The allocation of resources between the various types of economic activity, i.e., the objectives of development planning, is one of the basis issues for a given economy.
LET US look at the process of formulating development programs and of putting them into effect. The first stage of planning is the survey is to find out what resources are available and what are the potentialities of development? Here the work to be done may be sub-divided into technical surveys and economic surveys. Most under-developed countries have few technical surveys of their resources, and as a consequence they do not really know what their development possibilities are, and are not really in a position to begin development planning. Their need, at this stage, is to establish survey organizations.
They need geological surveys, to find out what minerals they possess, and what underground sources of water and of oil. They need soil surveys, and experiments to discover what new crops can be grown successfully. They need engineering surveys, of routes for roads, of communications and of the possibilities of irrigation, hydro-electric power, and new supplies of water. And they need market surveys, of the home market and of foreign markets, to indicate what new manufacturing industries might succeed. Too low a priority has been given to this work in the past.
In consequence, one of the bottle-necks now holding up economic development is simply the fact that governments b not know what is possible in their territories. Economic surveys are of two kinds. One is a survey of economic institutions. What are the institutions for stimulating and mobilizing domestic savings? Can the flow of capital into agriculture and into industry be improved through government agricultural or development banks? Are tenants adequately protected by the law? Does the existing commercial law inspire the confidence of persons entering into contracts? Is the scale of organization of economic activities adequate, in agriculture, in industry, in marketing and in transport, or is some rationalization needed? And so on.
I emphasize here only the fact that some governments are apt to overlook the importance of this aspect of economic planning, because they think of planning primarily in terms of money and of figures. There is, on the contrary, an important sense in which it is true that if the institutions are right, the figures will look after themselves.The other kind of economic survey is that which takes stock of the current use of the community's resources. This is expressed in various accounts. First, there is the manpower budget which shows the numbers and occupations of the people, and which stems from censuses and from other inquiries. Similar budgets show the utilization of land as between different industries; or the utilization of foreign exchange earnings, or of other scarce resources. Then, there are industry studies, showing the input of factors into each industry, and the output of products; from these studies can be derived such information as the net output of each industry, productivity, the cost of expanding the industry, the nature of the resources required for further expansion, and so on.
Another account shows the distribution of income between various social classes in the community. This in turn leads to accounts showing the expenditure of personal incomes, and of savings. Finally, much of this information can be crystallized into the form of national income accounts, which show, summarily, how the national income is produced, distributed and spent.All these types of surveys need to be established on a permanent basis. It is not enough that ad hoc studies be made from time to time, since the situation and its potentialities are changing all the time.
On the other hand, it is also true that the hardest part of this type of work is the initial survey; that once the initial survey has been made, keeping it up to date is relatively easy; and that the initial survey can provide most of the information which is needed to begin development planning. The sphere of surveying is one where technical assistance from abroad can be most helpful. Outside experts can be brought in for relatively short periods to assist in the initial surveys, in setting up the permanent organization, and in training local people to carry on. All underdeveloped countries should make the fullest use of technical assistance available from abroad for the purpose of setting up their survey organizations.
We come next to planning. The term 'plan' is used in many different senses, of which we distinguish four. First, in some countries it refers only to the making of a program for public expenditure, extending over from one to say ten years. Secondly, it refers sometimes to the setting of production targets, whether for private or for public enterprise, in terms of the input of manpower, of capital or of other scarce resources, or else in terms of output. Thirdly, the word may be used to describe a statement which sets targets for the economy as a whole, purporting to allocate all scarce resources among the various branches of the economy. And fourthly, the word is sometimes used to describe the means which the government uses to try to enforce upon private enterprise the targets which have been previously determined. We shall consider each of these four matters separately.
The word has also other meanings. In some of the literature, it is synonymous with geographical zoning, or 'town and country planning'. There is also a highly specialized economic theory literature in which it refers to the working of au economy exclusively by central direction, where each production unit uses the resources allocated to it by quota, and disposes of its product also by direction.