What Is The Methodology Of Economic Planning In Developing Countries?

After the popularity of Keynesian thinking and success of Russian philosophy of state control, it was realized that state should interfere in economic life. Later on the craze developed amongst the poor nations of the world to attain economic growth as soon as possible. Accordingly the economists and planner presented their models of planning and development. In the Harrod- Domar model the investment not only increases the level of NI, but also leads to increase the productive capacity of the economy. But for the ask of some dynamic equilibrium the need is to raise GNP. While to increase NI, the need is to raise the amount of capital.

In other words, the desired increase in GNP requires a certain proportion of increase in capital. Therefore, to raise the level of output, consumer goods and producers goods, the planners have to make planning at official level. The UDCs follow such an approach that they depend upon macro economic planning. Afterwards, they formulate investment pro gramme for different sectors of the economy. The methodology followed in this respect centers around, stipulation of general scheme for the growth during the plan period; to determine the correlation amongst different sectors of the economy; to explain different structures and proportions of the economy.