Unit Three

Classification/Types of planning
3.1 Classification of plan based on time
Looking from the standpoint of temporal dimension is one approach of classifying development
planning. Development plans can be put into three categories in terms of length or duration of
time of the plan: short-term plans, medium-term plans, and long-term plans. Yet there are
differences among countries as far as the duration of each term is considered.

1.1. Short-term plan: is an annual plan, used for adjustment in order to keep development
planning close to reality. It is also used to link economic plans to government budgets. A short-
term plan is a plan on the demand side simply because potential supply is fixed in the short run.
However, investment and certain elements of government budget expenditure, such as those on
social infrastructure, education, and research and development, do add to supply capacity. This
change in production capacity will not, however, be shown in the current plan period.

1.2. Medium- term plan: the duration of medium-term plans varies from three to seven years.
Most countries adopt five-year plans, as have the Republic of Korea, India, and the Soviet
Union. However, it is by no means necessary that a country always stick to the same duration in
its medium-term planning. In the case of France, the first plan was for seven years (1947–53),
but the following plans were for four years. Taiwan's medium-term plans have been four-year
ones, except for a six-year plan in 1976–81.

Medium-term plans are in operation in most developing countries. A complete medium-term plan
consists of three basic components: objectives, projections, and policy measures. Objectives are
the points we intend to reach with the help of certain policy measures; projections are the places
we would arrive at without adopting any government policy. A medium-term plan consists of
variables on both the supply side and the demand side. A key factor that connects supply and
demand is investment, which is by definition an addition to the capital stock. Whenever net
investment is not zero, the capital stock changes, and so does production capacity, or potential
GNP.

1.3. Long- term plan: a long-term plan is a perspective plan that covers a period of fifteen,
twenty, or even twenty-five years—strictly speaking, more a projection into the future than a
plan for the future. It predicts certain major variables, such as population, labor force, and
productivity in the distant future to serve as a background for the formulation of medium-term

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plans. Examples of long-term plans are the Soviet Union's 1960–80 twenty-year plans, and the
French 1969–85 projection. Recently, the Republic of China on Taiwan completed a long-term
projection into the year 2000, against which its 1986–1990 four-year medium-term plan was
drafted.

The long-term plan is basically a supply-side plan. This is because, in the long run, economic
growth is a result of increases in production capacity rather than in demand. And increases in
production capacity involve improvement of the quantity and quality of the labor force, capital
accumulation, and most important, technical progress, which reflects applications of advancing
knowledge to actual production. Technical progress not only raises the productivity of labor and
capital but also creates new products, offsetting the effect of the law of diminishing utility and
opening up new dimensions for demand. Since knowledge concerning technical progress is
limited, and is even more so as the period of observation extends, a long-term plan cannot be
expected to be as comprehensive as a medium-term plan.

The characteristics of development plans, and the ways in which government actions affect
economies through planning, vary with different economic systems. Plans in centrally planned
communist countries are basically controlling plans, whereas those in mixed-market economies
are mostly indicative plans. A controlling plan gives orders to the various units of the different
sectors of the economy. Its effect on the economy is direct and by command. An indicative plan
only indicates intentions and recommends policies to fulfill them. Its effect on the economy,
apart from the public sector, is indirect and through the influence of public policies on the private
sector. In a mixed-market economy, some sectors such as the government and public enterprises
can be controlled by plans and others can only be influenced by policy actions. The control over
the public sector may be tight or loose, and the influence on the private sector may be heavy or
light in different countries and in the same country at different stages of development. This is
what makes development plans different from one another.

The four-year and six-year economic plans of Taiwan may be taken as examples of indicative
plans. Taiwan started its first four-year medium-term plans in 1953. During the first two four-
year plan periods, 1953–60, the fundamental development strategy was the so-called inward-
looking, import-substituting policy. Certain consumer goods industries, notably textiles, were
selected for development under the protection of foreign-exchange controls and high tariff duties
to supply the domestic market. Government intentions for private industrial development were
carried out mainly through selective allocation of financial resources at differential rates of
interest. And, until 1965, when it was terminated, U.S. aid was one major source of financing.

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Toward the end of the 1950s, when the domestic market was becoming saturated with primary
import-substituting products, the government undertook a series of foreign trade and exchange
reforms. In so doing, it changed the development strategy to an outward-looking, export-
promoting policy. The New Taiwan dollar was devalued. Import controls were relaxed.
Throughout the 1960s, industrial development very much followed market forces rather than
government decisions, with the importing sector still considerably protected by high tariffs and
some import controls, and financial allocation in favor of exporting industries. In the mid 1960s
export-processing zones were established to encourage development of the industries in which
the economy possessed a comparative advantage.

The 1970s showed a reverting tendency toward more government intervention in private
investment. The petrochemical intermediate products industry was established under government
planning to supply the "downstream" industries. This is an example of so-called second-phase
import substitution. Electronics and machinery were selected as "strategic" industries and
enjoyed credit from banks with matching government funds to lower the interest rate. But the
intervention was gradually reduced, and in the early 1980s the government eventually decided to
liberalize the whole economy and go international.

3.2 Classification based on level (country wise planning)

Economic planning can take many different forms and at geographic scales ranging from local to
global. It includes national plans, sectoral plans, regional or local plans, natural resource
management plans, spatial plans, and development project plans. Plans may also need to take
into account international or trans-boundary considerations. Developing countries typically guide
their economic development through centralized plans (e.g. five-year plans as in Vietnam,
Thailand, Indonesia and Bangladesh) formulated by economic planning agencies. These plans
incorporate planning targets, strategies for achievement and financing arrangements. Most
national development plans also contain sectoral development plans and frequently, but not
always, regional or spatial development plans. Below are classifications of development
planning at national, regional and local levels.

3.2.1 National planning

National development planning is deliberate, comprehensive time-specific effort, initiated and
sustained by the government of a country for the purpose of creating and maintaining conditions
that will accelerate economic growth and social development. It is a large scale investment
project to develop the infrastructure of a country. It requires central planning and monitoring on a
national level and implementation on a micro, local level. Adequate funding from government

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agencies as well as support from citizens, will allow short, medium and long term goals to be
met. In addition, appropriate monitoring and supervision is required to accomplish the plans at
all level.
Goals should focus on the micro and macro strategy for national growth. This can include
development of the economic infrastructure, education, social welfare, science, and innovation.
Before setting goals, a government should review the current strengths of each sector and
articulate room for growth (both in the long and short term). The scope of goals will depend
upon whether a country is a developed or developing nation and should be adapted to the
cultural, economic and social needs of a specific country. Goals should avoid being politically
motivated and have sustainability regardless of what is politically popular at the time. Nations
should consider advice from outside consultants to review current national conditions and
proposed strategies to ensure that they are sustainable and not just politically expedient.
A communication strategy for a development plan is important so taxpayers and citizens
understand what investments and initiatives are being addressed. Typically the committee
overseeing a national development plan will develop an Information Office that will market and
publicize the plan and also can field questions/suggestions from concerned citizens.
It's important that a national plan address short, medium and long terms goals. The purpose of
the plan is to prioritize for national immediate needs (food, water, housing, and health-care) that
should be met but also to predict in the medium and long run, what are larger goals that should
be achieved.
The key to any national plan is actually accomplishing goals. A central planning body typically
oversees the national plan and acts as a project manager of sorts to oversee the execution of goals
on the micro level. This will involve liaising with government agencies that regulate various
sectors (transportation, education, health & human services, etc.). It will also need to coordinate
with local and municipal governments.
Funding can come from a variety of sources. Depending on qualifications, certain projects of a
national development plan can be financed by foreign donors, international organizations or even
corporate/non-profit partners. It also can liaise with various government agencies responsible for
an area or industry included in a development plan. The funding issue will most likely be the
most politically sensitive and will require support from taxpayers and elected officials to
advocate for funding in the budgeting process. Realistic resource forecasts should be considered
before establishing a project because if funding dries up, cynicism may arise from voters.
Once development goals have been met, it's appropriate to publicize infrastructure and national
improvements to other foreign countries. Such improvements can encourage foreign direct
investment, international commerce and tourism that will further promote economic productivity.

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The buzz and excitement of meeting national goals will also improve morale among citizens
since it demonstrates involvement and action by the national government.
By coordinating opinions and shaping a common understanding about the country’s development
in the near and distant future, the NDP presents the strategic goal of country’s development and
sets forth the main activities that will be able to ensure stable growth of a country and society.
The NDP’s task is to focus society’s attention on an agreed upon goal, thus ensuring
coordination and balance of activities and purposeful channeling of financial resources into
attainment of the state’s development goals, as well as into creating the necessary preconditions.
Therefore, it is very important to incorporate NDP’s principles and suggested proposals into
other planning documents, to co-ordinate them and to provide funding for them.

The NDP is a document which marks a turning point in the development of a country and offers
answers to the following questions:

 What will a country look like after seven and more years?
 How can an increase in a country’s’ competitiveness be ensured?
 What qualities should a person – a shaper of a country’s future – possess?

The government and other institutions in charge of the development process have to develop and
implement a policy that will ensure the country’s growth and will increase the people’s welfare.
The government has an important role in involving all of the participants – public, private and
non-governmental sector – in implementing a unified national growth scenario. Moreover, each
person has to share part of the responsibility for his/her choices, for the development of his/her
creative potential and for an active lifestyle.

3.2.2 Regional planning

Regional planning began with inauguration of the Marshall Plan to rebuild Germany and Japan
on a democratic basis after World War II. It was fashionable in many countries in Latin America,
Asia and Africa in the late 1950s. In the 1960s and 1970s it fell out of favor. Major financing
institutions such as the World Bank and the UN focused on big ambitious projects, based on the
belief that identifying specific huge high benefit projects for a region would radiate on overall
development, resulting in large infrastructures projects such as dams and irrigation projects,
roads, oil industries or urban renewal. In the end most of the projects were not sustainable due to

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both social and economic reasons; income generated fell short of the capacity of the population
to maintain them and at times they created new problems in other sectors.

Only in the 1980s and the beginning of the 1990s does one see a resurgence of regional
development planning as the international organizations, financing institutions and national
development agencies came to realize that identification of suitable projects for investment and
implementation requires the formulation of a complete integrated development plan that
considers and analyzes all the influences and mutual interdependencies among the sectors and
among the proposed projects.

Regional economic development plans are formulated either by centralized economic

development planners or by regional, district or local authorities. These plans facilitate
investment planning by the public and private sectors and help to guide development at the
regional and local scale. In recent years, economic development planners have begun to realize
planning at regional level can provide a significant stimulus to regional economic development,
generating income and employment. Economic techniques and models are providing frameworks
to help formulate regional plans that specifically take regional and local inputs into
consideration. Models are also being used to facilitate local participation in planning processes.

One of the challenges in regional planning is determining how to take advantage of new
opportunities for economic expansion that are associated with regional development and manage
any potentially adverse economic and social impacts that might result from structural change in
regional and local economies.

3.2.2 Local planning

In a country like Ethiopia where poverty, illiteracy, inequality and unemployment are the main
problems, the issue cannot be solved unless attention is paid to local level of planning.
Development programmes ought to be related to local resources and needs. This alone can make
both quantitative and qualitative difference to the planning process. The quantum of outputs can
be increased by better utilization of resources, both natural and human. It can also lead to a
socially relevant production pattern.

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Rural development must focus on manageable areas in which development activity can be
responsive to the specificity of natural endowment and social order. The tasks before local level
planning are many. It has to combine an integrated resource inventory, prepare draft action plans
and undertake a malady remedy analysis and select appropriate programmes with the
involvement of the local community. However, planning at the micro-level faces a number of
problems. It cannot be effective unless attention is paid to production programmes for the target
groups, manpower planning and skill development, provision of basic minimum needs and a
progrmme for institutional support.
Of course, there must be consistency between macro and micro planning. Macro-planning
naturally gives importance to growth, while micro-planning lays stress on redistributive aspects
of development. But funds cannot be wasted on projects of doubtful utility at the micro-level in
the name of social justice. Both macro-planning and micro-planning should strive to step up
growth rates, which is possible only when there is consistency between both the levels of
planning.
The development outcome of the partnership will be to support mainstreaming risk management
in development strategies for good governance, sustainable economic growth and poverty
reduction in low and middle-income countries that suffer from or are at risk of high mortality and
economic losses due to multiple natural hazards.
The orthodox approach to LED is primarily informed by good practice in urban planning and
development. Urban planning has a number of defining features:

 Urban planning and development is – in most countries – a mandatory task of

government. The governance structure in urban planning is straightforward: Local
government takes the guiding role in designing and implementing the overall
approach. Implementation of individual projects is left to private investors;
however, in an ideal world their freedom of action is circumscribed by
government-defined design and quality principles.
 Urban planning is based on master plans which more or less precisely describe the
final result of urban development, even if full implementation of a given
programme may be ten or more years down the road. Urban planning results in
blueprints and detailed planning documents that define activities for a number of
years to come.
 Urban planning leads, first of all, to built structures. These built structures create
latitude and limits for social structures and processes. Yet it is neither the purpose
nor the ambition of urban planning to shape social structures in any detailed way.

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3.3 Sectoral and strategic planning
3.1 Sectoral Planning
What is the concern of sectoral planning?
It includes the planning that goes in to various sections of development. It is unlimited. Here, the
scope of planning generally encompasses the public and private sectors. In both sectors the
process of planning is alike though its implementation differs. Planning and its implementation
in the private sector is more effective and efficient than the public one because of the feasibility
of the desired objectives. This means in the private sector the planning process is undertaken by
better talent in an attempt of achieving the desired results (profit maximization). Hence,
leadership, productivity and employee involvement is given more focus to achieve the desired
goals. Even the public sector planning approach these days is taking the good experience of
private sector achievements and becoming more result oriented than process oriented one.

We could also understand the scope of planning by analyzing the different sectors of planning
include under rural and urban development planning like irrigation scheme, livestock
development planning, fishery and mining sector planning, planning for transportation and
communication, electricity planning, sanitation planning, planning for health and education,
natural resource conservation plans, economic development plans, human development plans,
etc.

3.2 Strategic planning:

Critical to the success of any development effort is a thorough and comprehensive strategic
planning process. Strategic planning is a process by which organizations can visualize and
articulate a future and identify the means by which it will be realized. It is better described as a
navigation map with a clear destination and a range of options to get there. The ‘right’ option or
strategy will depend in part in part on circumstances that arise, the unique attributes of the
organization and its leadership and the engagement of those who will be responsible for
implementing it. Strategic planning is the process of identifying future goals and how to achieve
them. It will clarify the process of building a local foundation for economic development. To
succeed in economic development efforts, a community must know where it wants to go and
how it should to get there. It should devise the strategy that leads it to the destination.

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Strategic planning is a framework for carrying out strategic thinking, direction, and action
leading to the achievement of consistent results. Strategic planning is an on-going, pro-act8ive,
research based, prioritized, situational process which considers the external environment, linking
budgeting to planning, and utilizes evaluation. It attempts to steer the organization by evaluating
future objectives and present procedures in light of a mission. Strategic planning is intended to
accomplish three important tasks:
 to clarify the outcomes that an organization wishes to achieve,
 to select the broad strategies that will enable the organization to achieve those outcomes,
 to identify ways to measure progress.
A relatively straightforward way to characterize strategic planning is that it concerns itself
mostly with the leadership of an organization and sets the direction for it in the mid-term future
(typically, three to five years). A strategic planning process is frequently initiated because an
organization perceives the need for a change in focus or direction, often precipitated by a change
in its operating environment. But it is also commonly initiated to refocus an organization’s
efforts by setting priorities and allocating resources appropriately. One ways beneficial and
important outcome of the strategic planning process is revitalization of the institution, renewing
the commitment of directors, staff, community and supporters.
The strategic planning process is structured, focused and outcome-oriented, bringing together
perspectives from both sides; the organization and external to it, articulating key directions and
strategies in which and with which to move forward. Our approach to strategic planning begins
with the development of what we call the “framework policies” of mission, vision, and values
and the goals that that will direct all organizational activities during the period covered by the
plan.
Simply put, strategic planning determines where an organization is going over the next year or
more, how it's going to get there and how it'll know if it got there or not. The focus of a strategic
plan is usually on the entire organization, while the focus of a business plan is usually on a
particular product, service or program.
There are a variety of perspectives, models and approaches used in strategic planning. The way
that a strategic plan is developed depends on the nature of the organization's leadership, culture
of the organization, complexity of the organization's environment, size of the organization,
expertise of planners, etc. For example, there are a variety of strategic planning models,
including goals-based, issues-based, organic, scenario (some would assert that scenario planning
is more of a technique than model), etc. Goals-based planning is probably the most common and
starts with focus on the organization's mission (and vision and/or values), goals to work toward
the mission, strategies to achieve the goals, and action planning (who will do what and by when).

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Issues-based strategic planning often starts by examining issues facing the organization,
strategies to address those issues and action plans. Organic strategic planning might start by
articulating the organization's vision and values, and then action plans to achieve the vision while
adhering to those values. Some planners prefer a particular approach to planning, example,
appreciative inquiry. Some plans are scoped to one year, many to three years, and some to five to
ten years into the future. Some plans include only top-level information and no action plans.
Some plans are five to eight pages long, while others can be considerably longer.
Quite often, an organization's strategic planners already know much of what will go into a
strategic plan (this is true for business planning, too). However, development of the strategic plan
greatly helps to clarify the organization's plans and ensure that key leaders are all "on the same
script". Far more important than the strategic plan document, is the strategic planning process
itself.
Benefits of Strategic Planning
Strategic planning serves a variety of purposes in organizations, including to:
1. Clearly define the purpose of the organization and to establish realistic goals and objectives
consistent with that mission in a defined time frame within the organization’scapacity for
implementation.
2. Communicate those goals and objectives to the organization’s constituents.
3. Develop a sense of ownership of the plan.
4. Ensure the most effective use in made of the organization’s resources by focusing the
5. resources on the key priorities.
6. Provide a base from which progress can be measured and establish a mechanism for
informed change when needed.
3.3 Strategic Planning for economic development
In the 25 to 30 years that state and local governments have practiced economic development,
economic development theory and principles have become increasingly sophisticated. Tactics
have evolved from early untargeted bidding competitions to attract any business that might be
considering relocation to current efforts focused on developing and supporting a quality of life
that makes a community attractive to individuals and companies. The preparation and use of a
strategic economic development plan is an important step in assuring that investments in
economic development efforts use precious local resources (money and time) effectively and
efficiently. Most importantly, a strategic plan for economic development will provide
communities with a rational, consistent, and defensible basis for determining which economic
development opportunities to pursue and perhaps equally important which economic
opportunities to decline.
A strategic economic plan should identify the community’s economic assets and liabilities,
describe its economic goals, delineate a plan for how to get there, and include a set of evaluative

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measures for both the planning effort and the resulting long-term outcomes. Economic plans do
not need to be formally adopted.

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Section –V Nexus between development planning and management

 Overview
Dear distance learners, in the previous two sections development planning and development
management were separately dealt and defined. Now it is the concern of this part to acquaint
you with the nexus between the two. Due emphasis will be laid on how development
management impacts on the actualization of development plans.
Objective
After the completion of this section you will be able to;
 Analyze how development management contributes to the realization of development plans

How do you relate development planning with development management?

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Dear students! We have seen the definition of the terms ‘development’, ‘planning’ and
‘management’ one by one earlier. Now, let us sum up by looking at their relationships. There is
no single definition for ‘development planning and management.’

Development is a multi-dimensional process involving major changes in social structures,

popular attitudes and a national condition of life from unsatisfactory to satisfactory. Economic
development, social justice and democracy are major political objectives of modern societies
which strongly depend on healthy relationship with the state, with its institutions and public
administration and the private enterprises. It generally means the improvement of people’s
lifestyles through improved education, incomes, skills development and employment. It also
means that people should have decent housing with security. Furthermore, to bring change in
behavior or to lead a better life, people must get a good education. It is development which is to
improve the living standards of the society and enabling them to achieve their aspirations.

The success of any development effort depends on the preparation of development plans, their
effective implementation and assessment of progress made. The preparation of a development
plan according to its objectives requires the collection of reliable data, their analysis and
publication. If the plan and its implementation are faulty, it cannot produce the desired result. It
is necessary to emphasize on regular review and assessment to achieve effectiveness in
implementation, which is the task of management.

The process of human development is one that takes place in individuals and society. Individual
development is dependent with that of the family and other groups and the development of these
groups is in turn interdependent with the development of the wider society, national and
international. Successful development is a community-wide effort by all stakeholders, public and
private. Human development may be seen in two sides; the formulation of human capabilities
such as improved health, education (knowledge and skills) and the use of these capabilities for
productive purposes. If the scales of human development (which is the result of human panning
and management) do not finely balance the two sides, much human frustration can result. Human
resource development treats human beings primarily as an input in the production process- a
means rather than an end.

National development depends greatly on the capacity to organize human activity, the essence of
management being the coordinated efforts of many persons toward common objectives. All
organizations require management: government organizations aim at contributing to the

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management of the economy; business organizations require overall managerial guidance as well
as derailed management of financial, commercial and industrial operations. The real wealth of a
nation is its people- both men and women. The purpose of development is to create an enabling
environment for people to enjoy long, healthy and creative lives. For the development efforts of a
country is to achieve its objectives, planning and its management plays the number on role.

Economic planning has to be viewed as an integral part of the wider process aiming not merely
at the development of resources in a narrow technical sense, but at the development of the human
faculties and the building up of an institutional frame work adequate to the needs and aspirations
of the people. Planning is the organization’s best course of actions for achieving its common
purpose, for giving support for that purpose, and for assuring individuals, groups and
departments that they have a stake in what the organization seeks to accomplish. Here, the
management should play a decisive part in coordinating individuals and groups share their effort
towards common vision and also solve their problems.

Development planning is a plan with a broad set of objectives intended to develop the economic
and social potential of either the economy as a whole or a specific area. It is an all-embracing
process, which cannot be compartmentalized. However, our current issue is more related to
economic development. Economic development cannot proceed far unless the communities learn
how to get a larger output of commodities and services from its resources of men and material,
especially in non-developed economies. These resources should also include capital as well as
managerial talent and the skilled human power necessary to develop new institutions.

There must be an ‘organic’ link between the plans and the available resources, a like in policies
and organizations and it would be obligatory for the management to ensure that resources
become available and get utilized to the fullest possible extent as planned. The purpose of
planning for development is to achieve greater efficiency through coordination which is based on
an overall and periodical review of the development process. This is the function of
management. No planned effort can be realistic unless it is based on proper assessment of one’s
capacity to realize it.

Management involves policy formulation and coordination of the administrative machinery in its
public effort. The administrative machinery, as an important aspect in the implementation of the
national plans, should get the necessary guidance, orientations and supervision from the policy
makers (mangers) so as to evaluate the efficiency, economy and effectiveness of the work
towards the goals. The management must construct and maintain administrative capacity and

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control it in order to ensure the responsiveness of the public to development efforts. Good
management empowers people, which mean enhancing the capacity of poor people to influence
the state institutions that affect their lives by strengthening their participation in political
processes and local decision-making. Empowerment requires the full participation of people in
the formulation, implementation, and evaluation of decisions determining the functions and well
being of the society.

The relationship between planning and management is so intimate that the causes of the success
or failure on one cannot be determined without reference to the other. Management involves
policy formulation and that planning is an integral part of it. The purpose of planning for
development is to achieve greater efficiency through coordination (management). Effective
coordination is based on an overall and periodical review of the development process. In any
development effort, participatory planning and effective management is indispensible. Planning
and management are the vehicles through which the development objectives are to be achieved.
The involvement of people is seen as necessary to elaborate and implement development plans in
a ways that are more responsive to local problems and needs. Hence, the public sector should
continue to be in the forefront in the coordination of the different stakeholders (the public,
private and other civil society organizations) in an effective planning, implementation and
monitoring machinery at all levels of the government which is essential for the rapid
development of a nation.

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