Page 1 of 11

Journal for Studies in Management and Planning

Available at http://internationaljournalofresearch.org/index.php/JSMaP

e-ISSN: 2395-0463

Volume 01 Issue 06

July 2015

Available online: http://internationaljournalofresearch.org/ P a g e | 137

Macro and Multi-Sector planning: a situation analysis

Charles Agwu

PHD student, Department of Economics, School of Business and Economics, Atlantic International University, US

Abstract:

The impact of planning to an

economy cannot be overemphasized and this

is because planning serves as instrument in

which government policies are implemented.

Also an economy or a country is a

combination of different sectors and

understanding sectoral inter-dependence is

of important to less-developed countries and

developed countries. This research paper

examines “Macro and Multi-sector

planning: a situation analysis”. The purpose

of the research paper is to analyze “macro

and multi-sector planning: a situation

analysis”; explain the rational for

development planning; explain multi-sector

development objectives, development

strategies, sector policy instrument and to

explain multi-sector planning models. The

researcher was of the view that there is need

to indentify international sector and

national sector within the different sectors of

the economy and recommends the need for

governments to implement policies based on

sectoral inputs so as to achieve economic

growth and development.

Keywords: sectoral planning and policy

instrument

1.0 Introduction:

According Tinbergen J. (1967),

planning is defined as ‘preparation of

policy’ and any good preparation must study

the structure of the system before deriving

policies that will be effective. Conventional

definition of development planning by

Jhingan M. L. (2003) is that planning is 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.

Development planning is preceded

by development modelling, which is aimed

at presenting a consistent, feasible and

optimal path for inter-related variables of the

economy, based upon its dynamic structure.

On the other hand, development modelling

is the formalization of the procedure for

studying the structure of an economy for the

purpose of deriving consistent and optimal

policies.

The important of development

planning to the life of an economy cannot be

over-emphasized and this is because it

provides a direction for a country. National

development planning is vast and multi- dimensional and naturally, the planning

problems have to be broken into manageable

parts or carried out in stages. This is called

‘planning in stages’ by Tinbergen Jan

(1967), in the sense that national

development planning is divided into the

macro-economic stage, middle stage that

incorporate planning at the regional level

and for major economic and social sectors of

the economy, and micro stage incorporating

the planning for districts and project.

Page 2 of 11

Journal for Studies in Management and Planning

Available at http://internationaljournalofresearch.org/index.php/JSMaP

e-ISSN: 2395-0463

Volume 01 Issue 06

July 2015

Available online: http://internationaljournalofresearch.org/ P a g e | 138

Various planning agencies and

organizations then specialize in the

respective dimensions or stages of planning,

and all the planning is carried out

simultaneously through continual

interactions among the various planning

agencies or broads, rather than by sequential

stages.

The primary objective of this

research paper is to analyze “macro and

multi-sector planning: a situation analysis”.

Also other objectives to be attain in this

paper are; to explain the rational for

development planning; to explain multi- sector development objectives; to explain

multi-sector development strategies; to

explain multi-sector policy instrument and

to explain multi-sector planning models.

2.0 Overview of sector development

planning:

Sector planning studies each of the

sectors of an economy and explores how its

potential can be harnessed in an efficient

and consistent manner with respect to the

objectives of national economic and social

development. A sector is a collection of

industries or sub-sectors of industries. A

further breakdown of sector planning

involves analysis and evaluation of suitable

project for the development of the sector.

For the purpose of sector planning, the

economy has to be divided into major

economic sectors with the objective of

studying the factors and constraints that

generally govern the performance of each of

the sectors (with its constituent industries- existing and potential) and the roles each

sector is capable of playing in contributing

to national development. Sector planning

also involves the development of planning

models and methods for achieving the

objectives of optimal sector development.

2.1 Rationale for development

planning and formal theory of

development policy:

Tinbergen (1967) postulates that for

any economic system, there are four types of

inter-related variables. The variables are first

divided into two groups, namely, exogenous

and endogenous. Each group is further

divided into two types. The exogenous

variables are divided into controlled and

non-controlled exogenous variables. The

controlled exogenous variables of a system

consist of government policy instruments

that are not determined by the economic

system but are determined by discretion of

central authorities. The non-controlled

exogenous variables are the variables not

determined by the economic system and

beyond government control, and are also

referred to as truly exogenous variables or

data. Examples are rainfall, atmospheric

temperature etc.

The endogenous variables, which are

those determined by economic system, are

divided into target endogenous and non- target endogenous variables. the form of

relationship among the variables is that the

non-controlled exogenous variables have

some definite impact on all the variables in

the economy without vice versa, that

controlled exogenous variables or policy

instruments have impact on all the

Page 3 of 11

Journal for Studies in Management and Planning

Available at http://internationaljournalofresearch.org/index.php/JSMaP

e-ISSN: 2395-0463

Volume 01 Issue 06

July 2015

Available online: http://internationaljournalofresearch.org/ P a g e | 139

endogenous variables without vice verse,

and that endogenous variables have mutual

impact on one another, and that target

endogenous variables are the main

arguments of the welfare function or matter

most for the development objectives.

Fig. 1 below is a diagrammatic

illustration of the theory of development

policy. Given the theory of development

policy, the task of development modeling is

to determine the nature of relationship

among the variables. Without modeling and

planning the system is capable of producing

all kinds of outcomes on the basis of the

influence of exogenous variables on the

target endogenous variables.

Modeling and planning seeks therefore to

manipulate the exogenous variables towards

selecting the best or optimal outcome.

Figure 1: theory of development policy:

The above diagram can be presented algebraically as follows:

Ay = Bx + Cu------------------------------------

------------- (1)

In system (1) above, y is the vector of target

endogenous variables; x is the vector of

policy instruments and u is the vector of

non-controlled exogenous variables,

consistent with notation in Fig. 1 and A, B

and C are the coefficient matrices. A has to

be square matrix since the number of

unknowns (vector y must be equal to the

number of equations for the system to be

Controlled variables x

(policy instruments)

Target endogenous

variables y

WELFARE FUNCTION

Non-controlled variables u

(data or truly Exogenous)

Non-target endogenous

variables Z

EXOGENOUS VARIABLES ENDOGENOUS VARIABLES WELFARE FUNCTION