(a) What is economic planning? (b) Outline the problems associated with economic planning in West...

Explanation

(a) Economic planning may be seen as government conscious formulation of economic policies for the allocation of resources to all sectors of the economy with a view to achieving rapid rate of economic development.

(b) The problems associated with economic planning are:

(i) Political instability often leads to change in plans.

(ii) Inadequate capital makes it difficult to achieve targets.

(iii) Another problem is wrong planning due to misplaced priorities.

(iv) Insufficient statistical data which implies that most of the planning are done on wrong projection is problem associated with it.

(v) Inadequate skilled labour and expert that makes plan implementation difficult.

(vi) Rapid population growth destabilizes planning.

(vii) Reliance on foreign aid and adherence to their conditionalities lead to plan failures.

(viii) Economic planning is affected by corruption and nepotism; Planned decision may be influenced by selfish and parochial considerations.

(ix) Unexpected sudden increases in the cost of projects compared to original estimates affects planning.

(x) Fluctuation in foreign exchange earnings on which plans are based and this may hinder implementation.