-marked assignment (TMA) questions for greater and
in- depth understanding of the course. By doing so, the stated learning
objectives of the course would have been achieved.
TEXTBOOK AND REFERENCES
For further reading and more detailed information about the

course, the following materials are recommended:
Adedeji, A. (1989). Towards a dynamic African economy: Selected

speeches and lectures. Great Britain: Frank Cass and Company
Limited.
Adegboyega, T. (2006, December 10). Reforms: OBJ‘s

sanctimonious sermon. The Nation.
vii
Adeyeye, A. (2002). Fundamentals of development administration: A

developing country perspective. Ibadan: IBDL Educational
Publishers.
Adubi, A. A. (2002). Pre-budget link in Nigeria: An exploratory

investigation. NCENI Policy Analysis Series, 8(2).
Agbakoba, J.C.A. (2003). Philosophical issues in development.

Enugu: Fourth Dimension Publishers.
Akosile, I. O., Adesanya, A. S. & Ajani, A. O. (2012). Management of

development: A Nigeria perspective (1st ed.). Mushin, Lagos:
Olas Ventures.
Akume, A.T. (2012). Leadership in Nigeria: A paradox of action for

resource mobillization in a depressed and privatized economy for
national development.
International Review of Social Sciences and Humanities, 3(2),
75-85.
Alam, G.M., Hoque, K.E., Khalifa, M.T.B., Siraj, S.B. & Ghani,
M.F.B.A. (2009). The role of agriculture education and training on

agriculture, economics and national development of Bangladesh.
African Journal of Agricultural Research, 4 (12), 1334-1350.
Alapiki, H. (2009). Politics and governance in Nigeria. Owerri:
Corporate Impressions. Ayo, E. J. (1988). Development planning in

Nigeria. Ibadan: University Press.
Burgess, J.C. (2001). Sustainable development. Oxford: Elsevier Ltd.
Central Bank of Nigeria (2005). CBN briefs (2004 - 2005 ed.). Abuja:
Research and Statistics Department of Central Bank of Nigeria.
Cole, G. A. (1993). Management: Theory and practice (4th ed.).

London: DP Publications.
Datta, A. K (2010). Integrated material management: A functional

approach. New
Delhi: Prentice Hall International Publishers.
Durojaiye, B. (2013, September 15). How to become Asian tiger? The

Nation, p. 51.
viii
Eneh, C. O. (2011). Nigeria‘s vision 20:2020 - issues, challenges and

implication for development management. Asian Journal of
Rural Development, 1(1), 1-6.
Ejimudo, V. B. O. (2013). The problematic development planning in

Nigeria: Critical discourse journal of developing country studies,
3-4. International Journal ofEconomic Development Research
and Investment, 5(2).
Egonmwan, J. S. & Ibodje, S. (2001). Development administration:

Theory and practice.
Benin City: Thesyin (Nig) Company.
Hehn-Been, L. (1970). The Role of the Higher Civil Service Under

Rapid Social and Political Change. In Weidner (ed)
Development of administration in Asia. Durban N.C. Dukes
University Press.
Iheanacho, E. N. (2012). Bureaucracy and development in Nigeria. In

Obi E.A., Obikeze, S.O. Onyekwelu, R.U. (eds) Introduction to
public administration. Onitsha: Bookpoint Educational Ltd.
Ikeanyibe, O. M. (2009). Development planning in Nigeria: Reflections

on the National Economic Empowerment and Development
Strategy (NEEDS) 2003. 2007. Journal of Social Sciences, 20(3).
Jaja, S. (2000). History of budgeting and planning in Nigeria: Lessons

for the fourth Republic. In Akpuru-Aja, A. and Emeribe, E
(eds) Policy and contending issues in Nigeria
National Development Strategy. Enugu: John Jacobs
Publishers.
Jhingan, M.L. (2007). The economics of development and planning

(39th ed.). India: Vrinda Publications.
Koha, S. (1994). Nigeria: The political economy of oil. London: Oxford
University Press. Obi, E. A. (2006). Development administration.

Onitsha: Bookpoint Ltd.
Obikeze, O. S. and Obi, E. A. (2004). Public administration in Nigeria:

A development approach. Onitsha: Bookpoint Ltd.
Okigbo, P. (1989). National Development Plan in Nigeria 1900-1907.

Enugu: Fourth Dimension Publishers Ltd.
ix
Okojie, C. E. (2002). Development planning since independence. In
Iyoha, M. A. and Itsede, C. O. (eds) Nigerian economy: Structure,

growth and development. Benin City: Mindex Publishers.
Okowa, W. (1991). Political economy of development planning in

Nigeria. Port Harcourt: Pam Unique Publishers.
Oladapo, A. (2004, June 21). Achieving Nigeria’s development goals,

Thisday.
Ologbenla, D. K. (2007). Leadership, governance and corruption in

Nigeria. Journal of Sustainable Development in African, 9(3).
Olajide, O.T. (2004). Theories of Economics development and planning

(2nd ed.). Lagos, Nigeria: Pumark Nigeria Ltd.
Onah, F. O. (2010). Managing public programmes and projects (2nd

ed.). Nsukka: Great AP Express Publishers.
Onyenwigwe, P. I. (2009). Principles of development administration:

Third World perspectives. Owerri: Ambix Printers Nigeria.
Otokiti, S.O. (1999). Issues and strategies in Economic planning (1st

ed.). Ibadan: Bitico publishers.
Sapru, K. K. (1994). Development administration. New Delhi: Sterling
Publishers. Todaro, M. P. (1992). Economics for developing world: An

introduction to principles,problems and policies for development.
London: Longman Group Limited. Todaro, M.P. (2000). Development

planning, models and methods, England.
Todaro, M.P. & Smith, S.C. (2011). Economic development. Essex,

England: Pearson Education Ltd, Edinburgh Gate Harlow.
UNDP (2013). Human Development Report. New York: UNDP.
Ziai, A. (2013). The discourse of development and why the

concept should be abandoned. Development in Practice, 23(1),
123 – 136.
x
ASSIGNMENT FILE
Assignment files and marking scheme will be made available to you.

This file presents you with details of the work you must submit to your
tutor for marking. The marks you obtain from these assignments shall
form part of your final mark for this course.
Additional information on assignments will be found in the assignment
file and later in this Course Guide in the section on assessment.
There are four assignments in this course. The four course assignments
will cover: Assignment 1 - All TMAs‘ question in Units 1 – 3 (Module 1
)
Assignment 2 - All TMAs' question in Units 4 – 6 (Module 2)
Assignment 3 - All TMAs' question in Units 7 – 9 (Module 3)
Assignment 4 - All TMAs' question in Unit 10 – 12 (Module 4).
PRESENTATION SCHEDULE
The presentation schedule included in your course materials gives you

the important dates for this year for the completion of tutor-marked
assignments and attending tutorials. Remember, you are required to
submit all your assignments by due date. You should guide against
falling behind in your work.
ASSESSMENT
There are two types of the assessment of the course. First, are the
tutor-marked assignments; second, there is a written examination.
In attempting the assignments, you are expected to apply information,
knowledge and techniques gathered during the course. The assignments
must be submitted to your tutor for formal assessment in accordance
with the deadlines stated in the Presentation Schedule and the
Assignments File. The work you submit to your tutor for assessment
will count for 30 % of your total course mark.
At the end of the course, you will need to sit for a final written
examination of three hours duration. This examination will also count
for 70% of your total course mark.
TUTOR-MARKED ASSIGNMENTS (TMAS)
There are four tutor-marked assignments in this course. You will

submit all the assignments. You are encouraged to work all the
questions thoroughly. The TMAs constitute 30% of the total score.
Assignment questions for the units in this course are contained in the
xi
Assignment File. You will be able to complete your assignments from

the information and materials contained in your set books, reading and
study units. However, it is desirable that you demonstrate that you have
read and researched more widely than the required minimum.
You should use other references to have a broad viewpoint of the subject
and also to give you a deeper understanding of the subject.
When you have completed each assignment, send it, together with a
TMA form, to your tutor. Make sure that each assignment reaches your
tutor on or before the deadline given in the Presentation File. If for any
reason, you cannot complete your work on time, contact your tutor
before the assignment is due to discuss the possibility of an extension.
Extensions will not be granted after the due date unless there are
exceptional circumstances.
FINAL EXAMINATION AND GRADING
The final examination will be of three hours duration and have a value
of 70% of the total course grade. The examination will consist of
questions which reflect the types of self- assessment practice
exercises and tutor-marked problems you have previously
encountered. All areas of the course will be assessed Revise the entire
course material using the time between finishing the last unit in the
module and that of sitting for the final examination. You might find it
useful to review your self-assessment exercises, tutor-marked
assignments and comments on them before the examination. The final
examination covers information from all parts of the course.
COURSE MARKING SCHEME

The Table presented below indicates the total marks (100%) allocation.
Assignment Marks
Assignments (Best three assignments out of four that is 30%
marked)
Final Examination 70%

Total 100%
COURSE OVERVIEW
The Table presented below indicates the units, number of weeks and
assignments to be taken by you to successfully complete the course.
Units Title of Work Week’s Assessment
Activities (end of unit)
Course Guide
xii
Module 1 Economic Planning: Meaning, Terminologies and Contemporary

issues
1 Meaning of Economic planning Week 1 Assignment 1
2 Features and Types of Planning in Week 2 Assignment 1
developing nations
3 Theories and Models of Economic Week 3 Assignment 1
Planning
Module 2 Concept and Approaches of Economic Growth and Development

1 Economic growth and Economic Week 4 Assignment 2
development
2 Sustainable Development Week 5 Assignment 2
3 The Concept of Under-development Week 6 Assignment 2
Module 3 Economic Development Planning Experience in Nigeria
1 The concept of national planning in Week 7 Assignment 3
Nigeria; Pre- independence to SAP
era
2 National economic plans during and Week 8 Assignment 3
after SAP era
3 Visions and policy statements of Week 9 Assignment 3
economic plans in Nigeria
Module 4 Planning Experiences in other Countries of the World

1 Planning experience of selected Week 10 Assignment 4
developed countries
2 Planning experience of India and Week 11 Assignment 4
Asian Tigers
3 Comparisons of economic plan of less Week 12 Assignment 4
developed and developed nations
HOW TO GET THE MOST FROM THIS COURSE
In distance learning the study units replace the university lecturer. This
is one of the great advantages of distance learning; you can read and
work through specially designed study materials at your own pace and at
a time and place that suit you best.
Think of it as reading the lecture instead of listening to a lecturer. In the

same way that a lecturer might set you some reading to do, the study
xiii
units tell you when to read your books or other material, and when to
embark on discussion with your colleagues. Just as a lecturer might give
you an in-class exercise, your study units provides exercises for you to
do at appropriate points.
Each of the study units follows a common format. The first item is an
introduction to the subject matter of the unit and how a particular unit is
integrated with the other units and the course as a whole. Next is a set of
learning objectives. These objectives let you know what you should be
able to do by the time you have completed the unit.
You should use these objectives to guide your study. When you have
finished the unit you must go back and check whether you have
achieved the objectives. If you make a habit of doing this you will
significantly improve your chances of passing the course and getting the
best grade.
The main body of the unit guides you through the required reading from
other sources. This will usually be either from your set books or from a
readings section. Some units require you to undertake practical overview
of historical events. You will be directed when you need to embark on
discussion and guided through the tasks you must do.
The purpose of the practical overview of some certain historical

economic issues are in twofold. First, it will enhance your understanding
of the material in the unit. Second, it will give you practical experience
and skills to evaluate economic arguments, and understand the roles of
history in guiding current economic policies and debates outside your
studies. In any event, most of the critical thinking skills you will develop
during studying are applicable in normal working practice, so it is
important that you encounter them during your studies.
Self-assessments are interspersed throughout the units, and answers are

given at the ends of the units. Working through these tests will help you
to achieve the objectives of the unit and prepare you for the assignments
and the examination. You should do each self- assessment exercises as
you come to it in the study unit. Also, ensure to master some major
historical dates and events during the course of studying the material.
The following is a practical strategy for working through the course. If

you run into any trouble, consult your tutor. Remember that your tutor's
job is to help you. When you need help, don't hesitate to call and ask
your tutor to provide it.
1. Read this Course Guide thoroughly.

2. Organize a study schedule. Refer to the `Course overview' for more
xiv
details. Note the time you are expected to spend on each unit and how
the assignments relate to the units. Important information, e.g. details of
your tutorials, and the date of the first day of the semester is available
from study centre. You need to gather together all this information in
one place, such as your dairy or a wall calendar. Whatever method you
choose to use, you should decide on and write in your own dates for
working breach unit.
3. Once you have created your own study schedule, do everything

you can to stick to it. The major reason that students fail is that
they get behind with their course work. If you get into difficulties
with your schedule, please let your tutor know before it is too late
for help.
4. Turn to Unit 1 and read the introduction and the objectives for the
unit.
5. Assemble the study materials. Information about what you need

for a unit is given in the `Overview' at the beginning of each unit.
You will also need both the study unit you are working on and
one of your set books on your desk at the same time.
6. Work through the unit. The content of the unit itself has been
arranged to provide a sequence for you to follow. As you work
through the unit you will be instructed to read sections from your
set books or other articles. Use the unit to guide your reading.
7. Up-to-date course information will be continuously delivered to

you at the study centre.
8. Work before the relevant due date (about 4 weeks before due
dates), get the Assignment File for the next required assignment.
Keep in mind that you will learn a lot by doing the assignments
carefully. They have been designed to help you meet the
objectives of the course and, therefore, will help you pass the
exam. Submit all assignments not later than the due date.
9. Review the objectives for each study unit to confirm that you
have achieved them.
If you feel unsure about any of the objectives, review the study material
or consult your tutor.
10. When you are confident that you have achieved a unit's
objectives, you can then start on the next unit. Proceed unit by
unit through the course and try to pace your study so that you
xv
keep yourself on schedule.
11. When you have submitted an assignment to your tutor for

marking do not wait for it return `before starting on the next
units. Keep to your schedule. When the assignment is returned,
pay particular attention to your tutor's comments, both on
the tutor-marked assignment form and also written on the
assignment. Consult your tutor as soon as possible if you have
any questions or problems.
12. After completing the last unit, review the course and prepare
yourself for the final examination. Check that you have
achieved the unit objectives (listed at the
beginning of each unit) and the course objectives (listed in this
Course Guide).
TUTORS AND TUTORIALS
There are some hours of tutorials (2-hours sessions) provided in support

of this course. You will be notified of the dates, times and location of
these tutorials, together with the name and phone number of your tutor,
as soon as you are allocated a tutorial group. Your tutor will mark and
comment on your assignments, keep a close watch on your progress and
on any difficulties you might encounter, and provide assistance to you
during the course. You must mail your tutor-marked assignments to
your tutor well before the due date (at least two working days are
required). They will be marked by your tutor and returned to you as
soon as possible.
xvi
Do not hesitate to contact your tutor by telephone, e-mail, or discussion

board if you need help. The following might be circumstances in which
you would find help necessary. Contact your tutor if:
• You do not understand any part of the study units or the assigned
readings
• You have difficulty with the self-assessment exercises
• You have a question or problem with an assignment, with your
tutor's comments on an assignment or with the grading of an
assignment.
• You should try your best to attend the tutorials. This is the only
chance to have face to face contact with your tutor and to ask
questions which are answered instantly. You can raise any
problem encountered in the course of your study. To gain the
maximum benefit from course tutorials, prepare a question list
before attending them. You will learn a lot from participating in
discussions actively.
SUMMARY
The course, Economic Planning I (ECO 441), was designed to introduce

to you and to teach you the basics and rudiments of Economic Planning.
In this course, attention is given to the theories, practices, processes and
strategies of economic planning as adopted by Nigeria, some selected
developed countries like the United States of America, France, Soviet
States, China, India, Singapore, and Malaysia and their planning
experiences to target desired Economic growth and development and
draw their comparisons to Nigeria‘s experience. It is basically
concerned with the explanations of the theories, processes and strategies
involved in Economic planning that can be adopted by the central
authority to exercise their conscious effort of achieving definite targets
and objectives within a specified period of time. In this wise, Economic
planning incorporate all aspect of human development aspirations to
accelerate the pace of a country‘s social, economic and political
development. More specifically, it is a study that shows the strategic
economic plan theories of deliberate control and direction of the
economy, by a central authority through various tools and sub-systems
within the main system, for the purpose of achieving definite targets and
objectives within a specified period of time bearing in mind the
economic development indices of food security, housing, health care,
water supply and education.
On successful completion of the course, you would have developed
critical thinking skills with the material necessary for proper economic
planning. However, to gain a lot from the course please try to apply
xvii
anything you learn in the course to term papers writing in other

development economics courses which can also help you to cope with
the second part, economic planning II, which will be duly served next
semester. We wish you success with the course and hope that you will
find it interesting, handy and fascinating.
xviii
MAIN
COURSE
CONTENTS PAGE
Module 1: Economic planning: Meaning,

Terminologies and Contemporary
Issues……………………………………….1
Unit 1 Meaning of Economic planning……………1

Unit II: Features and Types of Planning in
developing nations………………………….9
Unit III: Theories and Models of Economic
Planning…………………………………….17
Module 2: Concept and Approaches of Economic

Growth and Development………………..28
Unit 1: Economic growth and Economic
Development……………………………….28
Unit II Sustainable development………………….38
Unit III: The concept of under-development……….44
Module 3 Economic Development Planning

Experience in Nigeria……………………..52
Unit 1 The concept of national planning in Nigeria;

Pre-independence to SAP era……………….52
Unit II National economic plans during and
after SAP era…………………………………61
Unit III Visions and policy statements of
economic plans in Nigeria…………………..67
Module 4: Planning Experiences in other Countries

of the World…………………………………77
Unit I: Planning experience of selected developed

Countries……………………………………...77
Unit II: Planning experience of India and
Asian tigers……………………………………86
UnitIII: Comparisons of economic plan of less
developed and developed nations……………94
ECO 441 ECONOMIC PLANNING I
MODULE 1
Economic planning: Meaning, Terminologies and Contemporary
issues
Unit 1: Meaning of Economic Planning
Unit II: Features and Types of Planning in Developing Nations
Unit III: Theories and Models of Economic Planning
UNIT 1: Meaning of Economic Planning.

CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 What is planning and economic planning?
3.2 Objectives of economic planning
3.3 Rationale for planning
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Readings
1.0 INTRODUCTION
You must have read the Course Guide and it is assumed that you have
familiarized
yourself with the introductory comments. This unit is the first among the
three constituents units of this module. The main thrust of this unit is to
introduce you to the meaning of Economic Planning as a concept, show
its objectives, and highlight the rationale for planning. This unit is
fundamental to the understanding of subsequent units and modules. This
is simply because other units and modules will be discussed on the basis
of the fundamental concepts explained here, hence, requires your
maximum attention and understanding. Planning involves setting of
goals, objectives and targets and determining how they will be achieved.
As a student of economics, you should know that economic planning is
a deliberate governmental attempt to coordinate economic decision
making over the long run and to influence, direct, and in some cases
even control the level and growth of a nation‘s principal economic
variables to achieve a predetermined set of development objectives.
2.0 OBJECTIVES
At the end of this unit, you should be able to:
Define in your own words what economic planning is as established
by scholars.
1
Enumerate the objectives of economic planning available to

planners. Identify the rationales for economic planning.
3.0 MAIN CONTENT
3.1 What is Economic planning ?
Generally, our focus in this course is to understand the meaning of

economic planning, its applications and implementation to achieving set
economic development targets of a drawn actual economic plan. It is
important for you to know that planning is essential in whatever we do,
both at micro and macro level of human existence, given the limited
resources at our disposal which is of paramount importance to even the
planning authorities, that is, the government, for them to meet up with
the set targets of developing the economy using available resources. The
questions of poverty, high unemployment rate, high inflation rate, high
cost and standard of living, decay infrastructural facilities, high
exchange rate, low level of savings and investments, inequalities in
income distributions etc, to mention but few could be better
answered if proper economic development planning is given a priority
and drawn to meet up with the set targets. Therefore, planning is
essential in anything we do. To start with, it is important for us to
examine what planning is all about. This will provide a convenient
platform to have a full grasp of the entire course content.
Let us begin our understanding of economic planning by first

defining the word
‗planning‘.
According to Otokiti S.O (1999), planning as understood by economists
implies centralized control, conscious and deliberate layout of the
national resources with a definite end in view, incorporating all
economic aspect which is well coordinated and integrated so as to
eliminate duplication and wasteful competition. For example as a lay
man, putting up a building requires a knowledge of the requirements like
sand, gravel, cement, etc , how much it costs, the time it will take to
build it and the number of labourers required. Hence proper
planning is needed. In the economy, the macroeconomic decision
of answering the basic economic problem questions of evenly
distributed resources is the pure responsibility of the government which
calls for careful strategic planning.
Therefore, to plan is to act in the light of a definite predetermined
objectives by designing and manipulating of factors which govern the
achievement of the given targets so as to attain specific goals within the
time limit which the planner sets to achieve.
Otokiti (1999), define economic planning as a deliberate control and
2
direction of the economy , by a central authority through various tools

and sub-systems within the main system, for the purpose of achieving
definite targets and objectives within a specified
period of time.
On the other hand, 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 in one or more ensuing periods.
Jhingan (2011), define economic planning as a deliberate control and
direction of the economy by a central authority for the purpose of
achieving definite targets and objectives within a specified period of
time
In the light of the above definitions of economic planning, as economics
students, you should understand that there has to be a vision, mission,
targets and timing periods for a
definite plan to be actualised. Countries like USA, UK, INDIA,
MALAYSIA, and SINGAPORE, carefully took their economic planning
formulation and implementation seriously which position them in the
place they occupy now in the committee of nations in the world.
However, this is not the case with the less developed countries of which
Nigeria is one. This has contributed to the level of economic
backwardness that is visible in their economies. It is also important to
state that there are objectives of economic planning that are available to
planners.
SELF-ASSESSMENT EXERCISE
Briefly discuss the meaning of the word economic planning.
3.2 Objectives of economic planning .

In this section, we shall look at the objectives of economic planning.
The following are
the objectives of economic planning as outlined by Pooja Mehta.
1. Economic Development:
The main objective of every economic planning is to achieve the goal of
economic
development. Economic development is necessary for less developed
countries because they can solve the problems of general poverty,
unemployment and backwardness through it. Economic development
is concerned with the increase in per capita income and causes behind
this increase. In order to calculate the economic development of a
country, we should take into consideration, not only increase in its total
production capacity and consumption, but also increase in its
population. Economic development refers to the raising of the people
3
from inhuman elements like poverty, unemployment and ill health etc.
2. Increase Employment:
Another objective of economic planning is better utilization of man
power resources and
increasing employment opportunities. Measures should be taken to
provide employment to millions of people during the plans.
3. Self-Sufficient:
It has been the objective of the plans that the country becomes self-
sufficient regarding
food grains and industrial raw material like iron and steel etc. Also,
growth is to be self- sustained for which rates of saving and investment
are to be raised. This objective should be to get rid of dependence on
foreign aid by increasing export trade and developing internal resources.
4. Economic Stability:
Stability is as important as growth. It implies absence of frequent
end excessive
occurrence of inflation and deflation. If the price level rises very high or
falls very low, many types of structural imbalances are created in the
economy. Economic stability has
been one of the objectives of every plan in developing countries
especially in Nigeria and
India. Some rise in prices is inevitable as a result of economic
development, but it should not be out of proportions.
5. Social Welfare and Services:
The objective should be to promote labour welfare, economic
development of backward
classes and social welfare of the poor people. Development of
social services like education, health, technical education, scientific
advancement etc. should always be the
concern of economic planning of any economy.
6. Comprehensive Development:
All round development of the economy is another objective that
should be given
consideration. Development of all economic activities vis-à-vis,
agriculture, industry, transport, power sectors etc. should be sought to
be simultaneously achieved. Likewise, other less developed rural
regions should be incorporated in the plan for proper development to
reduce rural-urban migration in the economy.
7. To Reduce Economic Inequalities:
Every plan is aimed at reducing economic inequalities. Economic
inequalities are
indicative of exploitation and injustice in the country. It results in
making the rich richer and the poor poorer. Several measures have to be
taken in a plan to achieve the objectives
of economic equality especially by way of progressive taxation and
4
reservation of jobs
for the economically backward classes. .
8. Social Justice:
Another objective of every plan is to promote social justice. It is
possible in two ways,
one is to reduce the poverty of the poorest section of the society and the
other is to reduce the inequalities of wealth and income and to
redistribute it evenly.
9. Increase in Standard of Living:
The other objective of a plan is to increase the standard of living of the
people. Standard
of living depends on many factors such as per capita increase in income,
price stability, equal distribution of income etc.
In view of these objectives, it is pertinent that the central
authority, which is the government, is left with no choice than to adopt
holistic economic measures and blue
print plan aimed at achieving sustained economic growth and
development in the
economy. Let us consider the rationales for economic planning.
SELF ASSESSMENT EXERCISE

Enumerate and discuss five objectives of economic planning in less
developed countries.
3.3 Rationales for planning in less developed countries

One of the principal objectives of planning in developing countries is to
increase the rate
of economic development. According to Gadgil (2002), planning
for development implies external direction or regulation of economic
activity by the planning authority which in most cases is identified as the
government. LDC‘s are characterized with low level of savings, low
level of income, and therefore what is prevalent in such countries are
poverty ridden people. This vicious economic circle can only be broken
by planned development. This can be achieved through importing
capital from abroad known as foreign direct investment (FDI) and
localized forced savings to support the level of industrialization.
Therefore, the rationale and the need for planning in such countries are
the following.
1. Strengthen the market mechanism
The market mechanism works imperfectly in LDC‘s because of the
ignorance and lack of
familiarity with it. This is so because the production factor; money and
capital markets are not organized properly, thus the price system fails to
5
bring about adjustments between aggregate demand and supply of good

and services. Therefore, to remove market imperfection, to mobilize and
utilize efficiently the available resources, to determine the
amount and composition of investment and to overcome structural
rigidities, the market mechanism is required to be perfected in LDC‘s
through planning using a workable economic planning blue print.
2. The necessity of removing unemployment.
Unemployment is a situation where resources are not fully utilized.
Capital is scarce and
labour is in abundance thereby creating the problem of providing gainful
employment and resulting in absence of sufficient enterprises and
initiatives. This requires an urgent attention by the planning authority in
LDC‘s to immediately adopt an economic planning roadmap that can
salvage the situation.
3. The development of agricultural and industrial sectors.
Agricultural sector is known to produce food for household, raw
materials for industries
and foreign earnings to government when exported abroad. Industrial
sector on the other hand utilizes the raw materials from the agricultural
sector for the production of further
finished goods that can be used for infrastructural development like
roads, railways,
power stations etc. Therefore there should be a conscious attempt by the
LDC‘s planning authority to have a roadmap planning strategies towards
the development of their agricultural and industrial sectors.
4. The necessity of removing the nation’s poverty.
The need for reducing inequalities income and wealth raising per-
capital income,
increasing employment opportunities, all round rapid development and
national independence substance requires a careful ad conscious idea of
planning targeted through a planning model that can achieve this. This
was seen in the rapid development and transformation of USSR now
Russia, a poor country at that time before target industrial planning was
introduced, embraced and adopted.
To sum this up, planning for economic development is undertaken
presumably because the pace of direction of development taking place in
the absence of external intervention is not considered to be satisfactory
and because it is further held that appropriate external intervention will
result in increasing considerably the pace of development and directing
it properly.

Enumerate and discuss three rationales for planning in less developed
countries.
6
4.0 CONCLUSION
From our discussion so far on the Meaning of Economic Planning, we
can infer the
following facts:
• Economic planning as understood by the majority of economists
implies deliberate control and direction of the economy by a central
authority for the purpose of achieving definite targets and objectives
within a specified period of time.
• Planning authorities must have clear economic plan objectives with
definite time frame of achieving it.
• For a major rational of economic planning to take place, the necessity
of removing the
nation‘s poverty should be of priority.
5.0 SUMMARY
In this unit, we have attempted to show various definitions of economic
planning from
various scholars of repute. Also, from the point of view of
harmonization, you have learnt that all the definitions agreed to the
fact that economic planning as understood by majority of economists
implies deliberate control and direction of the economy by a central
authority for the purpose of achieving definite targets and objectives
within a specified period of time. It is believed that understanding of this
unit has given you a basis for the understanding of the next unit and in
fact subsequent modules. It is expected that the reader be anxious of
reading more about the features and various types of planning in less
developed countries and developed nations which will be duly served in
the next unit.
6.0 TUTOR-MARKED ASSIGNMENT

Discuss the meaning of economic planning as defined by various
economic scholars.
7.0 REFERENCES/FURTHER READING
development - A
Nigeria perspective (1st ed.). Olas Ventures, Mushin, Lagos. Nigeria
Jhingan, M.L. (2007). The Economics of development and planning
(2nd ed.). Lagos:
Pumark Nigeria Ltd.
Otokiti, S.O. (1999). Issues and strategies in economic planning (1st
ed.). Ibadan: Bitico
7
Publishers.
Todaro, M. P. (2000). Development planning, models and methods,
England
England: Pearson
Education Ltd, Edinburgh Gate Harlow.
8
UNIT 1I FEATURES AND TYPES OF PLANNING IN

DEVELOPING NATIONS.
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Types of Planning in less developed countries
3.2 The main features of economic planning in developing countries
3.3 Relevance of development models to economic planning
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
The reader must have familiarized with the explicit explanations in the
first unit of this
module which discusses what economic planning is and what it entails.
This unit is the second among the three constituents units of this
module. The main thrust of this unit is
to show the features and various types of economic planning. It will also
highlight the
relevance of development models to actual economic planning.
This unit is also fundamental to the understanding of subsequent units.
2.0 OBJECTIVES
• Show the various types of economic planning that can be
identified.
• Enumerate the relevance of development models to economic
planning .
• Identify the features of economic planning in Less Developed
Countries.
3.0 MAIN CONTENTS
3.1 Types of Planning in less developed countries:

There are various types of planning which are discussed vividly below
as pointed out by
Jhingan (2011). Let us now examine them one by one.
9
1. Planning by Direction and Planning by Inducement:

Planning by direction is an integral part of a socialist society. It entails
complete absence
of laissez-faire. There is one central authority which plans, directs,
and orders the execution of the plan in accordance with pre-determined
targets and priorities. Such
planning is comprehensive and encompasses the entire economy.
Planning by inducement is democratic planning. It means planning by
manipulating the market. There is no compulsion but persuasion. There
is freedom of enterprise, freedom of consumption and freedom of
production. But these freedoms are subject to state control and
regulation. People are induced to act in a certain way through various
monetary and fiscal measures. Thus, planning by inducement is able to
achieve the same results as are likely to be achieved in planning by
direction but with less sacrifice of individual liberty.
2. Financial Planning and Physical Planning:

Financial planning refers to the technique of planning in which
resources are allocated in
terms of money. Financial planning is essential in order to remove
maladjustments between supplies and demand and for calculating
costs and benefits of the various projects. Thus, financial planning is
thought to secure a balance between demands and
supplies, avoid inflation and bring about economic stability.
Physical planning refers to the allocation of resources in terms of men,
materials and machinery. In physical planning, an overall assessment is
made of the available real resources such as raw materials, manpower,
etc., and how they have to be obtained so that bottlenecks may be
eliminated during the plan. Physical planning requires the fixation of
physical targets with regard to agricultural and industrial production,
socio- cultural and transportation services, consumption levels and in
respect of employment, income and investment levels of the economy.
Physical planning has to be viewed as an overall long-term planning
rather than a short-term piecemeal planning.
3. Perspective Planning and Annual Planning:

Perspective planning refers to long-term planning in which long range
targets are set in
advance for a period of 15, 20, or 25 years. A perspective plan, however,
does not imply one plan for the entire period of 15 or 20 years. In
reality, the broader objectives and targets are to be achieved within the
10
specified period of time by dividing the perspective plan into several

short-period plans of 4, 5 or 6 years. Not only this, a five year plan is
further broken up into annual plans so that each annual plan fits into the
broad framework of the five-year plan. Plans of either kind are further
divided into regional and sectoral plans. Regional plans pertain to
regions, districts and localities and sectoral plans pertain to plans for
agriculture, industry, foreign trade etc. Annual planning can also be
incorporated into a budget which is made by a country yearly . For
example we shall see this type of planning that Nigeria undertook.
4. Indicative Planning and Imperative Planning:

This is the French system of planning which is based on the principle of
decentralization
in the operation and execution of the national plans. This type of
planning is not imperative but flexible. In indicative planning the
private sector is neither rigidly controlled nor directed to fulfill the
targets and priorities of the plan. Even then, the
private sector is expected to fulfill the targets for the success of the plan.
The state
provides all types of facilities to the private sector but does not direct it,
rather indicates the areas in which it can help in implementing the plan.
On the other hand, under imperative planning all economic activities
and resources of the economy operate under the direction of the state.
There is complete control over the
factors of production by the state. The entire resources of the country are
used to the maximum in order to fulfill the targets of the plan. There is
no consumers sovereignty in
such planning. Decisions about what and how much to produce
are taken by the
managers of firms and factories on the directive of the planning
commission or a central
planning authority. Since government policies and decisions are rigid,
they cannot be changed easily.
5. Democratic Planning and Totalitarian Planning:

In totalitarian or authoritarian planning there is central control and
direction of all
economic activities in accordance with a single plan. There is planning
by direction where consumption, production, exchange, and distribution
are all controlled by the state. In totalitarian planning, the planning
authority is the supreme body. It decides about the targets, schemes,
allocations, methods and procedures of implementation of the plan.
There is absolutely no opposition to the plan. People have to
11
accept and rigidly implement the plan.

In democratic planning, the philosophy of democratic government is
accepted as the ideological basis. People are associated at every
step in the formulation and
implementation of the plan. Cooperation of different agencies, and
voluntary groups, and
associations plays a major role in the execution of the plan. Democratic
planning respects the institution of private property. Price mechanism is
allowed to play its due role. The government only seeks to influence
economic and investment decisions in the private sector through fiscal
and monetary measures. The private sector operates side by side with
the public sector. Democratic planning aims at the removal of
inequalities of income and wealth through peaceful means by taxation
and government spending on social welfare and social security schemes.
Individual freedom prevails and people enjoy social, economic and
political freedoms.
6. Rolling and Fixed Plans:

In a rolling plan, every year three new plans are made and acted upon.
First, there is a
plan for the current year which includes the annual budget and the
foreign exchange budget. Second, there is a plan for a number of years,
say three, four or five. Third, a
perspective plan for 10, 15 or 20 or even more years is presented every
year in which the
broader goals are stated and the outlines of future development are
forecast. The annual one-year plan is fitted into the same year‘s new
three, four or five year plan, and both are framed in the light of the
perspective plan.
In contrast to the rolling plan, there is a fixed plan for four, five, six or
seven years. A fixed plan lays down definite aims and objectives which
are required to be achieved during the plan period. For this purpose,
physical targets are fixed along with the total outlay. Physical targets
and financial outlays are seldom changed except under emergencies.
Planning in India (Five-Year) and Russia (Seven-Year) is of the fixed
type. In Nigeria, rolling plan and fixed plan were also considered and
used at one point or the other. This will be critically discussed in
subsequent module of this course.
7. Centralised and Decentralised Planning:

Under centralized planning, the entire planning process is under a
central planning
authority. The authority formulates a central plan, fixes objectives,
12
targets, and priorities for every sector of the economy. The principle
problems of the economy – what and how much to produce, how and for
whom to be produced etc, are decided by this authority.
The entire planning process is based on bureaucratic control and
regulation. Naturally,
such planning is rigid. There is no economic freedom and all economic
activities are directed from above.
On the other hand, decentralized planning refers to the execution of the
plan from the grass roots. Under it, a plan is formulated by the
central planning authority in
consultation with the different administrative units of the country. The
central plan
incorporates plans under the central schemes, and plans for the states
under a federal set- up. The state plans incorporate district and village
level plans. Under decentralized planning, prices of goods and services
are determined by the market mechanism despite government control
and regulation in certain fields of economic activity.

Enumerate and discuss five types of planning in less developed
countries.
3.2 The main features of economic planning in developing countries.

By now, the various types of planning available must have been clear to
you.
The following are the main features of economic planning in developing
countries . In developing countries, we can identify some features of
economic planning:
i. The governments mobilize domestic resources and also raise

foreign finance to carry out such projects which are expected to induce
productive activities in the private sector. This involves the development
of infrastructure and heavy industries. For example Nigeria borrows
from foreign creditors like IMF, ADB, Paris club etc. to finance
infrastructural projects in the past.
ii. The governments adopt certain monetary and fiscal policies to
stimulate private economic activity and to ensure harmony between the
social objectives of the
government and the behaviour of the private producers and
businessmen.
Let it be known to you that in developing economies, decision making
in the economy is also a pointer to the fact that both private business
owners and the government contributes to resources mobilization in the
economy.
13
iii. People enjoy economic, social and religious freedom. People

have freedom to conduct such economic activities as
consumption, production, exchange, investments etc. in the national
interest and social welfare of the community as a whole.
iv. People‘s co-operation is sought in the preparation of the plan.
There is close relationship between welfare of the people and economic
activities.
v. One of the aims of planning is to co-ordinate the activities of
public and private sectors.
vi. People‘s co-operation is sought in achieving the targets of the plan
by giving them
proper incentives.
vii. Economic activities are conducted both to earn profit and promote
social welfare. viii. Under democratic planning, both price
mechanism and government decisions are
important.
ix. Objectives of public sector and private sector are co-ordinated.
x. It is quite a flexible planning. There is enough scope to modify
the targets of private sector. Targets of Public Sector are subject to
change according to changed circumstances.
xi. It has a tendency of decentralization.
xii. Its main objective is to raise the standard of living of the people
quickly. As such, consumer goods industries are given as much
importance as heavy industries.
From the above features of planning in mixed developing economy, it is

clear that the market and economic planning are complementary to one
another.
Identify and explain the main features of economic planning in
developing countries.
3.3 Relevance of development models to economic planning.

The following are the relevance of development models to planning. We
shall critically
discuss this in Economic planning II which is the concluding part of
economic planning course material.
a. It provides a framework for checking of consistency or the
optimality of the official plan targets.
b. It provides a framework for the actual setting of targets.
c. It provides a framework for the evaluation and selection of
projects.
14
d. It provides an insight into the structure of the economy and its

dynamics to help better policy decisions.
e. It assists in budget and budgeting control.
f. It helps the preparation of feasible plan.
g. It helps the projection and forecasting of measurable changes.
h. It helps in adjusting competing participants within available time
path
i. It helps the planning authorities to know their objectives,
instrument variables and the functional relationship of the variables in
the desired plan and how to achieve it.
j. It gives the planner a clear direction to follow on a projected
economic plan.
Briefly explain five relevance of development models to economic
planning of your
country.
4.0 CONCLUSION
From our discussion so far on types and features of Economic Planning
in developing
nations, we can deduce the following facts:
• That types of planning could be fixed, rolling, centralized and
decentralized in nature.
• That the government mobilizes domestic resources and also
raises foreign finance to carry out such projects which are expected to
induce productive activities in the
private sector. .
• That development models are relevant to providing a framework
for the actual setting of targets in economic planning.
5.0 SUMMARY
In this unit, we have attempted to show the types of Planning in less
developed countries,
the main features of economic planning in developing countries and the
relevance of development models to economic planning. From the point
of view of harmonization of
all these rationale, you have learnt that all these are a good model road
map for a
successful economic planning and development. It is believed that your
understanding of this unit has given you a basis for the
understanding of the next unit and in fact subsequent modules. It is
expected that you should be anxious of reading more about theories and
models of economic planning which will be duly served in the next unit.
15

Economic planning model are relevant in building up economic plan in
Nigeria. Discuss

development - A
(2nd ed.). Lagos:
Pumark Nigeria Ltd.
Publishers.
England
England: Pearson
16
UNIT III: THEORIES AND MODELS OF ECONOMIC

PLANNING. CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 What are Economic Planning Models?
3.2 Types of Planning models
3.3 Classical Theories of Economic Development Planning
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
Our concluding discussion in this module will give us an introductory
insight into what
we shall consider in Economic Planning II of this course .This unit is the
third and last among the three constituents units of this module. The
main thrust of this unit is to
discuss the theories and models of Economic Planning as a concept,
show the meaning of
planning models and theories of economic planning. This unit is also
fundamental to the understanding of subsequent units and modules. As a
student of economics, you should know that a planning model specifies
the relationships between endogenous and exogenous variables and aims
at ensuring the consistency of the proposed plan for economic
development. It is also meant to yield an optimally balanced collection
of measures which can help the planning authority in the drawing of an
actual plan.
2.0 OBJECTIVES
• Define what economic planning models are, as scholarly defined
and in your own words.
• Enumerate and discuss types of planning models available to
actual development plan making.
• Identify the theories of economic development planning that are
available.
3.0 MAIN CONTENT
17
3.1 What are Economic planning models?

Generally, our focus in this unit is to understand the meaning of
techniques and models of
Economic planning. It is important for you to know that planning is
essential in whatever we do both at micro and macro level of human
existence. Quantifying what we want to achieve as set targets and how
to realize them given the limited resources at our disposal is of
paramount importance to even the planning authorities that is the
government for them to meet up with the set targets of developing the
economy using available resources. This can only be done using
quantitative equations which expresses relationships among economic
variables to explain and predict past and future events under a set
of simplifying assumptions known as Model. Planning models have
been increasingly used
in less developed countries of which Nigeria is one, for the drawing up
of plans for economic development. To start with, I consider it
important for us to examine what Planning models is all about. I believe
this will provide a convenient platform for us to have easy assimilations.
Let us begin our understanding of the models of economic planning by

first defining the
word ‗Models‘.
According to Jhingan (2011), a model expresses the relationships
among economic variables which explain and predict past and future
events under a set of simplifying assumptions. In other words, a model
consists of a series of equations each of which represents the association
among certain variables.
Planning Model therefore is a series of mathematical equations which
help in the drawing up of a plan for economic development. Jhingan
M.L (2011).
On the otherhand, Otokiti S.O (1999) views an economic model as an
organize set of
relationships, that describes the functioning of an economic entity
whether it concerns, the individual, house hold or firm, the local
government system, the regional or national economies, or the world
economy under a set of simplifying assumptions. He also posits that in
the context of planning economic models provide a logically, systematic
and internally consistent operational framework, based on structural
inter-relationships of sets and participants in the economy under
consideration. A planning model, in other words sets out the relationship
between the crucial (key) variables in the process of planned economic
development within the stipulated time horizon of the plan. You should
also know that most planning models belong to the category of what are
known as decision or policy models. In these models a set of plan
objectives is specified, policy measures to achieve these objectives are
18
isolated and their interrelationship worked out.

It is imperative to let you know that model may have endogenous
and exogenous variables. Endogenous variables are those whose values
are determined from within the
system, examples of such are national income, consumption, savings,
investment etc.
On the other hand, exogenous variable are determined from outside the
system, Examples of such are prices, exports, imports, technological
changes etc.
Therefore as a student of economics, you should know that a planning
model specifies the relationships between endogenous and exogenous
variables and aims at ensuring the
consistency of the proposed plan for economic development. It is also
meant to yield an
optimally balanced collection of measures known as Model Targets
which can help the planning authority in the drawing of an actual plan. It
is also important to let you know that there are types of planning models
which we shall considers in the next section of this unit.
Briefly discuss the meaning of the word economic planning models.
3.2 Types of Planning Models

Having understood what economic planning models are, it is important
for us to discuss
the various types of development planning models. Most development
plans have traditionally been based initially on some more or less
formalized macroeconomic model. Such economy wide planning model
can be divided into three basic categories.
1. Aggregate growth, Macroeconomic or Simple Models
2. Multi-Sector Models
3. Decentralised Models
3.2.1 Aggregate growth, Macroeconomic or Simple Models

The first category is the aggregate growth, macroeconomic or simple
models which
involves macroeconomics estimate of planned or required changes in
principal economic variables. It deals with the entire economy in terms
of a limited set of macroeconomic variables deemed most critical to be
determined by levels and growth rates of national output; that is savings,
investment, capital stock, exports, imports, foreign aid etc. The model
provides a convenient method for forecasting output (and perhaps also
19
employment) growth over a three to five year period. Harrod Domar and
two gap models are of this type.
3.2.2 Multi-Sector Models

The second category is the multi-sector models. Multi-sector include
input-output, social
accounting and computable general equilibrium (CGE) models which
ascertain among other things, the production, resources, employment
and foreign exchange implication of a given set of final demand targets
within an internally consistent framework of inter- industry product
flows. It is a sophisticated approach to development planning in which
the activities of the major industrial sectors of the economy are
interrelated by a means of a set of simultaneous algebraic equations
expressing the specific production processes or technology of each
industry. All industries are viewed both as producers of outputs and
users of inputs from other industries. For example, the agricultural
sector is both a producer of output e.g. (wheat) and a user of input from
the manufacturing sector e.g. (machinery, fertilizer), therefore there is
interdependence of industry which could lead to direct and indirect
repercussions of planned changes in the demand for the products of any
one industry on outputs, employment, and imports of all other industries
can be traced throughout the entire economy in an intricate web of
economic interdependent. This inter-industry model can be used to
determine intermediate material, import, labour and capital
requirements with the result that a comprehensive economic plan
with mutually consistent production levels and resource requirements
can in theory be achieved.
3.2.3 Decentralised Models

The third stage or category of planning models is the decentralized
models. It is the type
that have sector of project level variables which are used to prepare
models for individual sectors or projects. This type of models are useful
in the early stages of a country‘s
economic development when information is available for only
individual sectors or
projects, project evaluation or project appraisal and social cost benefit
Analysis are techniques that fit into this category. The most important
component of plan formulation is the detailed selection of specific
investment projects within each sector through the decentralized models.
You will be exposed in details to the workings of these models and their
co-efficient in economic planning II next semester.
20
Discuss the basic models available in economic development planning

formulation in less
developed countries.
3.3 Classical Theories of Economic Development Planning

We shall be looking at some of the theories of development planning as
applied by some
economies of the world and its reflections as stated by Dang and Pheng
Sui (2015) in their paper ― Infrastructure Investments in Developing
Economies‖. It is discussed below. Let us start by comparing the theories
as argued out by development economists as
follows.
1. The Linear Stages of Growth Theories
The first generation of economic development models was formulated in
the early
years after the World War II. These early models focused on the utility
of massive injections of capital to achieve rapid GDP growth rates. The
two famous models are Rostow‘s stages of growth model and the
Harrod–Domar model (Todaro and Smith,
2009).
Theorists of the 1950s and early 1960s viewed the process of
development as a
sequence of historical stages. This view was popularized by
Rostow(1995). Building on the historical pattern of the then developed
countries, Rostow (1960) claimed that the transition from
underdevelopment to development would pass through five stages: the
traditional society, the preconditions for take-off, the take-off, the drive
to maturity and the age of high mass consumption. The decisive stage is
the take-off, through which developing countries are expected to transit
from an underdeveloped to a developed state. Increasing rate of
investments is considered to be necessary to induce per-capita growth.
Like Rostow‘s stages of growth model and the Harrod–Domar model
emphasized that the prime mover of the economy is investments. Every
country therefore needs capital to generate investments. The principal
strategies of development from the stage approach were commonly used
by developing countries in the early post-war years.
With a target growth rate, the required saving rate can then be known. If
domestic savings were not sufficient, foreign savings would be
mobilized.
Every economy is assumed to have the same necessary conditions and
would pass through the same phasing, stage by stage. But that
economic growth path, which
historically had been followed by the more developed countries, is not
the only one
21
pathway. The development process is actually highly nonlinear

according to Chenery (1960). Countries may pursue distinct
development paths, economies may miss stages, or become locked in
one particular stage, or even regress depending on many other
complementary factors such as managerial capacities, and the
availability of skilled labour for a wide range of development projects
(Todaro and Smith, 2009).
2. Structural Change Theories

During most of the 1960s and early 1970s, economists generally
described the
development process as structural change by which the reallocation of
labour from the agricultural sector to the industrial sector was
considered the key source for economic growth. Two well-known
representatives of this approach are the two-sector model of
Theories of Economic Development model (Lewis ,1954), and the
structural change and
patterns of development (Chenery,1960).
In Lewis‘ (1954) two-sector model or theory of surplus labour, labour
increasingly moves away from the agricultural sector to the industrial
sector. However, with unlimited supply of labour from the traditional
sector, these transferred workers continually received only subsistence
wages. The excess of modern sector profits over wages and hence
investments in the modern sector continued to expand and generate
further economic growth on the assumption that all profits would be
reinvested. Both labour transfer and modern sector employment growth
were in turn brought about by output expansion in that sector. This
process of modern sector self-sustaining growth and employment
expansion facilitated the structural transformation from a traditional
subsistence economy to a more modern developed economy to take
place. Like the Harrod–Domar model, the Lewis model considered
savings and investments to be the driving forces of economic
development but in the context of the less developed countries.
However, several Lewis‘ assumptions are not valid such as those
relating to rural surplus labour, and the proportional rate of expansion in
capital accumulation in the modern sector (Todaro and Smith, 2009).
Although promoting the roles of savings and investments, the structural
change and patterns of development analysis extended in comparison
with the Lewis model. The analysis identified that the steady
accumulation of physical and human capital is among the conditions
necessary for economic growth, apart from savings and investments.
By focusing on the pattern of development rather than theory, the
structural change models may mislead policy-makers. Since the
reallocation of labour from the agricultural sector to the industrial sector
22
is considered the engine of economic growth, many developing

countries implemented policies that often promote the industry and
neglect agriculture. But the negative effects of policies that turned
against that vital sector have come to be widely recognized (World
Bank, 2000). Criticisms of these models were reinforced by the fact that
in many developing countries, poverty was prevalent.
3. International Dependence Theories

The international dependence theory was very popular in the 1970s and
early 1980s.
The dependence theorists argued that underdevelopment exists because
of the dominance of developed countries and multinational corporations
over developing countries. The
theory is considered an extension of Marxist theory (Hein, 1992). The
poor countries are
said to be dependent on the developed countries for market and
capital. However, developing countries received a very small portion of
the benefits that the dependent relationship brought about. The unequal
exchange, in terms of trade against poor countries, made free trade a
convenient vehicle of ―exploitation‖ for the developed countries.
Developed countries can exploit national resources of developing
countries through getting cheap supply of food and raw materials.
Meanwhile, poor countries are unable to control the distribution of the
value added to the products traded between themselves and the
developed countries. The growth of international capitalism and
multinational corporations caused poor countries to be further exploited
and more dependent on the developed countries. Poor countries
therefore could not expect sustained growth from that dependence.
Following the international dependence theory, developing countries
should therefore end the dependence by breaking up their relationships
with the developed world, as well as by closing their doors on the
developed countries (Elkan 1995; Ghatak 2003; Ferraro 2008).
The models gained increasing support among the developing countries
because of the limited results of the stages and structural change models.
However, the failures of the model were clearly reflected in the
developing countries that followed the autarky policy. These countries
often experienced stagnant growth and finally decided to open their
economies once again such as China, Tanzania and India (Ferraro 2008;
Todaro and Smith, 2009). Meanwhile, the experience of the newly
industrialized economies of East Asia, namely Hong Kong, Singapore,
Malaysia, Taiwan and South Korea, during the
1970s and 1980s showed that their success had been the result of
emphasizing trade with the advanced industrial countries. The negative
impacts of the policy of autarky rendered the theory out of favour in the
1980s.
23
4. Neoclassical Counter-Revolution Theories

In the 1980s, neoclassical counter-revolution economists used three
approaches, namely
the free market approach, the new political economy approach and the
market-friendly approach, to counter the international dependence
model. In contrast with the
international dependence model, these approaches mainly argued that
underdevelopment is not the result of the predatory activities of the
developed countries and the international
agencies but was rather caused by the domestic issues arising from
heavy state intervention such as poor resource allocation, government-
induced price distortions and
corruption (Meier 2000). As a response to public sector inefficiency,
economists of the counter-revolution thinking, for example Bauer
(1984), Lal (1983), Johnson (1971), and
Little (1982), focused on promoting free markets, eliminating
government-imposed distortions associated with protectionism,
subsidies and public ownership.
Neoclassical economists focused on the market to find a way out for the
developing
countries. Policies of liberalization, stabilization and privatization
therefore become the central elements of the national development
agenda. Foreign trade, private international investments and foreign aid
flowing into the developing countries were expected to accelerate
economic efficiency and economic growth of these countries.
Empirically, the models, however, did not bring about the expected
results. The growth rates per capita have diverged among countries
(Azariadis and Drazen 1990). Several African countries focusing on
these issues achieved an average growth rate of only 0.5 % per year.
With weak and inadequate legal and regulatory framework, not to
mention the different institutional, cultural and historical context of the
developing countries, free market in these countries failed to stimulate
economic development (World Bank, 2000).
5. The New Growth Theory

Endogenous growth or the new growth theory emerged in the 1990s to
explain the
poor performance of many less developed countries, which have
implemented policies as prescribed in neoclassical theories. Unlike the
Solow model that considers technological
change as an exogenous factor, the new growth model notes that
technological change
24
has not been equal nor has it been exogenously transmitted in most
developing countries
(World Bank, 2000).
New growth theorists (Romer 1986; Lucas 1988; Aghion and Howitt
1992) linked the technological change to the production of knowledge.
The new growth theory emphasizes that economic growth results from
increasing returns to the use of knowledge rather than labour and capital.
The theory argues that the higher rate of returns as expected in the
Solow model is greatly eroded by lower levels of complementary
investments in human capital (education), infrastructure, or research
and development (R&D). Meanwhile, knowledge is different from
other economic goods because of its possibility to grow boundlessly.
Knowledge or innovation can be reused at zero additional cost.
Investments in knowledge creation therefore can bring about sustained
growth. Moreover, the knowledge could create the spillover benefits to
other firms once they obtained the knowledge. However, markets failed
to produce enough knowledge because individuals cannot capture all of
the gains associated with creating new knowledge by their own
investments. Policy intervention is thus considered necessary to
influence growth in the long term. The new growth models therefore
promote the role of government and public policies in complementary
investments in human capital formation and the encouragement
of foreign private investments in knowledge-intensive industries such as
computer software and telecommunications (Meier, 2000).
Although the new growth theory helps to explain the divergence in
growth rates across economies, it was criticized for overlooking the
importance of social and institutional
structures (Skott and Auerbach, 1995). Its limited applicability lies in its
assumptions. For example, it treats the economy as a single firm that
does not permit the crucial
growth-generating reallocation of labour and capital within the
economy during the process of structural change. Moreover, there are
many other factors which provide the
incentives for economic growth that developing countries lack
such as poor infrastructure, inadequate institutional structures and
imperfect capital and goods markets
(Cornwall and Cornwall, 1994). Policy-makers will therefore need
to pay careful attention to all of the factors that determine the
changes and their impacts on the
aggregate growth rate.
6. Theory of Coordination Failure

The foundation of the theory of coordination failure is the idea that the
market may fail to
25
achieve coordination among complementary activities. When

complementaries exist, that is when returns of one investment depend on
the presence or extent of other investments, there exist two scenarios.
On the one hand, optimally, all investors as a whole are better
off with all investments to be achieved at the same time. On the other
hand, it would not
make sense for an investor to take similar actions when he believes that
others may not do the same as well. The market is said to have failed to
coordinate investors‘ actions in this way. Coordination failure therefore
leads the market to an (equilibrium) outcome inferior to a potential
situation in which resources would be optimally allocated and all agents
would be better off. As a result, underdevelopment equilibrium is
possible (Hoff and Stiglitz, 2000). The theory of coordination failure
became influential in the 1990s.
Briefly discuss four theories of economic development planning.
4.0 CONCLUSION
From our discussion so far on Theories and Models of Economic
Planning, the following
facts were drawn:
• For effective Economic development planning of any nation, it
must possess a formidable development planning model upon which the
plan is built.
• The three stages or types of development planning models
are aggregate or macroeconomic models, multi-sector or inter
industry models and the decentralized models.
• Planning authorities should adopt economic development theories
which have clear objectives with definite time frame to achieve the
policy objectives and targets
5.0 SUMMARY
In this unit, we have attempted to show various definitions on models
and techniques of
economic planning from various scholars of repute. Also, from the point
of view of harmonization, you have learnt that all the definitions agreed
to the fact that planning
model is a series of mathematical equations which help in the drawing
up of a plan for
economic development, we have also considered types of planning
models and the theories of economic development planning. It is
26
believed that your understanding of this unit will prepare you well for
this course. It is expected that you should be anxious of reading more
about the next module.

Discuss the meaning of economic planning models and the types of
planning models in
less developed countries .

development - A
(2nd ed.). Lagos: Pumark Nigeria Ltd.
Publishers.
England
England: Pearson
27
MODULE 2
THE CONCEPT AND APPROACHES OF ECONOMIC
GROWTH AND DEVELOPMENT
Unit 1: Economic development and economic growth
Unit II: Sustainable development
Unit III: Concept of underdevelopment
UNIT 1: ECONOMIC DEVELOPMENT AND ECONOMIC

GROWTH
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Meaning and concept of economic development and growth
3.2 Measurement of economic development
3.3 Human Development Index
4.0 Conclusion
5.0 Summary
1.0 INTRODUTION
Our discussion in the first module of this course was to introduce us to
the general
knowledge of economic planning. We shall again continue in this
knowledge by looking at the concept and approaches of economic
growth and development which will be duly discussed in this second
module of this course. Therefore our task in the present module is to
look at economic development and economic growth, sustainable
development and concept of underdevelopment. For the above reasons,
we shall familiarize ourselves with the meaning of economic
development and growth, measurements of economic developments and
human development index which shall be duly served in this unit. It is
therefore necessary for you to concentrate so that you can understand
the explanations that will be given.
2.0 OBJECTIVES
• Define what economic development and economic growth is.
• Show and identify the measurements of economic development.
28
• Understand what human development index is all about.
3.0 MAIN CONTENTS
3.1 ECONOMIC DEVELOPMENT AND ECONOMIC GROWTH.

Speaking in a broad term, economic development refers to the
problems of under
developed countries and economic growth to those of developed
countries. A scholar known as ‗‗Maddison‘‘ makes the distinction
between the two terms in this sense that; The raising of income levels is
generally called economic growth in rich countries and in
poor ones it is called economic development. But this view does not
specify the underlying forces which raise the income levels in the two
types of countries. ‗Professor Hicks‘ points out in this connection that
the problems of underdeveloped countries are concerned with the
development of unused resources, even though their uses are well-
known, while those of advanced countries are related to growth, most of
their resources being already known and developed to a considerable
extent.
In fact, the terms ‗development‘ and ‗growth‘ have nothing to do with
the type of economy. The distinction between the two relates to the
nature and causes of change. Schumpeter makes the distinction
clearer when he defined development as a
discontinuous and spontaneous change in the stationary state which
forever alters and
displaces the equilibrium state previously existing, while growth is a
gradual and steady change in the long run which comes about by a
gradual increase in the rate of savings and population. This view of
Schumpeter has been widely accepted and elaborated by the majority of
economists. Kindle Berger in his opinion, posit that economic growth
means more output, while economic development implies both more
output and changes in the technical and institutional arrangement by
which it is produced and distributed. Growth may well involve not only
more output derived from greater amounts of inputs but also greater
efficiency, i.e. an increase in output per unit. Development goes beyond
this to imply changes in the composition of output and in the allocation
of inputs by sectors. Friedmann in his opinion consider growth as an
expansion of the system in one or more dimensions without a change in
its structure, and development as an innovative process leading to the
structural transformation of social system.
Thus economic growth is related to as quantitative sustained increase in
the country‘s per capita output or income accompanied by expansion in
its labour force, consumption, capital and volume of trade. On the other
hand, economic development is a wider concept than economic growth.
29
It is taken to mean growth plus change. It is related to qualitative

changes in economic wants, goods, incentives, institutions, productivity
and knowledge or the ‗upward movement of the entire social system. It
describes the underlying determinants of growth such as technological
and structural changes. In-fact, economic development embraces both
growth and decline. An economy can grow and not develop but it may
continue to persist due to the absence of technological and structural
changes. But it is difficult to imagine development without economic
growth in the absence of an increase in output per capital, particularly
when population is growing rapidly.
Despite these apparent differences, some economists use these
terms as synonyms. Arthur Lewis in his write up ‗The Theory of
Economic Growth‘ writes that ‗most often we shall refer only to growth
but occasionally for the sake of variety, to progress or to development.
Therefore, for an economy to experience development, the basic social
indicators of good health care system, affordable housing, constant
electricity supply, available portable water supply, efficient education
system, good road network, availability of infrastructural facilities etc
have to be given priority in such an economy.
SELF ASSESSMENT EXERCISE:-

In your own understanding, differentiate between economic growth
and economic
development.
3.2 MEASUREMENT OF ECONOMIC DEVELOPMENT
Economic development is measured in four ways; according to Jhingan,
(2011)
1. GNP: This is known as Gross National Product which is the total
monetary value of goods and services produced in a country in a year
with net incomes from
abroad. One of the methods to measure economics development is in
terms of an
increase in the economy‘s real national income over a long period of
time. But this is not a satisfactory definition due to the following
reasons.
i. Real national income‘ refers to the country‘s total output of final
goods and services in real terms rather than in money terms. Thus price
changes will
have to be ruled out while calculating real national income. But this is
unrealistic because variations in prices are inevitable. In this measure,
the phrase ‗over a long period of time‘ implies a sustained increase in
real income. A short- period rise in national income which occurs during
the upswing of the business cycles does not constitute economic
development.
30
ii. This measure fails to take into consideration changes in the

growth of population. If a rise in real national income is accompanied by
a faster growth in population, there will be no economic growth but
retardation.
iii. The GNP figure also does not reveal the costs to society of
environment pollution, urbanization, industrialization and
population growth. It considers natural resources to be free and treats
the earth‘ like a business in liquidation‘
iv. Further, it tells us nothing about the distribution of income in the
economy. v. Moreover, there are certain conceptual difficulties in the
measurement of
GNP which are discussed as under.
a. GNP is always measured in money, but there are a number of goods
and services which are difficult to be assessed in terms of money,e.g
painting as a hobby by an individual, the bringing up of children by the
mother. According to a UN report, on an average two thirds of women‘s
work and a quarter of men‘s work never enter into GNP calculations. By
excluding all such services from it, the GNP will work out less than
what it actually is.
b. Another difficulty in calculating GNP is that of double counting
which arises from the failure to distinguish properly between final and
intermediate products. There always exists the fear of a good or a
service being included more than once. If it so happen, the GNP would
work out to be many times the actual.
c. As a corollary, it double counts both addictions and cures. Firstly,
when food and wine are consumed. Secondly, when money is spent on
the food industry and for curing alcoholism.
But GNP as an index of economic development has not been successful
in reducing poverty, unemployment and inequalities, and raising
living standards in developing
countries. Robert McNamara, the then Governor of the world Bank,
admitted in February
1970 the failure of the GNP growth rate as an index of economic
development in these words; ‗In the developing world, and the end of
the decade: malnutrition is common, in- fact mortality is high, life
expectancy is low, illiteracy is widespread, unemployment is endemic
and growing, the redistribution of income and wealth is severely
skewed‘.
Thus GNP cannot be regarded as a measure of economic development.
2. GNP per Capita. The second measure relates to an increase in the per
capital real income of the economy over the long period. Economists are
one in defining economic development in terms of an increase in per
capita real income or output. In the opinion of Meier, economic
development is seen as the process whereby the real per capita income
31
of a country increase over a long period of time, subject to the

stipulations that the number of people below an ‗absolute poverty line‘
does not increase, and that distribution of income does not become more
unequal. This indicator of economic growth purports to
emphasize that for economic development the rate of increase in real
per capita income should be higher than the growth rate of population.
But difficulties still remains.
i. An increase in per capita income may not raise the real standard
of living of the masses. It is possible that while per capita real income is
increasing, per capita consumption might be failing. People might be
increasing the rate of saving or the government might itself be using up
the increased income for military or other purposes.
ii. There is another possibility of the masses remaining poor
despite an increase in the real GNP per capita if the increased income
goes to the few rich instead of going to the many poor.
iii. Such a measure subordinates other questions regarding ‗the
structure of the society, the size and composition of its population, its
institutions and culture, the resource patterns and even distribution of
output among the
society‘s members‘
iv. The real per capita income estimates fail to measure adequately
changes in output due to changes in the price level. Index numbers used
to measure changes in the price level are simply rough approximations.
Moreover, the price levels vary in different countries. Consumers‘ wants
and preferences also differ in each country. Therefore, the national
income figures of different countries are often misleading and
incomparable.
v. International comparisons of the real GNP per capita are
inaccurate due to exchange rate conversion of different currencies into a
common currency,
i.e. US dollars, through the use of official exchange rates. These
nominal
exchange rates do not reflect the relative purchasing power of different
currencies. Thus the comparisons of GNP per capita of different
countries are erroneous.
Despite these limitations, the real GNP per capita is the most widely
used measure of economic development.
3. WELFARE: There is also a tendency to measure economic
development from the point of view of economic welfare. Economic
development is regarded as process
whereby there is an increase in the consumption of goods and
services of individuals. According to Okun and Richardson,
economic development is a
sustained, secular improvement in material well- being, which we may
consider to be reflected in an increasing flow of goods and services.
32
This indicator is also not

free from limitations. The first limitation arises with regard to the
weights to be
attached to the consumption of individuals, consumption of goods and
services
depends on the tastes and preferences of individuals. It is, therefore, not
correct to have the same weights in preparing the welfare index of
individuals. Secondly, in measuring economic welfare caution has to be
exercised with regard to the composition of the total output that is giving
rise to an increase in per capita consumption, and how this output is
being valued. The increased total output may be composed of capital
goods. It may be at the cost of a reduced output of consumer goods.
Thirdly, the real difficulty arises in the valuation of the output. The
output may be valued at market prices whereas economic welfare is
measured by an increase in real national output of income. In fact, with
a different distribution of income, prices would be different and both the
composition and value of national output would also be different.
Fourthly, from the welfare point of view we must also consider not only
what is produced but how it is produced. The expansion of real national
output might have raised the real costs (pain and sacrifice) and social
costs in the economy. For instance, the increased output might have
resulted from long hours and in the deterioration of the working
conditions of the labour force. Fifthly, it is not essential that with the
increase in national income, the economic welfare might have improved.
It is possible that with the increase in real national income/ per capita
income, the rich might have become richer and the poor poorer. Thus,
mere increase in economic welfare does not lead to economic
development till the distribution of national income is equitable or
justifiable. Lastly, we cannot equate an increase in output per head
with an increase in economic welfare, let alone social welfare without
additional considerations. To specify an optimum rate of development,
we must make value judgments regarding income distribution,
composition of output, tastes, real cost and other particular changes that
are associated with the overall increase in the real income.
4. SOCIAL INDICATORS; Dissatisfied with GNP/GNP per capita as

the measure of economic development, certain economists have tried to
measure it in terms of social indicators. Economists include a wide
variety of items in social indicators. Some are inputs such as nutritional
standards or number of hospital beds or doctors per head of population,
while others may be ‗output‘ corresponding to these inputs such as
improvements in health in terms of infant mortality rates, sickness rates,
etc. Social indicators are often referred to as the basic needs for
development. Basic needs focus on alleviation of poverty by providing
basic human needs to the poor. The direct provision of such basic needs
33
such as health, education, food, water, sanitation and housing affects

poverty in a shorter period and with fewer monetary resources than
GNP/ GNP per capita is a strategy which aims at increasing productivity
and incomes of the poor automatically over the long run. Basic needs
lead to a higher level of productivity and income through human
development in the form of educated and healthy people. The merit of
social indicators is that they are concerned with ends, the ends being
human development. Economic development is a means to these ends.
Social indicators tell us how different countries prefer to allocate the
GNP among alternative uses. Some may prefer to spend more on
education and less on hospitals. Moreover, they give an idea about the
presence, absence or deficiency of certain basic needs.
Hicks and Streeten consider six social indicators for basic needs.
Table 2.1
S/N Basic need Indicators
1 Health Life expectancy at birth
2 Education Literacy signifying primary school enrolment as per cent of
population.
3 Food Calorie supply per head
4 Water supply Infant mortality and percentage of population with access
to potable water
5 Sanitation Infant mortality and percentage of population with access
to sanitation.
6 Housing None.
Source: Jhingam M.L (2011)
SELF ASSESSMENT EXERCISE:

Discuss the four measurements of economic development with relevant
examples.
3.3 HUMAN DEVELOPMENT INDEX

The Human Development Index (HDI) is a tool developed by the United
Nations to
measure and rank countries' levels of social and economic development
based on four criteria: Life expectancy at birth, mean years of schooling,
expected years of schooling and gross national income per capita. The
HDI makes it possible to track changes in development levels over time
and to compare development levels in different countries.
It is also a global index utilized to rank the development of countries by
examining the achievements of the inhabitants of the country. The index
factors in three important
elements: standard of living, life expectancy, and literacy level. The
34
index is not 100%

accurate in its determinations due to inconsistencies and lack of data in
certain parts of the world. The index was established in 1990 by the
United Nations.
In 2010, the index ranked Norway, Australia, New Zealand, the United
States and Ireland at the top of its list for "very high human
development." The countries that fell at the
bottom of its "low human development" list were Mozambique,
Burundi, Niger, Congo
and Zimbabwe. The index also shows that countries with lots of income
do not always spend that money in ways that create high life
expectancies or education levels.
Human Development Report (HDR) combines three dimensions:
1. A long and healthy life: Life expectancy at birth
2. Education index: Mean years of schooling and Expected years of
schooling
3. A decent standard of living: GNI per capita (PPP US$)
In its 2010 Human Development Report, the UNDP began using a new
method of calculating the HDI. The following three indices are used:
1. Life Expectancy Index (LEI) = LE - 20

85-20
LEI is 1 when Life expectancy at birth is 85 and 0 when Life expectancy
at birth is 20
2. Education Index (EI) = {MYSI} + {EYSI}
{2}
2.1 Mean Years of Schooling Index (MYSI) = {MYS}

{15}
Fifteen is the projected maximum of this indicator for 2025.
2.2 Expected Years of Schooling Index (EYSI) = {EYS}

{18}
Eighteen is equivalent to achieving a master‘s degree in most countries.
3. Income Index (II) = In{GNIpc} - In (100)} In (75,000) - ln(100)}

II is 1 when GNI per capita is $75,000 and 0 when GNI per capita is
$100. Finally, the HDI is the geometric mean of the previous three
normalized indices:
LE: Life expectancy at birth
MYS: Mean years of schooling (Years that a person 25 years-of-age or
older has spent in schools)
EYS: Expected years of schooling (Years that a 5-year-old child will
35
spend in schools throughout his life)

GNIpc: Gross national income at purchasing power parity per capita
In the final analysis, Nigeria‘s HDI value and rank for 2014 was 0.514
— which put the country in the low human development category —
positioning it at 152 out of 188 countries and territories. Between
2005 and 2014, Nigeria‘s HDI value increased from 0.467 to 0.514,
an increase of 10.1 percent or an average annual increase of about
1.07 percent.

What do you understand by Human Development Index?
4.0 CONCLUSION
From our discussion so far on the economic development and economic
growth, we can
conclude as follows:
That an economy might be growing and not developing most
especially when all the social indicators are missing
That despite its limitations, the real GNP per capita is the most
widely used measure of economic development.
That HDI factors in three important elements which are standard
of living, life expectancy, and literacy level.
5.0 SUMMARY
In this unit, we have attempted to show the meaning of economic
development and
economic growth, covering what is measurements of economic
development is all about, and showing the Human development Index
and its formula. You have learnt that
economy can only be said to grow and develop when its people‘s
standard of living, life
expectancy, and literacy level are better off. Your understanding of this
unit should encourage you to be familiar more with the topics in this
module as you read ahead against the next unit.

Discuss briefly the development of the economy with respect to
peoples Human
development index.

36
development - A
(2nd ed.). Lagos:
Pumark Nigeria Ltd.
Publishers.
England
England: Pearson
37
UNIT II: SUSTAINABLE DEVELOPMENT.
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Meaning and definition of sustainable development
3.2 Objectives of sustainable development
3.3 Elements of Policies for sustainable development
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
It is good that we have familiarized ourselves with economic growth and
development as
well as its measurements and human development indices. We shall
again be looking at sustainable developments bearing in mind its
meaning, objectives, and elements of
policies for sustainable development. An in-depth explanation of the
above topics shall
be provided. It is advisable that you critically concentrate as we
move along with explanations that will be given.
2.0 OBJECTIVES
• Define what sustainable development is
• Understand the objectives of sustainable development.
• Highlight and explain elements of policies for sustainable
development
3.0 MAIN CONTENTS
3.1 MEANING AND DEFINITION OF SUSTAINABLE

DEVELOPMENT
According to the report ‗Our common future‘ by Ms. Harlem
Brundtland, sustainable development is defined as development that
satisfies the needs of the present without compromising the ability of
future generations to satisfy theirs. This report, published in
1987 by the United Nations World Commission on Environment and
38
Development, insists on the need to protect the diversity of genes,

species, and all terrestrial and aquatic ecosystems in nature. This is
possible in particular via measures to protect the quality of the
environment, and by the restoration, development, and maintenance of
habitats that are essential to species. This implies the sustainable
management of the use of the animal and plant populations being
exploited. In other words, it is the rational management of human,
natural, and economic resources that aims to satisfy the essential
needs of humanity in the very long term. Sustainable development
implies the fulfillment of several conditions: preserving the overall
balance, respect for the environment, and preventing the exhaustion of
natural resources. Reduced production of waste and the rationalisation
of production and energy consumption must also be implemented.
Sustainable development is presented as a more or less clean break from
other modes of
development, which have led and are still leading to worrying social and
ecological damage on both a worldwide and a local scale. In order to be
sustainable, development must combine three main elements:
fairness, protection of the environment, and economic efficiency. A
sustainable development project must be based on a better- developed
mode of consultation between the community and the members it
comprises. The success of such a policy also depends on consumers
accepting certain constraints and citizens observing certain requirements
with regard to transparency and participation. Securing economic
development, social equity and justice, and environmental protection is
the goal of sustainable development. Although these three factors
can work in harmony, they are often found to conflict with one another.
During the latter half of the
20th century economic development for a better standard of living has
been instrumental in damaging the environment. We are now in a
position whereby we are consuming more resources than ever, and
polluting the Earth with waste products. More recently, society has
grown to realise that we cannot live in a healthy society or economy
with so much poverty and environmental degradation. Economic
growth will remain the basis for human development, but it must
change and become less environmentally destructive. The challenge of
sustainable development is to put this understanding into practice,
changing our unsustainable ways into more sustainable ones that will
last us.

Explain the term sustainable development in your own understanding.
39
3.2 OBJECTIVES OF SUSTAINABLE DEVELOPMENT

The aim of sustainable development is to balance our economic,
environmental and
social needs, allowing prosperity for now and future
generations. Sustainable development consists of a long-term,
integrated approach to developing and achieving a
healthy community by jointly addressing economic, environmental, and
social issues,
whilst avoiding the over consumption of key natural resources.
Sustainable development encourages us to conserve and enhance our
resource base, by gradually changing the ways in which we develop and
use technologies. Countries must be allowed to meet their basic needs of
employment, food, energy, water and sanitation. If this is to be done in a
sustainable manner, then there is a definite need for a sustainable level
of population. Economic growth should be supported and developing
nations should be allowed a growth of equal quality to the developed
nations.
The UK Government has recognised four objectives for Sustainable
Development. These include (i) social progress and equality,(ii)
environmental protection, (iii)conservation of natural resources and
(iv)stable economic growth. Everybody has the right to a healthy, clean
and safe environment. This can be achieved by reducing pollution,
poverty, poor housing and unemployment. No one, in this age, or in the
future should be treated unfairly. Global environmental threats, such as
climate change and poor air quality must be reduced to protect human
and environmental health. The use of non-renewable resources such
as fossil fuels should not be stopped overnight, but they must be used
efficiently and the development of alternatives should be encouraged to
help phase them out. Everybody has the right to a good standard of
living, with better job opportunities. Economic prosperity is required if
our country is to prosper and our businesses must
therefore offer a high standard of products that consumers throughout
the world want, at the prices they are prepared to pay. For this, we need
a workforce equipped with suitable skills and education within a
framework to support them.

Mention and explain the objectives of sustainable development that you
know.
3.3 IMPORTANT ELEMENTS OF SUSTAINABLE

DEVELOPMENT POLICIES Let us carefully look at some important
40
elements that sustainable development policies should contain. They are

discussed as follows.
1. Delivery of public goods.
Many of the benefits from government interventions needed to
promote sustainable development have the characteristics of public
goods (basic research, information, health
and education). Also, many of these public goods are global, as they will
benefit several
countries (e.g. information on the state of global ecosystems). Effective
delivery of these public goods requires overcoming obstacles to co-
ordination, through burden-sharing rules that recognise the different
responsibilities and response capacities of individual countries.
2. Cost-effectiveness.
Policies should aim at minimising their economic cost. This will require
ensuring that the costs of each extra resource spent are equal across the
range of possible interventions. Cost-effectiveness allows the
minimisation of aggregate costs and the setting of more ambitious
targets in the future.
3. Environmental effectiveness.
Policies should also secure the following under this:
i. regeneration–i.e.renewable resources should be used efficiently
and their use should not be permitted to exceed their long term rates of
natural
regeneration;
ii. substitutability– i.e non- renewable resources should be used
efficiently, and their use limited to levels that can be offset by renewable
resources or other forms of capital;
iii. assimilation – i.e. releases of hazardous or polluting substances
to the environment should not exceed its assimilative capacity, and
concentrations should be kept below established critical levels necessary
for the protection of human health and the environment. When
assimilative capacity is effectively zero, zero release of such substances
is required to avoid their accumulation in the environment;
iv. avoiding irreversibility– i.e. irreversible adverse effects of human
activities on ecosystems and on bio-geochemical and hydrological
cycles should be
avoided. The natural processes capable of maintaining or restoring the
integrity of ecosystems should be safeguarded from adverse impacts of
human activities. The differing levels of resilience and carrying capacity
of ecosystems should be considered, in order to conserve their
populations of threatened, endangered and critical species.
4. Policy integration.
Unsustainable practices may result from incoherent policies in
different domains. Sectoral policies, in particular, are often
introduced without due regard for the externalities being targeted by
41
environmental policies, leading to inconsistencies and spill-over effects.

Improving policy coherence requires better integration of economic,
environmental, and social goals in different policies.
5. Policy Precaution.
Threats of exceeding critical thresholds in the regenerative capacity of
the environment are subject to uncertainty. Accordingly, when designing
policies for sustainable development, countries should apply precaution
as appropriate in situations where there is lack of scientific certainty.
6. International co-operation.
With deepening international interdependency, spill overs become more
pervasive. A narrow focus on national self-interest is not viable when
countries are confronted with a range of environmental and social
threats that have global implications.
7. Transparency and accountability.
A participatory approach is important to successfully meet the challenge
of sustainable development, as the criteria for sustainability cannot be
defined in purely technical terms.
This requires that the process through which decisions are reached is
informed by the full
range of possible consequences, and is accountable to the public.
Invariably, sustainable development policies should be all
encompassing to achieve economic development goals

Mention and explain five elements that a sustainable development
should contain.
4.0 CONCLUSION
From our discussion so far on sustainable development, we can
conclude as follows:
The aim of sustainable development is to balance our economic,
environmental and social needs, allowing prosperity for now and
future generations. Sustainable development consists of a long-term,
integrated approach to developing and achieving a healthy community
by jointly addressing economic, environmental, and social issues, whilst
avoiding the over consumption of key natural resources.
5.0 SUMMARY
In this unit, we have attempted to discuss the meaning and definition of
sustainable
development, objectives of sustainable development and elements of
policies for sustainable development. You have learnt that sustainable
42
development encourages us to conserve and enhance our resource base,

by gradually changing the ways in which we develop and use
technologies. Countries must be allowed to meet their basic needs of
employment, food, energy, water and sanitation. If this is to be done in a
sustainable manner, then there is a definite need for a sustainable level
of population. Economic growth should be supported and developing
nations should be allowed a growth of equal quality to the developed
nations. You expected to read ahead against the next unit.
Discuss your understanding of sustainable development and its
objectives.

development - A
Publishers.
England
England: Pearson
43
UNIT III CONCEPT OF UNDERDEVELOPMENT CONTENTS

1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Meaning of underdevelopment
3.2 Visible criteria or indicators of an underdeveloped countries
3.3 Obstacles to economic development
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
In this unit, attention will be given to the concept of underdevelopment,
focusing on the
meaning of underdevelopment, visible criteria or indicators of
underdeveloped countries and obstacles to economic development. It
is advised that you follow an in-depth explanation of the above
topics that will be provided as it will assist in the assimilation and
proper understanding of this unit.
2.0 OBJECTIVES
Know the Meaning of underdevelopment .
Highlight the visible criteria or indicators of underdeveloped
countries .
Understand the obstacles to economic development .
3.0 MAIN CONTENTS
3.1 MEANING OF UNDERDEVELOPMENT

As a student of economics, you should know that in economics,
underdevelopment is
when resources are not used to their full socio-economic potential, with
the result that local or regional development is slower in most cases than
it should be. Furthermore, it results from the complex interplay of
internal and external factors that allow less developed countries only a
lop-sided development progression. According to the United Nations
experts, ―an underdeveloped country is one in which per capita real
income is low when compared with the per capita real income of the
United States of America, Canada, Australia and Western Europe. In
44
this sense, an adequate synonym would be poor countries.‖ This

definition brings out an important feature of underdevelopment, namely,
poverty. But poverty is not always an adequate criterion to judge
whether a country is developed or under-developed. For a country to be
called under-developed there must be un-utilised or under-utilised
natural resources which may be used for production to raise per capita
income and standards of living of the people. If the resources of a
country are meagre and scanty, then even after having fully developed
them, it will remain poor.
Underdeveloped nations are characterized by a wide disparity between
their rich and poor populations, and an unhealthy balance of trade.
Symptoms of underdevelopment include
lack of access to job opportunities, health care, drinkable water, food,
education and housing. The world consists of a group of rich nations and
a large number of poor nations. It is usually held that economic
development takes place in a series of capitalist stages and that today‘s
underdeveloped countries are still in a stage of history through which
the now developed countries passed long ago. The countries that are
now fully developed have never been underdeveloped in the first place,
though they might have been undeveloped. All economies of the world
are not equally developed. Some are more developed and advanced than
others. Therefore, the economics of the world have been classified into
developed economies and under-developed economies.
Previously, the undeveloped economies were called backward
economies and the developed economies were known as advanced
economies. But the terms backward and
advanced are now considered unsatisfactory and misleading.
Therefore, the terms
developed and under-developed began to be used in place of advanced
and backward. But it is not easy to give a precise definition of an under-
developed economy.
Professor Jacob Viner has provided a more satisfactory and adequate
definition of an under•developed economy. According to Professor
Viner, an under-developed country is
one, ―which has good potential prospect for using more capital or more
labour or more
available natural resources, or all of these to support its present
population on a higher level of living or if its per capita income level is
already fairly high to support a larger population on a lower level of
living.‖ Thus, Professor Viner has emphasized that for a country to be
called under-developed there must be possibilities and potentialities for
its development. In other words, in an underdeveloped country resources
must be lying un- utilised which can be used for increasing the rate of
production and thereby raising the level of living of the people.
Thus, according to him, the basic criterion of under-development is
45
whether there exists potential prospects for development and raising

standards of living of the people.
Similar to Professor Viner, Eugene Staley has also provided a definition.
According to him, an underdeveloped country is one which is
characterized:
i. By mass poverty which is chronic and not the result of some
temporary misfortune and
ii. By obsolete methods of production and social organization which
means that
poverty is not entirely due to poor natural resources and hence could
presumably
be lessened by methods already proved in other countries.‖
Thus Eugene Staley lays emphasis on the existence of poverty as well as
the potentialities for development and raising standards of living. We
conclude that under-developed country is one which is poor but
which has the future possibility and prospect of removing poverty
and raising the levels of living of its people by utilising the idle and
under-utilised resources for production. Since there exists potential
prospects for development in almost all poor countries, therefore all
poor countries are generally described as underdeveloped. These days
the under-developed countries are usually called developing or less
developed countries (LDCs). The developing countries are also called
the Third World countries of which Nigeria and India were part of. The
First World consists of the Western developed countries like UK, USA,
Canada, France, Germany etc, whereas the erstwhile Communist
Countries led by Soviet Russia like Croatia, Slovenia, Serbia, Serbia,
Georgia, Hungary etc were referred to as the Second World countries.
Explain the term under-development in your own words with relevant
examples.
3.2 VISIBLE CRITERIA OR INDICATORS OF

UNDERDEVELOPED COUNTRIES.
According to Jhingan (2011), An underdeveloped country is one
which has no
potentialities of development. The Antarctic, the Arctic and parts of the
Sahara may be termed as undeveloped, while India, Nigeria, Pakistan,
Uganda, Peru, Panama, etc. may be called underdeveloped countries. A
poor country does not mean a young country. Poverty simply refers to
the low level of per capita income of a country. This claim seemed to
have changed as some of these countries are faqst developing.
1. The first criterion of underdeveloped is the ratio of population to land
area. But it is very difficult to ascertain whether a high or a low ratio of
population to area is an indicator of underdevelopment. There are many
46
underdeveloped countries in Africa and Latin America where there are

‗empty spaces‘ signifying a low ratio. While there are a number of other
underdeveloped countries like India, Burma, Pakistan, Myamar and
many other South Asian countries which have a high ratio of population
to area. This criterion is, therefore, vague and superfluous.
2. Another indicator of underdevelopment is the ratio of industrial
output to total output. It may also be explained as the ratio of industrial
population to total population. According to this criterion, countries with
a low ratio of industrial output to total are considered underdeveloped.
But this ratio tends to increase with the increase in the per capita
income. Therefore, the degree of industrialization is often a consequence
rather than a cause of economic prosperity in a country. In countries
where agriculture is developed, tertiary or service industries tend to
grow spontaneously because increasing disposable agricultural surplus
creates demand for the products of the industrial sector. Thus, this
criterion is not a valid indicator of underdevelopment.
3. The third criterion of underdevelopment is the low ratio of capital to
per head of population. Nurkse defines underdeveloped countries as
those which ‗compared with the advanced countries are underequipped
with capital in relation to their population and natural resources‘ But
dearth of capital is not a satisfactory criterion of underdevelopment
for the following reasons: (a) Capital deficiency is not related to the
absolute size of a country‘s stock of capital but to the ratio of capital to
population or to some other factor.(b) The principle of Marginal
Productivity explains that where the ratio of capital to other factor is
low, the marginal productivity of capital is high. But it is difficult to
infer from this that in underdeveloped countries marginal productivity of
capital is high since capital is scarce, or that a high marginal
productivity of capital suggests a scarcity of capital. It is possible that
poor organization, low skills, unfavourable weather, etc. may tend to
keep the marginal productivity of capital low in underdeveloped
countries.
4. Another criterion indicates poverty as the main cause of
underdevelopment. Staley defines an underdeveloped country as one
‗characterised by mass poverty which is chronic and not the result of
some temporary misfortune and by obsolete methods of production and
social organization, which means that poverty is not entirely due
to poor natural resources and hence could presumably be lessened by
methods already proved in other countries. This definition points
towards some of the important characteristics of underdeveloped
countries. It cannot be denied that underdeveloped countries have
unexploited natural resources, scarcity of capital goods and equipment,
obsolete techniques of production and defects in socio- economic
organization, cannot be. But it does not lay emphasis on the basic
criterion of underdevelopment, viz, low per capita income.
47
5. Thus one of the most commonly acceptable criteria of

underdevelopment is the low per capita real income of underdeveloped
countries as compared with the advanced countries. According to the
United Nations experts, ―We use it (the term underdeveloped country)
to mean countries in which per capita real income is low when
compared with the per capita real incomes of the United States of
America, Canada, Australia and Western Europe.‖ But such definitions
which explain an underdeveloped country in terms of low per capita
level of income can by no means be considered adequate and
satisfactory. For they focus attention only on one aspect of
underdevelopment, viz, poverty. They do not analyse the causes of low
consumption levels, of inhibited growth and of the
underdevelopment potential of an underdeveloped economy.

Enumerate and discuss the criteria features of underdeveloped countries
known to you.
3.3 Obstacles to economic development

There are many obstacles to economic growth and development in
developing countries.
Let us look at a few of them.
1. Governance challenges:
Related to leadership problem is bad governance. Governance among
others is defined as a system of values, policies, and institutions by
which a society manages its economic, social, and political affairs
through interactions within the state, civil society and private
sector. Thus governance comprises the mechanisms and processes for
citizens and groups
to articulate their interests, to work together and mediate their
differences, and exercise their legal rights and obligations with rules,
institutions, and practices that set limits and provide incentives for
individuals, organizations and firms. Good governance refers to the
question of how a society can organize itself to ensure equality of
opportunity and equity (social and economic justice) for all citizens. It
also promotes people –centered development.
2. Corruption Challenges:
Although corruption is a global scourge, Nigeria appears to suffer the
most from it because the leaders are pathologically corrupt. Everyone
appears to believe that the
nation has a ― culture of corruption‖. Over the years, Nigeria has
48
earned huge sum of

money from crude oil, which has gone down the sinkhole created by
corruption. In an article, ‗oil giant that runs on grease of politics‘,
Nigeria was described as a rich nation floating on oil wealth ‗but almost
none of it flows to the people. Top public servants are very rich because
they harbour the mentality that public money belongs to no one.
National dailies are awash with news of how public officials are
acquiring million dollar homes (within and outside Nigeria) and stock
piling stolen public money in financial institutions abroad.
3. Infrastructural and Institutional challenges:

Any person familiar with Nigeria would agree that some of the main
challenges facing the economy are poor social infrastructure and
institutions; bad roads, erratic power supply, limited access to potable
water and basic healthcare, ineffective regulatory agencies, and much
more. And the plethora of policies in the society is ineffective due to
broken institutions and dilapidated infrastructure (Hoff, 2003).
4. Market challenges:
Lack of genuine competition in the system is among the challenges
facing the economy. Real capitalistic economies are controlled by
market forces or what Adam Smith brands the ‗invisible hand‘ of the
market. The self-regulating nature of the market determines where one
lives and works, how much one earns, and what one can buy. Although
every economy (developed, developing or underdeveloped) needs some
form of government intervention.
5. Cultural issues:
Some scholars argue that some countries lack the right culture for
economic development. Their people might not want to take risks in
order to start new businesses. Their people might feel that traditional
cultural duties are more important than showing
up to work every day. These sorts of cultural issues can slow down a
country‘s growth.
6. Foreign debt:
Sometimes, countries have to take actions that they do not want to take
because they need to pay off their creditors. They might have to do
things that bring money in the short term even if that hurts their ability
to invest for the long term.
7. Lack of adequate human resources:

This may be a type of governmental problem. Many developing
countries lack the educational infrastructure needed to develop a
workforce that could support a more modern economy.
49
8. Foreign competition:
Developing countries have to compete against companies from the
developed world. This can be very difficult. It can force developing
countries to stay with making low value-added products using cheap
labor instead of becoming more modernized
9. Leadership challenges:
The leadership problem that has confronted Nigeria since independence
appears to be worsening because the state of the polity is rapidly
deteriorating. Very few of the leaders, if any, work for, ―common
good‘. Over the years a wave of reform programmes have
been undertaken but the society lacks committed political leadership to
implement them
to address the problems facing the economy. Thus leadership is a
responsibility.
10. Public officer‘s insincerity:
This greatly hampers development in the sense that certain policies
which are supposed
to be executed by public officer‘s, if not sincerely overseen will lead to
backwardness and jeopardy on the part of the country‘s economic
development. A good example is the recent budget padding by some
Nigeria‘s public officer‘s which delayed the process of passing the 2016
budget.

Highlight and discuss six obstacles to development in Nigeria
4.0 CONCLUSION
From our discussion so far on the concept of underdevelopment, we can
conclude that:
underdeveloped nations are characterized by a wide disparity between
their rich and poor populations, and an unhealthy balance of trade.
Symptoms of underdevelopment include
lack of access to job opportunities, health care, drinkable water, food,
education and housing. The world consists of a group of rich nations and
a large number of poor
nations.
5.0 SUMMARY
In this unit, we have examined the meaning of underdevelopment,
highlighted the visible
50
criteria or indicators of under-developed countries, and understand

the obstacles to economic development. For a country to be called
under-developed there must be un- utilised or under-utilised natural
resources which may be used for production to raise per capita income
and standards of living of the people. If the resources of a country are
meagre and scanty, then even after having fully developed them, it will
remain poor. It is strongly believed that your understanding of this unit
and module will usher us into the next module. It is expected that you
should read ahead to prepare for the next module.

Enumerate and discuss the problems of third world countries known to
you .

development - A
Publishers.
England
England: Pearson
51
MODULE 3
ECONOMIC DEVELOPMENT PLANNING EXPERIENCE IN

NIGERIA. Unit 1 The concept of national planning in Nigeria; Pre-
independence to SAP era Unit II National economic plans during and
after sap era
Unit III Visions and policy statements of economic plans in Nigeria
UNIT 1: National planning in Nigeria; Pre- independence to SAP

era
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Contents
3.1 Nigeria Pre-Independence Development Plan: (1945-56)
3.2 Nigeria Post-Independence Development Plan: (1962-74) 1st and
2nd Plan
3.3 Nigeria Post-Independence Development Plan: (1975-85) 3rd and
4th Plan:
4.0 Conclusion
5.0 Summary
1.0 Introduction:
Our discussions from preceding modules had introduced to us what we
need to know about things used in proper economic planning of nations.
There is no country, whether
developed or less developed that will not embark on economic
development plan to
achieve its desired economic goals and targets. Planning entails
determination of control, direction and methods of accomplishing the
overall organization or national objective. Plans must be directed and
controlled towards achieving desired objectives. Development planning
involves processes which ensure that national policies and strategies are
realized and development concerns at all levels are fully integrated into
the overall national development thrust. Therefore in this module
development planning experience of Nigeria from independence to
date shall be discussed.
52
2.0 OBJECTIVES
At the end of this unit, you should be able to;
Discuss the Nigeria‘s Pre-Independence development Plan: (1945-

56)
Explain the Nigeria‘s Post-Independence Development Plan:
(1962-68)(70-74)
1st and 2nd Plan
Understand Nigeria‘s Post-Independence Development Plan:
(1975-80)(81-85)
3rd and 4th Plan:
3.0 MAIN CONTENTS
3.1 Nigeria’s Pre-Independence development Plan: (1945-56)
Development plans have been accepted as a suitable strategy to address

development challenges in Nigeria. Therefore, the analysis of various
development plans in Nigeria since independence becomes necessary.
Nigeria‘s planning experience began with the Ten-Year Plan of
Development and Welfare for Nigeria which was introduced in 1946 by
the colonial government (1945-1956) sequel to a circular from the
Secretary of State for Colonies to all British colonies, directing the
setting up of a Central Development Board (Onah, 2010). The Ten Year
Plan of Development and Welfare for Nigeria could not be actually be
termed as plan in real sense because it contained mainly a list of
uncoordinated projects in various regions. The objective of the plan,
though not stated was to meet the perceived needs of the colonial
government rather than any conscious attempt to influence the overall
performance of the Nigerian economy then (Egonmwan and Ibodje,
2001). The primary interest of the colonial government was to produce
agricultural products such as groundnuts, palm oil, and cocoa that were
required by the British factories. No attempt was made to articulate and
incorporate the needs and interest of Nigerian people into the objectives
and priorities of the development plans (Onah
2010). Ayo (1988) observes that the programme ―suffered from non-
specialized colonial administrators approach to development planning,
the inadequacy of planning machinery and absence of clearly defined
national objectives.‖
Irrespective of the weaknesses of the plan, it served as a launch pad to

subsequent development plans in Nigeria. We shall see this in
subsequent units in this module.
53

Briefly discuss Nigeria‘s pre-independence economic plan as
presented by the then colonial administration
3.2 Nigeria’s Post-Independence Development Plan:1st (1962-

68)&2nd(70-74)Plan
3.2.1 First National Development Plan 1962-1968):
Immediately after attainment of independence in 1960, the first National
Development
Plan (1962-1968) was launched. The objectives of the plan were:
1. To bring about equal distributions of national income.
2. To speed up the rate of economic growth.
3. To generate savings for investments so as to reduce its dependence
on external capital for the development of the nation.
4. To get enough capital for the development of manpower.
5. To increase the standard of living of the masses particularly in
respect of food, housing, health and clothing.
6. To develop the infrastructure of the nation (Onyenwigwe 2009).
It had a proposed total investment expenditure of about N2,132million.
The public sector was expected to invest about N1,352.3million
while the remaining investment expenditure of N780 million was
expected to be made by the private sector (Obi, 2006).
Though, the plan appeared impressive, but due to political upheaval in
the country which resulted in 30 month civil war, the plan almost
became redundant. According to Nnadozie (2004), the objectives and
targets of the 1962-68 plan were too large and over- ambitious and
therefore out of tune with financial technical and managerial capabilities
of the country. This made the plan to lack clarity and precision in the
formulation of objectives and targets (Onah, 2010). Despite the
weaknesses of the plan, some major projects were executed during that
period. These included the Nigerian Security and Minting Plant, the
Jebba Paper Mill, the Sugar Mill, Niger Dam, the Niger Bridge, Onitsha,
Kanji Dam and Port Harcourt Refinery.
3.2.2 The Second National Plan (1970-1974):

After the civil war, national reconstruction and rehabilitation were the
focus of attention of the Federal Government. In order to hasten the
growth of the national economy and ensure equitable distribution of
national income, it became imperative to launch the Second National
Development Plan. Initially, the plan, was meant to cover the four year
period, 1970-1974, it was later extended to cover the fiscal year of 1974-
1975. The plan put forward five national objectives: a United, strong
and self-reliant nation; a just and egalitarian society; a land of bright and
54
full opportunities for all citizens; and a free and democratic society
(Onyenwigwe, 2009). Ayo (1988) outlines the differences between this
plan and others as:
Besides being much bigger in size and more diversified in its project
composition, it was in fact the first truly national and fully integrated
plan which viewed the economy as an organic unit: the twelve states
were fully integrated into the national development plan. Also, unlike
the first plan, the second plan was formulated wholly by Nigerians.‖
The total capital projected expenditure of about 4.9 billion was
contained in the plan. Out of this figure, the proposed public sector
investment was 3.3 billion while the private sector was expected to
invest 1.6 billion (Obi, 2006). The highest order of priorities in public
sector projected expenditures were accorded to transport and
communication, manufacturing, housing and education (Onah 2010).
Second National Development Plan laid much emphasis on
indigenization. In the opinion of Okowa (1991) ―indigenization was
seen by this plan as an instrument towards the long term
objective of economic independence‖. Although the Second National
Development Plan also attached importance on agriculture, industry and
the development of high level and intermediate level manpower, the
plan was beset with problems as in the first National Development Plan.
Onah (2010) alludes to this fact that ―the high priority given to
agriculture and industry was not matched with action during the
implementation of the plan‖. One of the basic tenets of Second
National Development Plan is indigenization policy.
Indigenization policy was carefully designed to encourage Nigerians to
participate fully in the commercial, industrial and financial activities of
the Nigerian economy. Several indigenization decrees were made to
realize the objectives of this policy. It is a sad commentary that close to
two years after enactment of the first indigenization Decree (1972), out
of about 950 affected enterprises, only 314 or 33 percent were
confirmed as having fully complied with the provisions of the decree
(Onah, 2010). It should also be emphasized that despite indigenization
policy, there were over 16 multinational oil companies representing
the United States, Dutch, Japanese, British, Italian, German and
French interest that had firm and massive grip on Nigeria‘s Petroleum.
(Koha, 1994). An interesting feature of the Second National
Development Plan was the objective of creating ―a free and
democratic society‖ that was being challenged by the military
government. This objective was put in place without considering any
discussion on political development in the plan document and any
means of returning to civilian rule. Despite the inadequacies of the plan,
it witnessed achievements in the areas of industry and agriculture. The
industrial sector recorded more improvements. Many industries in the
war affected areas were rehabilitated, coupled with establishment of two
55
salt factories in Kaduna. Super phosphates project and two vehicle

assembly plants were also established. Other achievements included the
establishment of Colleges of Technology and Trade Centers by state
governments and reconstruction of about 3,000 kilometres of roads.

Briefly discuss the premise on which the objectives of the first and
second Nigeria economic plans as proposed by government was
anchored bearing in mind their successes and failures.
3.3 Nigeria’s Post-Independence Development Plan:(1975-80(81-85)

3rd and 4th Plan
3.3.1 The Third National Development Plan (1975-1980):
The Third National Development Plan had a projected jumbo
investment of N30 billion which was later increased to N43.3 billion.
This represented ten times that of the Second Plan and about 15 times
that of the First Plan (Obi, 2006). The objectives of the plan were:
1. Increase in per capita income.
2. More even distribution of income.
3. Reduction in the level of unemployment.
4. Increase in the supply of higher level manpower.
5. Diversification of the economy.
6. Balanced development and indigenization of economic activities.
The approach of the plan was to utilize resources from oil to develop the
productive capacity of the economy and thereby permanently improve
the standard of living of the people. Therefore, the plan was premised on
the need for the public sector to provide facilities for the poorer
sections of the population including electrification, water supplies,
health services, urban housing and education.
The assessment of the plan showed it focused to give priority to projects
and programmes that would directly impact positively on the rural
dwellers, but the meager allocations to agriculture and social
development schemes did not indicate sincere intention of the
government to achieve the objective. According to Okigbo (1989)
agriculture and social development indices (education, housing, health,
welfare etc) that have direct bearing on the living conditions of the rural
population received only 5 per cent and 11.5 per cent respectively of the
financial allocations contained in the plan. It is appropriate to state here
that the meagre allocation to agriculture and social development
schemes, which were priority areas, indicated the ―lack of focus of the
planners to careful sifting of the criteria for allotting principles‖ (Onah,
2010). In this context, nobody should expect the
plan to achieve the desired objectives like other plans before it, the
third plan did not really achieve its set targets. Irrespective of the
56
inadequacies of this plan, it witnessed achievements in some areas. In

the opinion of Okowa (1991), ―in terms of achievement, the
manufacturing sector recorded the fastest growth rate with an average of
18.1 per cent per annum. Some other sectors that witnessed growth were
building and construction and government services.
3.3.2 Fourth National Development Plan (1981-1985):

The Fourth National Development Plan (1981-85) came on board in
1981. It was the first that the civilian government prepared since the
intervention of the military in Nigerian politics in 1966. The objectives
of the plan according to Obi (2006) were:
i. Increase in the real income of the average citizen;
ii. More even distribution of income among individuals and socio-
economic groups iii. Reduction in the level of unemployment and
under employment;
iv. Increase in the supply of skilled manpower;
v. Reduction of the dependence of the economy on the narrow range
of activities;
vi. Increased participation by the citizens in the ownership and
management of productive enterprises;
vii. Greater self-reliance that is, increased dependence on local
resources in seeking to achieve the various objectives of society;
viii. Development of technology;
ix. Increased productivity and
x. The promotion of a new national orientation conducive to greater
discipline, better attitude to work and cleaner environment.
The projected capital investment of the plan was put at N82billion. Out
of this figure, the public sector investment was to invest N70.5
billion while the private sector was expected to invest N11.7 billion
(Obi, 2006).
According to Adedeji (1989) the plan was ―the largest and most
ambitious programme of investment over launched in Nigeria‖. The plan
also adopted as its main strategy the use of resources generated from oil
to ensure all-round expansion in production capacity of the economy
and to lay a foundation for self-sustaining growth (Egonmwam and
Ibodje,
2001). It was anticipated in the Fourth Plan that exports led by
petroleum products would generate enough funds to actualize the plan
that had been formulated.
Eventually, the revenue realized from exports were far below anticipated
projections. It is a sad commentary that only 54 per cent of the export
proceeds projected for the period were realized in 1984. For instance, it
was projected that N79.449 million would be earned from petroleum
exports between 1980 and 1984, but only N52.78 million, ( 66.4 per
57
cent) of the projected figure was earned (Okigbo, 1989).

With the dwindling resources to finance the Fourth Plan, the
Nigerian economy witnessed debt service and balance of payment
problem coupled with high level of inflation. Most of the projects that
were started at the beginning of the plan period could not be completed
and these together with several spillover projects from previous plan had
to be abandoned (Jaja, 2000). The growth rate of Gross Domestic
Product (GDP) per annum was only 1.25 percent compared to 5.5, 13.2
and 4.6 percent under the previous
National Development plans (Onah, 2010). Another problem of this plan
was a rise in the cost of living that led to a reduction in the standard of
living of the common man. There was also phenomenal increase in
unemployment among school leavers in the country. The external
reserves kept on declining. Commenting on the plan, Alapiki (2009)
observed that ―the plan period 1981-85 proved to be the most dismal in
the economic history of Nigeria at that time‖. The Fourth National
Development Plan recorded some achievements in some areas in spite of
its drawbacks. The implementation of Agricultural Development
Programme (ADP) in most states was successfully completed, the
commissioning of Egbin Power Station, Dry Dock Project at snake
Island, Lagos and the
87 telephone exchanges located all over the federation which increased
the number subscribers to telephone lines from 188,000 in 1981 to
297,000 in 1985 were some of the
achievements. (Egonmwan and Ibodje, 2001).

Briefly discuss the premise on which the objectives of the third and
fourth Nigeria economic plans as proposed by government was
anchored bearing in mind its success and failure.
4.0 CONCLUSION
From our discussion so far on economic development planning
experience in nigeria , we
can deduce the following facts:
That the assessment of the plan showed that it was focused to give
priority to projects and programmes that would directly impact
positively on the rural dwellers, but the meager allocations to agriculture
and social development schemes did not indicate sincere intention of the
government to achieve the objectives.
5.0 SUMMARY
In this unit, we have attempted to discuss the Nigeria‘s Pre-
58
Independence development
Plan: (1945-56), explain the Nigeria‘s Post-Independence Development
Plan: (1962-74)
1st and 2nd Plan and understand Nigeria‘s Post-Independence
Development Plan: (1975-
85) 3rd and 4th Plan. It is a pity that in spite of these entire laudable
plans, it fails to achieve its objectives as expected. It is believed that
your understanding of this unit has given you a basis to understand the
next unit. You are advised to prepare for the next unit as you read along.

Discuss your understanding of the objectives of Nigeria‘s fourth
economic plan.
speeches and
lectures. Great Britain: Frank Cass and Company Limited.
Ayo, E. J. (1988). Development planning in Nigeria. Ibadan: University

Press.
Research and
Statistics Department of Central Bank of Nigeria.


implication for development management. Asian Journal of Rural
Development, 1(1), 1-6.

Nigeria: Critical discourse journal of developing country studies, 3-4.
International Journal of Economic Development Research and
Investment, 5(2).

Obi E.A., Obikeze, S.O. Onyekwelu, R.U. (eds) Introduction to public
administration. Onitsha: Bookpoint Educational Ltd.

on the National Economic Empowerment and Development Strategy
(NEEDS) 2003. 2007. Journal of Social Sciences, 20(3).
59

for the fourth Republic. In Akpuru-Aja, A. and Emeribe, E (eds)
Policy and contending issues in Nigeria National
Development Strategy. Enugu: John Jacobs Publishers.
Nnadozie, U. (2004). The State Civil Service and Underdevelopment in

Nigeria: An Analysis of Public Policy Making Process in a
Neocolonial Society. Enugu: Johnkens J and Willy Publishing Co. Nig.
Ltd.
Obi, E. A. (2006). Development administration. Onitsha: Bookpoint Ltd.
Okigbo, P. (1989) National Development Plan in Nigeria 1900-1907.

Enugu: Fourth
Dimension Publishers Ltd.


Todaro, M. P. (1992). Economics for developing world: An introduction

to principles, problems and policies for development. London: Longman
Group Limited.
60
UNIT II NATIONAL ECONOMIC PLANS DURING AND AFTER

SAP ERA
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 The Fifth National Development Plan and SAP (1986-89)
3.2 The Perspective Plan and Rolling Plans (1990-1998):
3.3 Macro objectives of rolling plans in Nigeria
4.0 Conclusion
5.0 Summary
I.0 INTRODUCTION
Having studied the national development plans in Nigeria before
independence to pre
SAP era critically, it is imperative to familiarise you with the topic to be
discussed in this unit. The SAP era was a period where adjustments
were expected to be made by all and
sundry bearing in mind the economic situation at that time. SAP, which
is Structural
Adjustment Programme, was aimed at belt tightening to salvage Nigeria
economy which was on the verge of collapse on account of rising
inflation, high exchange rate, high unemployment rate, increase poverty,
low per-capita income, poor infrastructural facility, high level of
corruption, low value of the naira etc to mention but few. Therefore, our
discussion in this unit will describe the national economic plans during
and after the SAP era. It is important for you to pay attention as we
move on.
2.0 OBJECTIVES
Understand the Fifth National Development Plan and SAP (1986-
89)
Ascertain the Perspective Plan and Rolling Plans (1990-1998):
Discuss the macro objectives of rolling plans in Nigeria
3.0 MAIN CONTENTS
3.1 The Fifth National Development Plan and SAP (1986-89)

61
Due to poor implementation of the Fourth National Development Plan, a

machinery was
put in place for preparation of the Fifth National Development Plan. In
order to facilitate the exercise, a conference was held at the University
of Ibadan in November 1984 to
deliberate on the appropriate mechanisms for the Fifth National
Development Plan. The conference suggested some measures which
formed the corner stone of the policies and
strategies incorporated in the Fifth National Development Plan. The
objectives of the
Fifth National Development Plan were:
i. Diversification of the nation‘s economy away from the mono-
cultural one to which it had been pushed by the fortunes of the oil
sector;
ii. revitalization of the agricultural sector with a view to
achieving thorough integrated rural development programmes;
iii. domestic production of raw materials for local industries in order
to reduce the importation of locally manufactured goods and
iv. promotion of employment opportunities in order to arrest the
deteriorating mass unemployment (Onyenwigwe, 2009).
The primary focus of the plan was to correct the structural defects in the
economy and
create a more self-reliant economy that would largely be regulated by
market forces. The economy was therefore expected to be restructured
in favour of the production sector especially those of agriculture and
manufacturing (Onyenwigwe, 2009). More than ever; the linkage
between the agricultural and manufacturing sectors of the economy were
to be emphasized during the plan (Ayo, 1988). The Fifth National
Development Plan did not materialize. It was later incorporated in the
Structural Adjustment Programme (SAP). The two year SAP brought to
an end the five year planning model in Nigeria. One major objective of
SAP was the adoption of a realistic exchange rate policy to reduce
inflationary rate and promote economic self –reliance. The Federal
government changed the two year model to three year rolling plans. SAP
failed because it was not faithfully and well implemented.

Highlight and briefly discuss the objectives of the fifth Nigeria
development plan.
3.2 The Perspective Plan and Rolling Plans (1990-1998):

The Babangida administration had abandoned the previous fixed five
year development
62
plans and replaced it with two types of national plans viz: perspective
plan which was to cover a period of 15-20 years in order to provide
opportunity for a realistic long-term view of the problem of the country
and the rolling plan which was to cover three years subject to review
every year to ascertain whether the economy is progressing or not. You
should know that perspective plan is a long-term plan or future plan (11-
20years) while rolling plan is a medium term plan otherwise called a
short term plan (2-5years). On the other hand an annual plan is regarded
as a yearly plan otherwise called a budget. The perspective plan which
was to start from 1990 together with the rolling plans did not take off
until 1996 when Abacha set-up the Vision 2010 Committee. The main
report of Vision 2010 submitted to Abacha government in September
1997 among other things recommended that the vision should provide
the focus of all plans including long (perspective), medium (rolling)
and annual plans (budgets) (Adubi, 2002). Therefore, the Vision became
the first perspective plan for the country even though it failed to proceed
beyond Abacha‘s death in 1998. The three year rolling plan became
operational from
1990 with the introduction of the First National Rolling Plan (1990-
1992). The primary objective of the rolling plan was to afford the
country the opportunity of revision in the
―midst of increasing socio-political and economic uncertainties‖
(Ikeanyibe (2009). But
the preparation of medium term plans turned out to be a yearly event
and became almost indistinguishable from annual budgets. Rolling plans
are being prepared annually at all
levels of government. At the end of about ten rolling plans from 1990 to
1999, Nigerians
are not better off than they were during the years of fixed medium term
planning (Okojie,
2002).
What do you understand by perspective plan, rolling plan and annual
plan in your own
words?
3.3 Macro objectives of rolling plans in Nigeria

The following are the macro objectives of rolling plans in Nigeria as
highlighted by
Akosile, Adesanya and Ajani (2012) in their textbook as follows.
i. Consolidation of the gains of the Structural Adjustment

Programme (SAP) and pursuance of policies and programmes designed
63
to sustain the adjustment process and strengthening the base for a

market economy.
ii. Enhancing the level of socio political awareness of Nigerians.
iii. Creating and Enhancing employment opportunities for Nigerians
iv. Consolidating the achievement in the area of food production and
industrial raw materials.
v. Continued effort to reduce the adverse effect of economic
downturn and the adjustment process on the most affected groups.
vi. Laying solid foundation for self-reliant industrial development as
a key to self- sustaining dynamic and non-inflationary growth.

Highlight five macro-economic objectives of Nigeria‘s rolling plan and
expansiate futher
on it.
4.0 CONCLUSION
From our discussion so far on national economic plans during and after
SAP era,we can
deduce the following facts:
That perspective plan which was cover a period of 15-20 years in order
to provide opportunity for a realistic long-term view of the problem of
the country and the rolling plan which was to cover three years subject
to review every year to ascertain whether
economy is progressing or not.
5.0 SUMMARY
In this unit, we have attempted to discuss the Fifth National
Development Plan and SAP
(1986-89), ascertain the Perspective Plan and Rolling Plans (1990-
1998) as well as discussing the macro objectives of rolling plans in
Nigeria. The primary objective of the rolling plan was to afford the
country the opportunity of revising the plan in the ―midst of
increasing socio-political and economic uncertainties‖ and perspective
plan a long term
project pursuit. You are expected to read ahead of the next unit for easy
assimilation.

Discuss your understanding of Nigeria‘s rolling plan during the SAP era
and its failure.
64

speeches and

Press.
Research and



Investment, 5(2).




Ltd.

65
Enugu: Fourth



Group Limited.
66
UNIT III: VISIONS AND POLICY STATEMENTS OF

ECONOMIC PLANS IN NIGERIA
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Overview of Nigeria vision 2010 economic plan.
3.2 NEEDS, Vision 2020, and other policy statements
3.3 Challenges of economic developments plans in Nigeria
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
The need to have a long term development plan was informed by the
success stories of
long term planning from the fast and miracle developed countries of the
world most especially the east Asian Tigers of South Korea, Malaysia,
Hong Kong, Singapore and Taiwan. Their own successful
implementation of their long term economic and social goals have
become what other less developed countries of which Nigeria is one
now copy. We shall therefore discuss the various vision statement, like
vision 2010, Vision
2020, seven point agenda, Transformation agenda and the latest change
agenda. An in- depth explanation of the above topics shall be provided.
It is advisable that you critically concentrate as we move along with
explanations that will be given.
2.0 OBJECTIVES
Show the overview of Nigeria vision 2010 economic plan.
Discuss the NEEDS, Vision 2020, and other policy statements
Understand the challenges of economic developments plans in
Nigeria
3.0 MAIN CONTENTS
3.1 OVERVIEW OF NIGERIA VISION 2010 ECONOMIC PLAN
Vision 2010 was a projected economic plan for Nigeria to improve

67
economically. Nigeria is a less-developed country, whose politics have

been shaped by chronic military dictatorships, dependence on oil, ethnic
and social cleavages, and a population too large to feed. In the
creation of Vision 2010, 248 members developed plans that would
hopefully guide the country out of poverty and other national crises.
Sub-committees worked on solving key issues needed to be resolved.
The main objectives expressed in Vision 2010 are increased political
stability, economic prosperity and social harmony. However, the
Vision includes several more specific
environmental/climate related objectives. One of such goal is to increase
the national
forest reserves (from 10% in 2003) to 25% by 2010. Other objectives
also include
obtaining full compliance with existing regulations, decreasing the
emission of dangerous gases into the atmosphere to zero and eliminating
gas flaring by 2008. Other areas of concern includes the following:
Politics - Stable democracy with a federal system, rule of law, political
accountability. Economy - Decrease on oil dependence (now over 90%
of country's export earnings) and increase in GDP.
Education - Better educated population (as at then, only 50% of children
between 5 and
24 enrolled in primary, secondary, and higher education).
Urbanization - Nigeria has a high urban increase rate (5-7%) and growth
needs to be managed. Rural development should be stressed.
Unemployment - very high in Nigeria; even bankers and doctors
had become unemployed.
Infrastructure (internal framework) - poor electricity,
telecommunications, fresh water supply, poor road networks, lack of
affordable housing.
Corruption - a history of military leaders have resulted in corruption for
personal gain at the expense of the people.
Women inferiority - women generally have greater health problems and
less education
facilities than men. The literacy rate of adult women is significantly low.
In order to meet up with the above challenges through the vision, the
following solutions were recommended as ways out.
1. Institute and maintain democratic elections in the Fourth Republic.

Nigeria has a history of military dictatorships and coup d'états which
short-lived the republics.
2. Increase in private sector to enhance competition.
3. Money created should allow for infrastructure to be rebuilt.
4. Increased female access to education and job opportunity should
raise literacy and equal gender rights.
5. Devote over one-quarter of the government's budget to education.
68
If better education is promoted, work force can provide for more labor.
Criminal activity and violence have resulted from a lack of youth
education. New scientific and medicinal advancements can be made
with better education systems
After the blueprints were drawn, implementing these strategies can
be difficult. Following Abacha's death in 1998, Abdusalami Abubakar
took control as Head of State. General Abubakar endorsed Vision 2010,
as he had worked in the formation of the plan. Since 1946, economic
plans were introduced but not very successful. There was a lack of
discipline in Nigeria to carry out the needs of these plans, so they did
poorly. If Vision
2010 hopes to be successful, it will require the nation as a whole to
cooperate and take the initiative to look past each other's ethnic
differences. Invariably, the vision was not achieved and the policy failed
as usual due to poor implementation, corruption and bureaucracy.

Vision 2010 policy fails because of poor implementation, corruption and
bureaucracy;
Discuss
3.2 NEEDS, VISION 2020, AND OTHER POLICY STATEMENTS
From our earlier discussions, we know that successive governments

have attempted one form of economic policy or the other. We shall
again look at some of it as discussed below. You are admonished to
concentrate on the explanation given below.
National Economic Empowerment and Development Strategy.(NEEDS)
(2003-2007): When the Obasanjo‘s government was re-elected in
2003, it realized the necessity for a comprehensive socio-political
and economic reform of the country since the previous plans did not
put the Nigerian economy on sound footings. It was in this context that
the
National Economic Empowerment and Development Strategy (NEEDS)
that appeared to be a road map to address the development challenges in
Nigeria was launched. The basic thrust of NEEDS focused on:
empowerment, wealth creation, employment generation and poverty
reduction as well as value re-orientation. The document was also to
cover states and Local governments. At States level, it was called
(SEEDS) State Economic Empowerment and Development Strategy,
while at the Local government level it is called (LEEDS) Local
Economic Empowerment and Development Strategy. It is worrisome
that the government has not realized most of the professed objectives of
NEEDS. Within the period of NEEDS 2003-2007, Nigeria‘s annual
budget crossed the threshold of billions into trillions of naira, but the per
69
capita income of Nigeria fell into the one dollar per head level of the
poorest countries. Education, which is expected to empower citizens,
witnessed increase in the number of educational institutions from
primary to tertiary institutions. The universities increased from about
forty in 1999 and mainly belonging to federal and state governments to
about eighty nine in April 2007, with greater private sector participation.
It is regrettable that despite the increase in the number of educational
institutions, the cost of education is very exorbitant. For example an
average private university charges fees as high as N600,000 per session.
This has led to the reduction of number of citizens that can have
access to higher education. Therefore, empowerment of such citizens
is grievously hampered. NEEDS had planned to create about seven
million jobs by 2007, but the reality is that most policies adopted by the
government to realize this objective were inimical to employment
generation. In her efforts to reform government institutions, many
employees have actually lost their jobs. The Central Bank of Nigeria
alone severed 804 employees through mandatory retirement in 2005
(CBN, 2005). In the area of infrastructural development, NEEDS also
failed to achieve the expected objectives. Electricity, which
coincidently was a major policy choice area of the government, rather
than show improvement, seemed to have declined tremendously
(Ikeanyibe, 2009). The poor supply of electricity in the country reached
a dangerous proportion by 2007 and still persist in 2016. Adegboyega
(2006), observed that
―we have to look beyond Obasanjo‘s reform package if we must get
out of the power quagmire‖. As a medium term plan, most of the
objectives of NEEDS should have been achieved before the expiration
of Obasanjo‘s administration in May 2007. The truth is that NEEDS as a
economic development planning policy did not achieve the expected
results like previous development plans in Nigeria. The four main
objectives viz: employment generation, poverty reduction, wealth
creation and value re-orientation remained only on paper.
President Olusegun Obasanjo also added Vision 20:2020 to one of its
endless search for appropriate development strategy for Nigeria. The
objective of the Vision 20:2020 is to make Nigeria one of the first
leading 20 economies in the world by the year 2020. As observed by
Eneh (2011), to actualize this lofty dream, Nigeria‘s GDP per capita
would have to grow at an incalculable rate (different from the then
0.7%) from US$ 752 to
$30,000 at least and the GDP of those countries (over US $29,000)
Nigeria wishes to displace and/or join must stop growing (they grew
then at 2%). The rural areas in Nigeria must be transformed from age-
long poverty and misery centres to urban status of world standard.
Nigeria‘s education, health, power, agriculture, manufacturing and other
sectors must receive such miraculous boosts that in 10years time, the
70
country will compare with high income OECD nations in all

development respect (Eneh, 2011). Nigeria must move from its 152nd
(2014) position in the UNDP human development ranking to the first 20
position in the world. Nigeria‘s Vision 20:2020 like other
development plans and initiative is nothing but a mere vision until it is
realized. At present, Nigerians are beset with hunger and starvation,
dilapidated road network, poor power supply, underdeveloped rail
system and insecurity of lives and property, high unemployment rate,
low level of exportation, high inflationary rate and flying exchange rate
etc. Is Vision
20:2020 attainable under the present state of affairs? Based on the
previous experience of the failures in Nigeria‘s development plans and
initiatives the Vision 20:2020 is bound to fail if not well monitored,
articulated and implemented.
There are other economic blue print plans by successive government.
Seven point agenda was the policy of President Umar Yar-adua which
was a short term plan aimed at turning the economy around for
Nigerian citizen. It was aimed at employment generation,
diversification of the economy, solving power problem etc to mention
just few, but today
none was ever achieved. President Goodluck Jonathan also introduced
Transformation Agenda plan in 2011, aimed at transforming the
economy, boosting agricultural production and encouraging the
diversification of the economy through agriculture and employment
generation through (GIS) graduate internship scheme, Subsidy
re- investment empowerment programme (Sure-P) etc. But all did not
achieved its planned aim. Today, in 2016, there is a Change Agenda in
vogue which is being championed by the government of President
Muhammadu Buhari, where possible change is expected in all spheres
of Nigeria economy.

Highlight and discuss the meaning of NEEDS policy at federal,
state and local
government.
3.3 CHALLENGES OF ECONOMIC DEVELOPMENTS PLANS

IN NIGERIA
We have seen the series of economic development plans and policy
visions introduced by
successive Nigerian governments since independence, the country has
failed to produce much needed sustainable development. Development
plans in Nigeria have failed to
71
achieve their desired objectives due to many challenges that bedeviled

the plans. Let us
consider these challenges as follows:
1. Corruption:
Corruption in Nigerian political system has hampered development
plans and programmes. Corruption has been a pervasive social
phenomenon. The disheartening
thing about the whole scenario is that the purported development plans
are to a large extent corruption avenues to some greedy Nigerian
leaders. Illicit misappropriation of privileges and opportunities in public
and private sectors for personal aggrandizement particularly those in
positions of authority in Nigeria (Ologbenla, 2007).
The involvement of our political leaders in massive corruption both in
military and civilian governments has been a stumbling block to national
development plans. Onah
(2006) observes that all development visions and programmes fail in
Nigeria because of
poor handling by corrupt and poor/hungry politicians and bureaucrats.
2. Lack of Plan Discipline:

The failure of Nigerian political leaders and bureaucrats to abide by the
plan objectives has frustrated development plans in Nigeria. Many
previous plans in Nigeria were distorted during the implementation
stages which eventually killed the overall objectives of the plans.
Indiscipline in the process implementation of development plans
has resulted in many abandoned projects in all parts of the country.
Many projects like Ajaokuta Steel Complex which could have hasten
Nigeria‘s industrialization are not yet completed after over two decades
of their projected completion dates.
3. Lack of Commitment:
Development plans are often prepared without consulting the people,
hence public apathy towards its implementation. Since the plan is meant
for the people, but they are not even aware of its existence or objectives,
they do not feel duty bound to contribute to its success. This has made
many development plans to fail in Nigeria. It was an attempt to address
this problem that made the defunct Vision 2010 Committee to embark
on series of publicity programmes, like seminars, conferences and
public enlightenment campaigns (Obi, 2006).
4. Absence of Relevant Data:

Development planning depends basically on availability of data. This is
due to inadequacies of National Bureau of Statistics, the unwillingness
of Nigerians to reveal information and outright manipulation of data for
pecuniary or other gains. A striking example of the problem in Nigeria
72
is that until today, nobody is sure about the exact population of Nigeria.
A country that does not know its population would definitely not be in a
position to determine the other vital statistics necessary for planning, via
life, birth rate, death rate, number of those of school age and
demographic changes in the population which are essential for
planning. The absence of reliable background data has made the use of
social indicators difficult and inadequate for plan preparation,
implementation and monitoring of national development.
5. Over-Ambitious Development Plans:

National Development Plans are over ambitious, trying to achieve many
objectives at the same time without considering the conflicting and
competing priorities. Again, they are often grandiose in design but
vague on specific policies needed to achieve stated objectives (Onah,
2010). In most cases, policy objectives are contradictory.
6. Lack of Continuity of Government Programmes and policies:
Lack of continuity of government programmes has retarded
development plans in Nigeria. Most of the development programmes
are usually abandoned once the government that introduced them is out
of power. Government officials do not feel committed to the national
plans of their predecessors and subsequently seek to change then by
introducing major projects not incorporated in the original plan.
(Oladapo, 2004). This is the reason for uncompleted projects in different
parts of the country today. The situation is worsened because of
political instability to which the country has been subjected since
independence. Arguably, the frequent and unpredictable changes in the
government especially during the military regimes, created room for
uncertainty and for the retardation of development process articulated in
various plans.
7. Public Service Inefficiency:

Public service is an institution that is responsible for execution of
development plans. It is worrisome that Nigerian public service is beset
with many problems which militate
against its efforts in the implementation of development plans. Some of
these problems are: corruption, inadequate working materials, poor
communication system, bureaucracy
and political instability. It is imperative to address these problems to
enhance the capacity of Nigerian public service to serve as appropriate
organ for implementing economic
development plans in Nigeria.
8. Poor Public and Private Sector Partnership:

There is poor collaboration between the public and private sectors
in development planning process in Nigeria. In fact, development
73
planning has largely followed bureaucratic process with little private

sector participation so much so that such efforts can be appropriately
described as lacking in synergy between public and private sectors.

Highlight and explain the challenges of economic developments plans in
nigeria
4.0 CONCLUSION
From our discussion so far on visions and policy statements of
economic plans in
Nigeria, we can deduce the following facts:
That Nigeria must move from its 152nd (2014) position in the
UNDP human development ranking to the first 20 position in the world.
Nigeria‘s Vision 20:2020 like other development plans and initiative is
nothing but a mere vision until it is realized. At present, Nigerians are
beset with hunger and starvation, dilapidated road network, poor power
supply, underdeveloped rail system and insecurity of lives and property,
high unemployment rate, low level of exportation, high inflationary rate
and flying exchange rate etc.
5.0 SUMMARY
In this unit, we have attempted to show the overview of Nigeria‘s vision
2010 economic
plan, we have discussed the NEEDS, Vision 2020, and other policy
statements, we also examined the challenges of economic developments
plans in Nigeria. The question is,
can Vision 20:2020 be attained under the present state of affairs? Based
on the previous
experience of the failures in Nigeria‘s development plans and initiatives,
the Vision
20:2020 is bound to fail if not well monitored, articulated and
implemented like the previous plans. You are therefore encouraged to be
anxious of reading more about the next topic which will be duly served
in the next unit.

List and explain the various vision statements and policy that you know
in Nigeria.
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MODULE 4
PLANNING EXPERIENCES IN OTHER COUNTRIES OF THE
WORLD
Unit 1: Planning experiences of selected developed countries

Unit 2: Planning experience of India and Asian Tigers
Unit 3: Comparisons of economic plans of less developed and
developed nations
UNIT I: Planning experience of selected developed countries
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Planning experience of France and the Soviet States
3.2 Planning experience of the USA
3.3 Planning experience of China.
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
In this module, we shall be looking at Planning experiences of
selected developed
countries and the lessons to be learnt from their experience.
Planning involves anticipating the future and formulating systematic
programs of action to attain desired
goals. Our discussion therefore will be limited to countries like France,
Soviet state,
USA, China, India, and the Asian Tigers of Singapore and Malaysia.
Therefore our task in this last module would be to look at certain types
of planning adopted by these countries. Let us therefore concentrate and
move along with the explanations that will be given in this module and
subsequent units.
2.0 OBJECTIVES
Identify Planning experience of France and the Soviet States
Show Planning experience of the USA
Explain Planning experience of China.
77
3.0 MAIN CONTENTS
3.1 Planning experience of France and the Soviet States

We shall briefly consider the planning experiences in France and the
soviet states as
follows:
A. France
France utilized indicative planning and established a number of state-
owned enterprises
in strategic sectors of the economy. The concept behind indicative
planning is the early
identification of oversupply, bottlenecks and shortages so that state
investment behavior can be modified in a timely fashion to reduce the
incidence of market disequilibrium, with the goal of sustaining stable
economic development and growth. Under this system France
experienced its "Trente Glorieuses" period of economic prosperity.
France also anchored its economic blue print by successive government
on economic indicators of growth and development, indices of food
security, water supply, adequate housing, efficient education,
affordable health care system, employment opportunities and provision
of infrastructures through which sustainable economic development can
be achieved. However, according to the Economist Intelligence Unit,
(2015), the global food security index of France is 83.8%, which placed
the country as one of the most secured in terms of food security. France
is also among the most developed nations in the world that other less
developed countries are now patronising.
B. Soviet Union (Dissolved in 1991) Now Russia.

The Soviet model of economic planning is an economic system
where decisions
regarding production and investment are embodied in a plan formulated
by Gosplan (State planning agency) through the process of material
balances. Economic information, including consumer demand and
enterprise resource requirements, are aggregated and used to balance
supply (from available resource inventories) with demand (based on
requirements for individual economic units and enterprises) through
a system of iterations. The Soviet economy operated in a centralized
and hierarchical manner where directives were issued to lower-level
organizations. As a result, the Soviet economic model was often referred
to as a command economy or an administered economy because plan
78
directives were enforced through inducements in a vertical power-

structure, where planning played little functional role in the allocation of
resources. The Soviet anchored their economic plan on socialist
ideology bearing in mind all economic indicators of growth and
development, indices of food security, water supply, adequate
housing, efficient education, affordable health care system, employment
opportunities and provision of infrastructures which were shouldered by
the planning authority, that is the government. Although, Soviet Union
have broken up but the economic planning system of countries like
Russia, Croatia, Slovenia, Serbia, Georgia, Hungary etc, still have major
traces of this system and that is why they are referred to as socialist
states.
However, according to the Economist Intelligence Unit, (2015), the
global food security index of Russia is 63.8%, which placed the country
as one of the most secured in terms of
food security.

Discuss your understanding of planning as experience by France and the
Russia.
3.2 Planning experience of the USA

The United States utilized economic planning during the First World
War. The Federal
Government supplemented the price system with centralized resource
allocation and created a number of new agencies to direct important
economic sectors; notably the Food Administration, Fuel
Administration, Railroad Administration and War Industries Board.
During the Second World War, the economy experienced staggering
growth under a
similar system of planning. In the postwar period, US governments
utilized such
measures as the Economic Stabilization Program to directly intervene in
the economy to control prices, wages, etc. in different economic sectors.
From the start of the Cold War and up until the present day, the United
States Federal
Government directs a significant amount of investment and funding into
research and development (R&D), often initially through the
Department of Defense. The government performs 50% of all R&D in
the United States, with a dynamic state-directed public- sector
developing most of the technology that later becomes the basis of the
private sector economy. As a result, Noam Chomsky has referred to the
United States economic model as a form of State capitalism. Examples
79
include laser technology, the internet, nanotechnology,

telecommunications and computers, with most basic research and
downstream commercialization financed by the public sector. This
includes research in other fields including healthcare and energy, with
75% of most innovative drugs financed through the National Institutes
of Health. The economic plan of US was also anchored on economic
indicators of growth and development indices of food security, water
supply, adequate housing, efficient education, affordable health care
system, employment opportunities and provision of infrastructures
through which sustainable economic development can be achieved. The
US economy has been the cynosure of all eyes thereby attracting
migrants from all parts of the world. However, according to the
Economist Intelligence Unit, (2015), the global food security index of
USA is 89.0%, which placed the country as one of the most secured in
terms of food security.

Discuss your understanding of planning as experience by the USA.
3.3 Planning experience of China

In China planning experience took so many dimensions most especially
coming from the
angle of the communist cum socialist ideology and economic system
canvassed for by the then Soviet Union of which China was an ally.
China witnessed a gradual economic development transformation with
emphasis on indicative and perspective planning strategy using available
manpower resources and investment on ‗ICT‘ information and
communication technology. Today, China can be seen as a market based
economy with socialistic ideology and a competitive economy which
other developed economies are afraid of. In 1953, China launched its
first five-year plan, modeled on the Soviet materials balance
planning system. China adopted the ―Big Push‖ strategy. Investment
spending was promoted greatly while consumption was restricted.
Large industrial projects were favored despite China‘s large number of
workers and shortage of capital goods. Between 1952 and 1978, the
share of Chinese GDP accounted for by industry rose from 18% to 44%.
In the planning system, prices were artificially set by the government i.e,
prices did not reflect demand and supply. Prices were artificially high
for industrial goods and artificially low for agricultural goods, wages
were also set by the government and they were low and were rarely
changed. This continued until 1993 after the cold war and the fall of
Soviet Union, when central planning was phased out and decision
making decentralized thereby opening up China‘s economy to the global
80
world market. With a

population of about 1.3 billion people which is the largest in the world,
China‘s economy is one of the largest in the world.
Let us now discuss the recent economic plan of China. The Twelfth
Five-Year Plan (2011–2015) Guideline was debated in mid-October
2010. A full proposal for the plan was released following the plenum
and approved by the National People's Congress on March 14, 2011,
with the goals of addressing rising inequality and creating an
environment for more sustainable growth by prioritizing more equitable
wealth distribution, increased domestic consumption, and improved
social infrastructure and social safety nets. The plan was
representative of China's efforts to rebalance its economy, shifting
emphasis from investment towards consumption and development from
urban and coastal areas toward rural and inland areas - initially by
developing small cities and Greenfield districts to absorb coastal
migration. The plan also continues to advocate objectives set out in the
Eleventh Five-Year Plan to enhance environmental protection,
accelerate the process of opening and reform, and emphasize Hong
Kong's role as a center of international finance. The targets for the
Twelfth Five-Year Guideline in 2011 were to grow the GDP by around
8%, 7% annual growth of per capita income, spend 2.2% of GDP on
research and development by 2015, bring the population below
1.39 billion by 2015, readjust income distribution to stop the yawning
gap, firmly curb excessive rise of housing prices, implement prudent
monetary policy, intensify anti- corruption efforts, accelerate
economic restructuring, and deal with the complex situations in
development in 2011. Other set targets were as follows:
1. Urbanization rate reaching 51.5%
2. Value-added output of emerging strategic industries accounting for

8% of GDP
3. Inviting of foreign investment in modern agriculture, high-tech, and

environment protection industries
4. Moving coastal regions from being the "world's factory" to hubs of

research and development, high-end manufacturing, and the service
sector
5. More efficient development of nuclear power under the precondition

of ensured safety.
6. Increased momentum for large-scale hydropower plants in southwest

81
China
7. Length of high-speed railways reaching 45,000 km
8. Length of highway networks reaching 83,000 km
9. A new airport being built in Beijing
10. 36 million new affordable apartments for low-income people

In a bid to remain focused, China has also adopted the Thirteenth Plan
(2016–2020) of which the focus areas are:
1. Innovation: Move up in the value chain by abandoning old heavy

industry and building up bases of modern information-intensive
infrastructure
2. Balancing: Bridge the welfare gaps between countryside and cities by
distributing and managing resources more efficiently
3. Greening: Develop environmental technology industry, as well as
ecological living and ecological culture
4. Opening up: Deeper participation in supranational power
structures, more
international co-operation
5. Sharing: Encourage people of China to share the fruits of economic
growth, so to bridge the existing welfare gaps
The Policies also aimed at the following:

a. Everyone is an entrepreneur, creativity of the masses by 2025 b.
Made in China 2025
c. Aims to address four worrying trends in current situation and have
them changed:
i. Nationally vital technologies lack a domestic core platform
ii. Chinese industrial products are perceived internationally as inferior
quality iii. Domestic industrial competition is fierce due to overly
homogeneous
structure
iv. Poor conversion of academic research results to practical
application d. Economy needs a Rule of Law
e. National defense reform
Organisational reform of the army, slashing number of highest generals,
as well as concentrating branches' functions, moving some under
Defence Ministry
f. Urbanization with Chinese characteristics
g. Reform one-child policy; Soon it could be called "two-child policy
82
global food security index of China is 64.2%, which placed the country
as one of the most secured in terms of food security. There is no doubt
that China is a rich nation that will be ready to partner with any country
for development of their infrastructure even with giving out of loans to
such nations. President Muhammadu Buhari of Nigeria is seeking
China‘s assistance in the area of infrastructural development and
seeking financial loan, borrowing of $2 billion dollars to finance its
infrastructural development.

Discuss your understanding of planning as experience by China.
4.0 CONCLUSION
From our discussion so far on planning experiences in other countries of
the world; we
can deduce the following fact ;
The economic plan of these countries was anchored on economic
indicators of growth and development, indices of food security, portable
water supply, adequate housing, efficient education, affordable health
care system, employment opportunities and
provision of infrastructures through which sustainable economic
development is achieved.
5.0 SUMMARY
In this unit, we have attempted to discuss Planning experience of France
and the Soviet
States, show Planning experience of the USA and explain Planning
experience of China. Also, from the point of view of our discussion, you
have learnt that all these countries at one point or the other had
embarked on indicative, fixed, rolling and perspective planning
strategies which they implemented faithfully to achieve their economic
goals and which positioned them as developed nations and made them a
reference point in the world till today. It is believed that your
understanding of this unit has given you a basis to understand the
next unit. It is expected of you to be anxious of reading about what will
be duly served in the next unit.

Discuss the various economic development indicators that the developed
nations built
their economic plan around.
83

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UNIT II: Planning experiences of India and Asian Tigers
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Planning experience of India
3.2 Planning experience of Asian Tigers
3.3 The vision of Singapore to become developed country
4.0 Conclusion
5.0 Summary
1.0 INTRODUCTION
Our discussion in the last unit has introduced to us how economic
development plan is
executed in some developed countries. Therefore, our discussion
in this unit will describe the planning experience of India, planning
experience of Asian Tigers and the
vision of Singapore to become a developed country. It is important
to take closer
attention to the explanations given in this unit for easy assimilation.
2.0 OBJECTIVES
- Understand planning experience of India
- Discuss the planning experience of Asian Tigers
- Explain the vision of Singapore to become a developed country
3.0 MAIN CONTENTS
3.1 Planning experience of India

India was known to be a developing nation because of the strategic
economic plan
embarked upon to salvage the economy which was in shamble in the
past. It is a country with about a billion people in terms of population
second after China. India has been seen to be a growing economy
adopting indicative, rolling and perspective type of planning with
emphasis on manufacturing, industrialization and medicine. Since 1947,
the Indian economy has been premised on the concept of planning. This
has been carried out through the Five-Year Plans, developed, executed,
86
and monitored by the Planning Commission known now as ‗‗NITI

Aayog after 2014‘‘. For easy understanding, we shall only discuss the
current Indian plan, although India has a series of economic
development plans which are in this progression. First Plan (1951–
1956), Second Plan (1956–1961), Third Plan (1961–1966), Fourth Plan
(1969–1974), Fifth Plan (1974–1979), Rolling Plan (1978–1980), Sixth
Plan (1980–1985), Seventh Plan (1985–1990), Annual Plans (1990–
1992), Eighth Plan (1992–1997), Ninth Plan (1997–2002), Tenth Plan
(2002–2007), Eleventh Plan (2007–2012) and Twelfth Plan (2012–
2017) The Eleventh Plan completed
its term in March 2012 and the Twelfth Plan is currently underway.
Prior to the Fourth
Plan, the allocation of state resources was based on schematic patterns
rather than a
transparent and objective mechanism, which led to the adoption of the
Gadgil formula in
1969. Five-Year Plans (FYPs) are centralized and integrated
national economic programs.
India launched its First FYP in 1951, immediately after independence
under socialist influence of first Prime Minister Jawaharlal Nehru. The
First Five-Year Plan was one of
the most important because it had a great role in the launching of Indian
development after Independence. Thus, it strongly supported
agriculture production and it also
launched the industrialization of the country (but less than the Second
Plan, which focused on heavy industries). It built a particular system of
mixed economy, with a great
role for the public sector (with an emerging welfare state), as well as a
growing private
sector. There are series of FYP‘s embarked upon by India till the
Twelfth Plan (2012-
2017) which is also tagged as 12th Five-Year Plan (India). Let us briefly
look at it.
The Twelfth Five-Year Plan of the Government of India had been
designed for growth rate at 8.2% but the National Development Council
(NDC) on 27 Dec 2012 revised it to
8% growth rate. The plan was further anchored on the following aims.
1. Rapid and inclusive growth. (Poverty reduction by 10%)
2. Emphasis on social sector and delivery of service therein.
3. Empowerment through education and skill development.
4. Reduction of gender inequality.
5. Environmental sustainability.
6. To increase the growth rate in agriculture, industry and services to
4%,10% and
9% respectively.
87
7. Reduce Total Fertility Rate to 2.1

8. Provide clean drinking water for all by 2014.
The document presented by the Planning Commission was aimed to
attract private investments of up to US$1 trillion for infrastructural
growth, which was also ensure a reduction in subsidy burden of the
government to 1.5 percent from 2 percent of the GDP. However,
according to the Economist Intelligence Unit, (2015), the global food
security index of India is 50.9%, which placed the country as one of the
secured in terms of food security.

Discuss your understanding of planning as experienced by India
3.2 Planning experience of Asian Tigers

The economic development models of the East Asian Tiger economies
involved varying
degrees of economic planning and state-directed investment in a
model sometimes described as "state development capitalism" or the
"East Asian Model". The Asian Tigers have been seen to be growing
economies adopting indicative, rolling and perspective type of planning
with emphasis on education, manufacturing, industrialization and
medicine The governments of Malaysia and South Korea instituted a
series of macroeconomic plans (First Malaysia Plan and Five-Year Plans
of South Korea) to rapidly develop and industrialize their mixed
economies. The economy of Singapore was partially based on economic
planning involving an active government industrial policy and high
levels of state-owned industry in a free-market economy. They also
based their economic plan to be anchored on economic indicators of
growth and development, indices of food security,
water supply, adequate housing, efficient education, affordable health
care system, employment opportunities and provision of infrastructures
through which sustainable economic development could be achieved.
There was a significant growth and development in these economies as a
result of disciplined execution of their economic plans, set goals and
objectives which made them to be referred to as Asian Tigers.

Discuss your understanding of planning as experienced by the Asian
Tigers.
3.3 The vision of Singapore to become developed country in the first

88
league Singapore is one of the major Asian Tigers, it is therefore

important to discuss its vision strategies that moved the country to a
developed nation. The strategic economic plan sets the strategies and
programmes for Singapore to realise a vision to attain the status and
characteristics of a first league developed country within the next 30 to
40 years. Key facets of the Vision are economic dynamism, a high
quality of life, a strong national identity and the configuration of a
global city.
Strategies for the long term, which will also produce some benefits for
Singapore in the short to medium term, are directed at maintaining and
extending the nation's inter-
national competitiveness. Eight strategic thrusts have been identified to
help propel
Singapore's economic and social progress to that of a developed country.
They are:
1. Enhancing Human Resources
2. Promoting National Teamwork
3. Becoming Internationally Oriented
4. Creating a Conducive Climate for Innovation
5. Developing Manufacturing and Service Clusters
6. Spearheading Economic RedeveIopment
7. Maintaining International Competitiveness
8. Reducing Vulnerability
When change is as rapid and dynamic as in the international economic
environment, the planning process is fraught with risks. Looking at it in
this course, world shattering events in the Gulf and the Soviet Union
occurred. No one could have predicted these events or the degree of
impact they would have on the world economy now and in the future.
But it is evident and shows as reference points in the World. Singapore
cannot hope to predict such dramatic events at home or abroad. But
through scenarios and contingency plans it would take into account
various contributory factors, and weigh up other more gradual shifts and
trends in international politics, trade and economics.
With clear lessons from the recent past of the World economy
and Singapore's experience, the writing on the wall currently is that
economic strategies for Singapore
need to evolve from the past single dimensional type to a multi-
dimensional one in order
to remain viable in an increasingly complex environment.
In this context, the Economic Planning Committee was charged with the
task of preparing a Strategic Economic Plan for Singapore to provide for
the medium to long term. This plan aims to:
1. Provide an overview of the economic landscape over the next 20 to
30 years
2. Define a clear vision for the economy and analyse its implications
89
3. Initiate a national planning process, which is consultative and

evolutionary in character 4. Help build a shared vision among labour,
business and government on national economic aspirations
global food security index of Singapore is 82.2%, which placed the
country as one of the most secured in terms of food security
ACHIEVEMENT OF QUANTITATIVE GROWTH

The principal objective for any economic development is to achieve a
high level of
sustained growth. Based on certain assumptions, Singapore's projected
growth rates under the two scenarios are given in Table I and 2.
Table 4.1
Projected GNP Growth – Optimistic Scenario Population at Year 1990-2030

3.4m 4.0m 4.4m
1990-1995 6.7% 7.1% 7.3%
1995-2000 5.6% 6.0% 6.2%
2000-2010 4.4% 4.8% 5.0%
2010-2020 3.9% 4.3% 4.5%
2020-2030 3.7% 4.0% 4.3%
SOURCE: Information on Singapore, (2015)
Table 4.2
Projected GNP Growth – Pessimistic Scenario Population at Year 1990-2030
3.4m 4.0m 4.4m
1990-1995 5.7% 6.1% 6.3%
1995-2000 4.6% 5.0% 5.2%
2000-2010 3.5% 3.9% 4.1%
2010-2020 3.0% 3.4% 3.6%
2020-2030 2.7% 3.1% 3.3%
SOURCE: Information on Singapore, (2015)
ACHIEVEMENT OF QUALITATIVE DEVELOPMENT

Singapore's Vision was to become a first league developed country in
terms of the
90
following characteristics:
1. Economic Dynamism with a per capita income of one of the major
industrialised countries. This means catching up with a moving target
and goes further than the
target set in 1984 that Singapore should achieve by 1999 the Swiss per
capita GNP
of 1984.
2. Quality of Life
3. National Identity
4. Global City
Despite the long horizon, Singapore took steps to seriously and
vigorously pursue the goal of becoming a first league developed country
for two reasons. Firstly, some of the
strategies, like enhancing manpower, requires a long lead time of one
generation or more. Secondly, it provides the best possible assurance
against being overtaken by other emerging countries which, if it
happened, could lead to economic stagnation or decline. The major
restraining factors towards achieving the high average growth rates
experienced in the 1980s of 7.1 per cent are the employment rate and
present limits set on the foreign worker population. Singapore has also
practically reached the limits of sea- front land and sea space. In order to
continue to grow at relatively high rates, it is necessary to reorganise the
way human and physical resources are managed. Singapore adopted key
strategies of growth and development like the which promote the
distribution of activities between Singapore, the Riau Islands and Johor,
in accordance with the comparative advantages of the three regions,
Singapore has effectively networked with a sub-region of ASIAN which
has a much larger resource base and also achieved economic
development through international competitiveness.

Mention and explain the success behind the transformation of Singapore
economy..
4.0 CONCLUSION
From our discussion so far on the planning experience of India and the
Asian tigers, we
can deduce the following facts:
That India and Asian Tigers have been seen to be growing
economies adopting indicative, rolling and perspective type of planning
with emphasis on education, manufacturing, industrialization and
medicine
91
5.0 SUMMARY
In this unit, we have attempted to describe the planning experience of
India, planning
experience of Asian Tigers and the vision of Singapore to become
developed countries. Also, from the point of view of our discussion, you
have learnt that Singapore adopted key strategies of growth and
development like the growth triangle which promote the distribution of
activities between Singapore, the Riau Islands and Johor, in accordance
with the comparative advantages of the three regions, Singapore
has effectively networked with a sub-region of ASIAN which has a
much larger resource base and also achieved economic development
through international competitiveness. India also adopted targeted
series of five year plan aimed at achieving desirable growth. It is
believed that your understanding of this unit will prepare you for the last
unit of this last module. Therefore, read ahead and concentrate.

Discuss briefly the magic of transformation of India and Asian Tigers
economIES.

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UNIT III Comparisons of economic plan of less developed and

developed nations
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Contents
3.1 China and Nigeria
3.2 Malaysia and Nigeria
3.3 Singapore and Nigeria
4.0 Conclusion
5.0 Summary
1.0 Introduction:
This is the last unit of the last module of this course. Our discussion in
the last unit will be short and precise comparing Nigeria economic
plan with China, Malaysia and
Singapore. Therefore, our discussion in this unit will describe
China and Nigeria,
Malaysia and Nigeria, likewise Singapore and Nigeria. It is important
for us to take closer attention to the brief explanations given in this unit
for easy assimilation and understanding.
2.0 OBJECTIVES
-Compare China and Nigeria in terms of economic performance
-Compare Malaysia and Nigeria in terms of economic performance
-Compare Singapore and Nigeria in terms of economic performance
3.0 MAIN CONTENTS
3.1 CHINA AND NIGERIA

By the year 1970, China had a GDP per capita of $112 and was ranked
114th in the world
while Nigeria had a GDP of $219 and was ranked 88th. Since then
China has recorded and sustained a very rapid growth rate of over 9.5%,
perhaps, the highest in the world and
has been transformed to the second largest economy in the world behind
the USA. The
reason adduced for this phenomenal growth is visionary leadership and
94
collective resolve of the citizens. In China planning experience took so

many dimensions most especially coming from the angle of the
communist cum socialist ideology and economic system canvassed for
by the then Soviet Union of which China was an ally. China witnessed a
gradual economic transformation with emphasis on indicative and
perspective planning strategy using available manpower resources and
investment on ‗ICT‘ information and communication technology.
Today, China can be seen as a market based economy with socialistic
ideology and a competitive economy which other developed economies
are afraid of. For Nigeria to have an economic turnaround like China,
plans have to be well executed faithfully and implemented successfully.
Compare and make comments on the economic planning experience in
China and Nigeria
3.2 MALAYSIA AND NIGERIA

By 1960, Malaysia had a GDP per capita of $299. Since then the
country has recorded
and sustained an outstanding economic success. By 2010, Malaysia had
a GDP of $8,634
compared to Nigeria‘s per capita income of $1,465. History has it that
Malaysia in the
1960s procured improved oil palm and rubber seeds from Nigeria and
later became the world largest palm oil producer/exporter and a major
exporter of rubber, while Nigeria has now become a major importer of
these commodities. The reason adduced for the Malaysian success has
been linked to a variety of pull factors; good political leadership that
created political stability, business friendly policies, prudency and influx
of foreign investors, productive workforce and developed infrastructure
(Sanusi, 2012).For Nigeria to be like Malaysia, the economy of Nigeria
has to be diversified most especially into agriculture and other key
sectors that are lying unproductive. However, according to the
Economist Intelligence Unit, (2015), the global food security index of
Malaysia is 69.0%, which placed the country as one of the most secured
in terms of food security while that of Nigeria is 37.1% which indicate a
low indices.

Compare and comments on the economic planning experience in
Malaysia and Nigeria
3.3 SINGAPORE AND NIGERIA

95
By 1960, the GDP per capita of Singapore was $395 and it grew to $925
in 1970 while
Nigeria‘s GDP per capita rose from $91 to $219. By 2010, a miracle had
taken place.
Singapore‘s GDP per capita had become $44,697 while Nigeria was far
trailing behind with $1,465. Today, Singapore was said to be the world‘s
2nd most open economy in the Asian Pacific Region, a highly developed
and successful free market economy devoid of corruption. The reason
adduced for the miracle is the many years of successive visionary
leadership that were able to transform the economy through consistent
policies and good governance. Nigeria must invest heavily on education
just like Singapore to be able to develop effectively in the World.

Compare and make comments on the economic planning experience in
Singapore and
Nigeria
4.0 CONCLUSION
From our discussion so far on comparisons of economic plans of less
developed and
developed nations , we can deduce the following facts:
That the reason adduced for the miracle of China and Asian Tigers is
the many years of successive visionary leadership that were able to
transform the economy through consistent policies and good
governance. Nigeria must invest heavily on education just like these
countries to be able to develop effectively in the World.
5.0 SUMMARY
In this unit, we have attempted to briefly discuss the Comparison of
China and Nigeria in
terms of economic performance, Malaysia and Nigeria in terms of
economic performance and Singapore and Nigeria in terms of economic
performance. Also, from the point of view of our discussion, you have
learnt that today, China and Asian Tigers can be seen
as a market based economy with socialistic ideology and a competitive
economy which other developed economies are looking forward to. For
Nigeria to have an economic turnaround like these countries, plans have
to be well executed faithfully and implemented successfully. We believe
you have intimate yourself with your course material and have been able
to acquire the needed knowledge that is expected of you.
You are therefore encouraged to read more for proper impartation and
assimilation of this course.

96
Describe in your own words the reasons why Nigeria‘s economic plan
has not achieved
much compared to the Asian Tigers.
speeches and

Press.
Research and



Investment, 5(2).




Ltd.
97

Enugu: Fourth



Group Limited.
98

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COURSE

Course Team Dr. Akinade Olushina matthew (Course

Prof. Ogunleye Edward Oladipo (Course Editor)

NATIONAL OPEN UNIVERSITY OF NIGERIA

National Open University of Nigeria

All rights reserved. No part of this book may be reproduced, in any

ISBN: 978- 978-058-039-5

You will be taught the rudiments and basics of economic planning

This course will expose students to the basics and rudiments of

(i) introduce you to the meaning, principles, processes,

The objectives of this course are to:

• allow students know the various theories, principles, practices,

WORKING THROUGH THIS COURSE

Exercises (SAE). At some points in the course, you will be required to

Module 1: Economic planning: Meaning, Terminologies and

Unit 1 Meaning of Economic planning

Module 2: Concept and Approaches of Economic Growth and

Unit 1: Economic growth and Economic development

Module 3 Economic Development Planning Experience in

Unit 1 The concept of national planning in Nigeria; Pre-

Module 4: Planning Experiences in other Countries of the World.

Unit 1: Planning experience of selected developed countries

TEXTBOOK AND REFERENCES

For further reading and more detailed information about the

Adedeji, A. (1989). Towards a dynamic African economy: Selected

Adegboyega, T. (2006, December 10). Reforms: OBJ‘s

Adeyeye, A. (2002). Fundamentals of development administration: A

Adubi, A. A. (2002). Pre-budget link in Nigeria: An exploratory

Agbakoba, J.C.A. (2003). Philosophical issues in development.

Akosile, I. O., Adesanya, A. S. & Ajani, A. O. (2012). Management of

Akume, A.T. (2012). Leadership in Nigeria: A paradox of action for

M.F.B.A. (2009). The role of agriculture education and training on

Alapiki, H. (2009). Politics and governance in Nigeria. Owerri:

Corporate Impressions. Ayo, E. J. (1988). Development planning in

Burgess, J.C. (2001). Sustainable development. Oxford: Elsevier Ltd.

Cole, G. A. (1993). Management: Theory and practice (4th ed.).

Datta, A. K (2010). Integrated material management: A functional

Delhi: Prentice Hall International Publishers.

Durojaiye, B. (2013, September 15). How to become Asian tiger? The

Eneh, C. O. (2011). Nigeria‘s vision 20:2020 - issues, challenges and

Ejimudo, V. B. O. (2013). The problematic development planning in

Egonmwan, J. S. & Ibodje, S. (2001). Development administration:

Benin City: Thesyin (Nig) Company.

Hehn-Been, L. (1970). The Role of the Higher Civil Service Under

Iheanacho, E. N. (2012). Bureaucracy and development in Nigeria. In

Ikeanyibe, O. M. (2009). Development planning in Nigeria: Reflections

Jaja, S. (2000). History of budgeting and planning in Nigeria: Lessons

Jhingan, M.L. (2007). The economics of development and planning

Koha, S. (1994). Nigeria: The political economy of oil. London: Oxford

University Press. Obi, E. A. (2006). Development administration.

Obikeze, O. S. and Obi, E. A. (2004). Public administration in Nigeria:

Okigbo, P. (1989). National Development Plan in Nigeria 1900-1907.

Okojie, C. E. (2002). Development planning since independence. In

Iyoha, M. A. and Itsede, C. O. (eds) Nigerian economy: Structure,

Okowa, W. (1991). Political economy of development planning in

Oladapo, A. (2004, June 21). Achieving Nigeria’s development goals,

Ologbenla, D. K. (2007). Leadership, governance and corruption in

Olajide, O.T. (2004). Theories of Economics development and planning

Onah, F. O. (2010). Managing public programmes and projects (2nd