v
UNITED NATIONS
AFRICAN INSTITUTE FOR ECONOMIC DEVELOPMENT AND PLANNING
D A K A R. 0---.-- _
1
.~ :
/ II
E/CN.14/CAP/12 IDEP/ET/9~1
~ - . •~ .,,~ f ". t' ~ ,...-,.•_~
From " Target Plans"
to
"Project Plans"
The Example of Morocco.
by R. OLIVIER.
IDEP/ET/921
Page 1.
CONTENTS
FOREWORD.
Part 1: The principles of the transition from "Targets" to "Projects"
1, The main orientations 2. Sectorial plans
3. Medium-term plans 4. Projects
5.
Programming Part 2:1•
2.
3.
4.
5·
6.
7.
The Case of Morocco
The Mor-cocan context (with a map of Morocoo) The first plans (1949 - 1959)
The five year plan 1960 - 1964 The ~nree year plan 1965 - 1967 Long-term Socio-economic prospeots The five-year plan 1968 - 1972 Conclusion on planning in Morocco
Conoise bibliography.
IDEP/ET,?21 Page 2.
FOR E VI 0 R D
1. There is no doubt that the formulation of a medium-term plan is quite incomplete unless it includes, besides sectorial or regional targets (always somewhat vague because of the time horizon of the plan, very specific projects which are to be implemented during the first two or three years; and that oonversely a juxtapoai tion of projects, though all advantageous, is not in itself sufficient to transform the struoture of an economy: these projects must also form part of a stra- tegy featuring particularly medium and long-term sectorial or region2~
targets.
2. There is therefore no contradiction between "target plans" and
"project plans" but rather COMPLEMENTARITY: targets can only be turned into realities through the projects envisaged, and the projects them- selves can only be properly evaluated through the development strategy adopted.
3. We would like to show in this brief paper exactly how "target plans" and "project plans" can be built into each other and made to support each ether.
(a) First of all we shall show in a theoretical part, how the transition between "target plans" and "project plans" can be effected.
(b) Then, taking Morocco as an example, and through the different plans, we shall try to bring to light the continuing concern of those responsible which led them to define targets and projects simultaneously.
4. We apologize to the reader who is already familiar with either planning literature or the Moroccan economy: he will find in this paper many things which he already knows.
JULY, 1967.
IDEP/ET/921 Page 3.
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PART ONE
THE PRINCIPLES OF THE TRANSITION FROM "TARGETS" TO "PROJECTS"
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IDEP/ET/ 921 Page 4
Any plan fixing a policy for the future must relate to a certain time period: we speak of a three year plan, a five-year plan, a seven year plan, or a physical plan for 20 or 30 years. And there tco we notice that plans never cover the same duration of time.
We generally call horizon year of a plan (or mcre simply the plan horizon) the final year of the plan, the one on "hich our eyes are fi:x:c,·3, because the results which are expected for this year express the t.r-ana- formation of the economy due to the plan. Horizon years range between the coming year, the year + 1, and in certain cases the years + 30 to + 50 in relation to the starting year.
Let us mention some types of "perspectives" 1.) or plans which have been actually formulated.
a) Very Long term perspective plans
Among those perspective plans, we shall mention - projection~ fo~
25 or 30 years which describe '"hat the daily life of the oitizonin the next g€neration will be like (the gap between two generations is equal to 25 or 30 years). In France for instance, there is a projection of this type known as "Horizon 1985".
Thuse projections, very qualitative or descriptive are half way
between the pure and simple extrapolation of observRo trpuos and expectations tempered with caution as to the future of the SOClje,'J'
population projections which foreoast or predict the population trend for the next 20 or 30 years. For a very long time, it was taken for granted that population perspectivos were relatively good. Today, it is thought that we must be very prudent, since the fertility rate id liable to evolve in an unexpected way (French example).
1) The "perspectives" describe the desirable and possible orientations of the eccnomy: the cnly essential difference between them and the
"plan" lS that they are not legally enforceable(whereas the plan is
submitted to '?arliamentary vote and thereby become virtually cornpu l R')r,Y)·
IDEPIET,'921 Page 5.
- Plans dealing with ~hysic~l or spatial organization, also known as guideline plans or nouels.
These plans have no other purpose than to desoribe a geography of the future as realistically as possible; they pinpoint the location of aotivities and of h~man settlement and traoe the communication routes between these different units. The most classical form of these plans
is the town-planning scheme whlch makes it possible in particula~ to
"reserve" plots of land for future development, and the transport pl"'fl whioh sketohes very approximately, .for instance, in 1965, the ;;.'",au. OT
motor highway network of the year 2000.
b) Medium or long-term uerspectives and p1~
These are rerspectives and plans covering the period of the neOCG 5 Or 10 years. They generally comprise two series of tasks:
- quantitative perspectives (Whereas those previously m8ntioned~ ~ivt
the exception of the population perspectives, were still very qualit::ttj:1T8:
are compiled for 10 years ah ead (ten-year perspectives). Even thcuC;' eha';
are vagu e , they se,t the main guidelines of development and. deec r-Lbe
quantitatively the desirable and possiblesi tuation of the country i~ ,;]
years' time. They will in pal'ticula", enable us to JudgE> whether in 'ion J.'C']'C·
time the country will be mature enough to continue t" ,'l"vol".i.) ~~l""-;:-_""
(the problem of self-majntaine~growth).
- five-year d.evelopment plans (between 4 anI 7 years), no re ?reGi~c than the ten-year perspectives, fix the sectorial targets to be atta:ne~, the resources to be us ed , (manpower, equipment, land, f r nanc i.aL resources. -), and the measures to be taken to attain the desired targets~ Som8'~ir:1Gs,
these plans contain 1'11 the proiects which Hill enable the 'cal'g8t~ to he fully attained; generally, hcweve r , they only contain some proj ee ts, those of the next few ye<1.rs. It will then be necessary for tho planners, during
these first ye"rs to f'o rmul ate in conformity Kith the plan targets, projects Khich should be implementel d.uring the r8st of tbe five-yes!" period. •
.. ··1· .
IDEP/ET/92'1
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We are not concerned. here with a very long-term visio:.:l or "':li·,th ,-1
medium-term equilibrium, but ~ith very specific data~ w~th project8 ready to be implemented. Programmes contain preoise dotai:,s 0f ope:,a"
tions to b-:; c a rri cd out , Fitb their lace.t i c n arid time 3chf;G:Llle"
'I'heae proe::::ammes should in principle be formula tod :·;i-~hi-..l G.'j ~'::_~:l ~
work of perspectives and plans already worked out: it "ould :ci' C'J\l""C 'o;
absurd to promote and implement operations which would be in cont:'acl"c' tion with the desired trend of development. In pr'acti c-. tete :9rogrClr"f,,"
may ccntain:
- a list of operations to be carried out in the next 'Cl,"Q or -~~LC'8C
years:
- a draft public finance budget (capital and current) in accordance ';'; i th this programme for the next J"ec"r and perhaps the year after,
- finally, vThere po s si.bLe (), dr,:1~~t oo onom i.c bud get , i~e" a table describing the economic situ2tion fo~ the ne~t year in accords~ce with the list of opcr-at ior;s, to be ca::-riec.. out and in accordance with the government budget.
As time goes on, the progr2.mmes must regularly be r-e--f'o rmu'La ted in order to take into account tho effects of tho t~a,ie cycle for exarnpLe;
Furthermore, because of their financial implications, they must be prepared in conjunotion 1'rith t~e p Lanning Der~rtment arid the Mjn; etl'J.'
Finance (see below, short-term prOfT'cmmine;).
x
x x
In general, we shall speak of F1PJ~ C}~DPt.Z (oLi.t=.ine p=.ur) .for ·~·:"o:c':
done under the heading of very long tUt'i,1 De~':'BT)ectj"vcG cs: ::.B'li'xn 0,:::.'4. l'::-Y'e,- term perspectives and plans, arid 0': PLAll -- P:.qOGRi).:'~,i::!: (P:-~")C:::',-LrJ.::.E 1-1n.,!:.:
for work done under the heading of shor t or lueliG..[~ --:.J~_'::'!,l ~).L·Ob·:",'ur::[i'.t='...'"
IDEPJET' ':;0 : PaGe 7-~
It is of course indis~_8nsGb1c for th;::; 111Jlan progr3.M~""ccll ·~o bo fl:'''0:9'_r,r~:,:,
in per:ect La.rmony 1-rj.t1 the [,'uil..l..eJ.i:18s of the Ilplan-c~d.::-€""
Lastly, it can happen ,hat tll<! five,-year plans and the ten-year perspectives arc ElhT2,YS ostauli she« f'c r the r.oxt
5
0:;: 10 ye"rs. ~fe ,.h,,11 then speak of n raov:"ng :lori5cn ('Jr ,:,oll.i",2' JjJ_::-~n) ~The main orientations cf the c..'.3"'TG:~oprrwy:-L of a cou-itry - one 801')8-
serne very s peci f i.c c(jnsi,ler~tr onc,
- 'rhe first group of these con~-:j.de-·:::'c:':;::"o~':s i::1Vc]vz;,; tl'.:::; c;tlrccp+; c,t' the desirable: d eve Loprnent i!lUf'::'-~ 'GI~T tr- ~.,.-'S.: -:::} :-: c; :'"i:;a:x:. ll\ullUel' o~f
fundamental aims ;;hich;;G .3h;011 i"",l (".',,2,,;.:00 ;1 ";~ .~>,.c':;
c,u':,.
",,'G'oenvisaged, te..king into 'lC:OCC.:lt \~:J~:.:..ol:J':": -:·T~_5.c;~: ~\f:i~l ~~.:-:~~.rl: tc -;..; _ ;TI..L-','.:,::-'v·
>,.
Or eliminated ar.id the brakes l,-rhi.ch ;.rtll ha~'-'3 -bc hi':; ::'e~tQa8t.':I,.
FrOID this eet of w:J.at is clesirablo and possible? Lhcr-e vTill 81'1e:""'-;B
a strat8g:'[ which we shall describe as _G,daptecl "0 _the context. It ~8 'Cc'·
s t.rat egy wh i.ch 1<ill cutline the pr-LnoipaL eri();1t,,,,~on,,, of ,lev81'J,":le" :..
It is on it that the medium-term plA,n, ,,'ill bee DC1S''''.' ;+. :'0 to 8a~i~:.".{
it that projeots wi Ll. be pro:pilrzlL and t:-Jen implemented thC3S baing previously grouped. in a progL3.mme for fj~:..ecution...
V e r y s i . m pLy , t h e g u n e r 8 1 ail;J.3 o f J.GvGlo:pmen~ Hl~i::::h c o ns ti,~u--t~ trs guiJ.elines can be classif j ed und.e ... t b~>}e headingD (if ve Leivc fL~id8 -J;:'iC'
security or prestige aap ecc.i},
IDEPJET,' 921 Page 8.
the goal of greater independence that of better distribution that of greater well-being.
This section will deal very briefly with the principal fcrms which these aims can take.
a) The goal of increased independence
The dependence of a developing country (and also of certain developed countries) as regards the outside world can take many forms: cultural, commercial, financial policy. The ~uestion here is not to analyse them all, but only to examine how the country concerned Can manage to attain a greater "inlepenclence" in the wide s enae of the word as regards fore~i;"
countries.
In general, dependence on foreign countries can be expressed through capital, people and trade.
Specifically the attempt to attain greater independe~ce is eA~ressed
through items of the balance of payments.
We find in i t :
Balance of payments (summary outline) Expend.i ture for the country
Imports
Transfors of income of foreigners working in the country
Interests and dividends transferred
Loan reimbursement
Total
Revenue for the country Exports
Transfers of' income of 11::1t.-;")'1,.,1,8 working in foreign countries Private capital being invested Foreign pubIi.e>: 031'i tal
Total (With e~uality hetween the totals)
ITEP/ET/92'j
E::all1lil(n -~h8 reductir.r, of tile inflow of foreign public G8-1:)2...lcal;
which ref2-ects a g::t:'eater political independence 18ar18; J.B the E,":'vural cons equenc e of the ba Lanc o of payments equi.Li.br-Lun , to at _~ca3-i:; one 01'
the follo"in5 conclusions,
- reiuction of the transfers of foreigners to their country o~
origin (exchange control)
- reduction of transfers of interest and dividendc (cXOh.0,D
e,e
co~trol, natio~alization)
abolition of reimbursement (nationalization).
increase in exports
mnigratioG of ~·,~ork61'U abroad
il1crea~e in pri.vnto fGr8i~;~1 ::'T:vostmsnts (investment code), It TTonld be easy tv _Ii" o-c·h::r :,:xC',mplc3, but Vie can already glimpse t):e m.ii.n r{:;Cl.'n:'l'~"'J[',t:_or~< '_If !Iad-.r :"28 r 2 on \..-lovelop!1le;:t;~~
b) 01 a bot tcr ,---._---_.l.ir:;t:::,i"}r,;.-~iol1
In a given ccurrtr-y~ a quantIt;:,~ 0-1 goe,:is and s oz-vi c ea , a "c ako"s is avatl ab.Lc :3;(; 0V~-:;:Y rccu.cnt , 8:: i'b.or =--~'" t:'.,,8 form of' 0.1.-l,T E',b l e goods (prOductive apparatus, Q"Jl--'2:bJ_8 cOp.surr,8~"" goods), or in form of ::'rIme- diately consumaol e good.::; (:;~oocl, .j8:':''''.'":_C8S)~ J~o\·r is this "cake" going to be shared among the vt:..ri our: cLai a.ants ?
We shall first examine .JL·he ca o o 0:1:' social grou1:s and then that of
regicl1z~
- Social groups
Social groups geneJ:'al.J.y ;,:.,h:i:'C',1 :;'~J2 ·'·JcJYJ," ..:_11 t·,~·J.l:S of cxistil1~
power relationships. Bu'c i t can bo acc;2~,J~OJ.. thQt ~,-,Jlic Au-cho:r'ities, being above the battle whic~l is G'::te:'-, :::to:'ij~~'\'~":'.2,,1 Lli;,C"I.' :;"J';T :J,;~J.J. alrr,os"c
IDE.P/ET/9 21
Page 10.
("better" need.ing of course to bo Jofinod). This "rule for d.ivid.ing the cake may cover either the whole natd cnaL Patrimony (or stock) or else more modestly - leaving asid.e real property - the national income.
The national stock or Patrimony can be broken d.own into a numbor of items, the main ones of which are:
real estate, i.e. the land
industrial and commercial capital, that is to say productive equipment in industry and commerce.
transport and communication infrastructure housing.
At a givcn period, the ownership of this quantity of good.s is
d.ivided. in a certain way among the d.ifferent social groups and. the State.
Naturally in many cases the Public Authorities wish and. intend. to change as
the existing d.istribution in order to attain a situation regard.ed. L:bette:r".
The national income. - or the national output which constitutes its physical counterpart - is divid.ed among the d.ifferent social groups in relation to two factors:
- firstly, the income which is attributed to each social group and.
which is expressed by the relation: Group income = Individ.ual income per worker x number of workers
- Secondly, the price system which governs the exchange of goc.da '1,[1,2-
services.
The first statement is obvious; the seoond only expresses the fac~
that ·ohe consumption patterns of the different social groups vary from one group to the other, so that the existence of products with aUllnrmnlly high prices penalizes the social groups ccnsuming that product.
The "incomes policy" must aim at a "better" redistribution of the national prod.uot. We should point out that economic measures (price - setting) social me~sures (wage rates, sooial security) and fiscal measures (aJd.itional taxation of high inuomes) are very often the instruments of this policy.
IDEP/ET/921 Page 11.
The Regions:
The regions for their part also divide the "oake" in terms of more complicated oriteria : for instance, the natural resOuroes of each region, the existing urban structure and the infrastructure, th~
geographical position etc ••••
Very generally, the different regions are not at the «ame level of development (static) and do not develop at the same pace (dynamic)"
If everything is left as it is,the country is already, and will be in future, faced with wide disparities.
The problem of Public Authorities is to determine a"good"
regional distribution of the present and fu.ture "oake".
Numerous theoretical ori teria can be envisaged for t:~e very 1011&-'
term physical planning of the country. For instance, we can sook to equalize the level of living among the regions, either by moving somo of the population (first assumption) or by transfering activities (h1c.
assumption) or by doing both at the Same time; or we can try al:d obtai.r.
the highest possible rate of growth of the national income or else "1"
can concentrate entirely on the regions whioh stand the best chanc« .,f
developing, abandoning the others completely•••
1;e Can note in passing that, the distinction which "as made in France between regions developing spontaneously (and therefore n.eed i.ng
only a supporting policy) and regions not developing spcntaneously but capable of being developed by government action (and amenable to a policy of stlmulation Can be applied to developing countries. We must only add to these two types of regions a third type : regio~s
which have practically no chance of development. When these regions are populated, they must be the subject of a policy of assistance valid for the short ter~.
c) Tho goal of greater well -being
The average standard of living of a population can be more or
IDEP/ET/921
Page 12.
less adequately expressed by the average share of the "cake" going to each member: note that since this "cake" itself - both a material and a cultural one - has net been perfectly defined, the average level of living is also a rather vague concept.
When the average level of living rises - that is to say when the "cake"
growing faster than the population, provides a greater share per capita -
- , ., ,'on
we say that there is "greater well-being.
Th~ people have a right to greater well-being. It ought consequently to be one of the fundamental concerns of the governments of developing countries, especially as the share cf the ",icake"·· is cften very small.
2. The Search for the possible: analysis of potentialities (1)
In order to define a sound s~rategy, it is essential to have a knowledge of the available resources and the environment, these being genuine "constraints" between which the country "must" develop. Some of
these constraints are favourable to development, others are net; some act as obstacles or brakes, others act as an instigators.
We cannot examine all of them, but we can make a brief list of the main "constraints" determining the "pctentialitieslt of,the country. In
decreasing order of rigidity we can qUickly survey the following "constraint, natural resources
human data, in quantity and quality social traditions and institutions level of technclogy
vOlume of existing capital equipment the international context.
Many other constraints would also .of course have to be examined, such as the quality and the working of the administrative apparatus which playa role of paramount importance in development. We shall leave them aside.
i) i.e. the long-term development possibilities, stressing the limitations.
IDEP/ET/921 Page 13.
a) Natural resources
Natural resources fix from the beginning the development poten- tialities of a country or a region. Do we not often identify_wrongly of course countries poor in natural resources with under - developed countries? Among these resources, very important ones are:
- the geographical position: a country or a region geographically well situated (Spain, Mexico, Greece) has more opportunities of deve- loping than a country or a region unfavourably situated.
high
terrain, climate, water resources in Temperate-Zone countries and altitude tropioal countries have historically developed more
rapidly than the others.
- Soil, sub-soil: Soil fertility and sub-soil resources constitute the very bases of the development of the "primary" sector, supplying tho raw materials for tho "secondary" sector, and are hence one of the
engines of development of the "tertiary" sector.
b) Human resources. Even more than natural resources, human resources have an important place in development.
These resources are both quantitative(size of the population,
geographioal distribution, age distribution) and qualitative (educational level, behaviour etc.II)' We shculd bear in mind 'that 'it·· is quite
frequent in developing countries to find people with rather "conservativo"
than "progressive" attitudes, in the sense of "maintaining traditions"
rather than "looking for progress" (CONSERVATISM versus PROGRESSIVISM).
This seems reasonable enough insofar as traditions have proved their soundness by enabling a human group to survive.
Only by a lengthy process of mass education will it become feasiblo for the future to be modified by man, and for forecasts to be made with a vie":.to_a,,j;tQn.
IDEP/ET/921 Page 14.
c) Social groups, social traQ;itiGns and institutiGns
Sooial traditions and institutions have oft~n been presented as an obstacle to or at least as a brake on, development. It is true that these traditions and these institutions as we have just mentioned are geared essentially tofue survival of a group, and not to economic deve- lopment (security versus Efficiency).
The problem facing the planner is one of modifying these traditions or these institutions in a "progressive" direction so as to enable them to become if not engines or instigators of development, at least to cease being obstacles or brakes. We must therefore,"from the beginning, analyse the different traditions and institutions, judge their merits and see how they can be used in future; then if we have to modify them,
the choice will be between an "evolution" and a "revolution".
d) Level of technology
The level of technology in developing countries is always very difficult to estimate, because, side by side with archaic techni~ues
(traditional techni~ues generally used by traditional social groups, living in a subsistence cr ~uasi barter, only'slightly monetized) we find ultra-modern techni~ues in industry, mining, transport and tourism for instance.
These different techni~ues must be analysed, and their value judged within the contex~of the country; their comparative profitability mus~
be taken into account the existing price system and the probable evoLu-..
tion of this price system.
We can then take a stand in the conf~tARGHAISM- MODERNISM, which is simply an aspect of the conservatism - versus' progressivism mentioned above.
It is indeed not absolutely proved that archaic techniques are invariably bad' in certain sectors, and at least in the short term in under-employed economies it may often prove advantageous to maintain them. Hence it is important to take a clear-cut stand on this matter,
IDEP/ET/9 21 Page 1~.
backed by as thorough research as possible.
e) The volume of existing capital equipment
By capital equipment we mainly have in mind all the good (vehiclc~,
machinery, buildings, infrastructure ••• ) which can be used in pro~lc
tion.
Hovrever, vestiges of the past can also be regarded as capital equip- ment: an ancient temple, a mosque constitute genuine capital equipment which can be used for tourist activities.
f) The international context
Developing countries are often the "prisoners" of a set of internatic~
nal data de jure or de facto, and these data weigh heavily on their future. The data must therefore be analysed, judged and, if necessary and if it is feasible - modified.
An analysis of the international political context and of relative bargaining - power, will enable us to meaSure the real possibilities of changing the existing data.
The main facts and figures which hnve a hearing both on the general structures of the country and on the economy, are the following:
existing bilateral agreements (monetary zone for example).
multilateral agreements (e.g. the Yaounde agreement).
Special agreements (coffee, sugar, tin ••• )
fluctuations in the world prices of raW materials.
trend towards a relative increase in the prices of manufactured goods as compared with raw materials
etc ...•
An exhaustive list of these external constraints must be established, since they dictate the strategy which the country will follcw.
IDEP/ET/921 ' Page 16.
Working out a suitable strategy.
The development strategy - which will onnstitute the development
"bible" of the country in the years to come, must take the following fully into account:
general aims to attain (the'desirable)
limitations observed during the study of potentialities (the possible)
Note that this strategy merely outlin~s the WAYS or paths to
development - the definition of MEANS which are the plans - cadres, the projects, the plans - programmes, the operational files, the meaSures •••
coming later on to back up this strategy.
But in the ado~tion of a strategy adapted to the context and to the aims, many special factors specific to each country are involved : since we cannot describe them here, we shall only indicate some fundamental problems which are found almost everywhere.
These problems are often of a political nature, and the political choices made very strongly condition the development of the country
a) The problem of foreign aid
Developing countries generally need foreign aid at least on a short term basis. But granting of aid is liable, unless special preoautions are taken, to deprive the country of some of its present or future indepen- dence: hence it must ohoose whether to develop with a large or small volume of aid.
When there is aid, the available resources of the coun~ry can be represented thus:
(1)1 D=P+A
Availability (disposable resources)
=
Production + Aid.TWQ ceses can then be presented
ei ther A is a grant, in whioh case the aid will not be politically "f'r-cc or A is a loan arid it will h~ve to be reimbursed in future plus Lntercc:,
IDEP/ET/921 Page 17
and. this will have the effect of reducing future 'avadLaba Lr t.i.es ,
It seems clear that fer a given oountry, any request for aid must be preceded. by a careful study of its consequences.
b) The for~ign tr8de polioy
Every country imports from abroad certain products which it uses,but ioes uot produce; ~'rance for example, irrports ooffee, coc ca , bananas •••
from tropical areas.
Asa oounter part, the country must export in suffioient quantity to be able to import. The result_is foreign trade- which is partially
inilispensable.
The balanoe of payments eouilibrium gives us to the following relation:
(2) !I=E+AI
Imports ~ Exports + foreign Aid.
We oan therefore also write (1) - (2), (3)
1
D = P + I - EJRelation (3) is the classical equation of the oonservation of goods and services.
The question is to know:
- whether certain imports cannot ailvanta~eously(term to be defined) be replaoed by Loc a L production.
whether certain import substitution proJeots oannot be enVisaged whether the country cannot become more self-sufficient.
In other words, the relative value of I (or E) in relation to P must be fixed.
0) ~le ohoioe of proiluction techniques.
We have seen above that in developing oountries, there exist today traditional techniques and modern techni~ues.
IDEP/ET/9 21 Page 18.
For the future, the problem whIch arises is whether modern techniques only will be used in new projects or, depending on the particular cases, both modern techniques and traditional techniques.
It is quite certain, that numerous considerations enter into the choice of techniques, SUCh' as the life of the project, the availability of skilled and unskilled ~anpower, the opening up of the country to the outside world (free trade or self-sufficiency), manufacturing prioes,&tc •..
d) Income distribution and use.
A certain income distributicn among the different social group is obviously one of the fundamental airns,to be attained. It must never be forgotten, however, that this distribution will affect the use of the income, that is to say the division between consumption and savings.
Let Ci be the average propensity to consume of group i receiving share
"A
i of the income Y (equal to P + A) "i t!lZ:)hee 1. The aggregate consumption C of the country will be equal to,If we want to act on the aggregate consumption, we can therefore m£nipulate the oi and/or the ~.
Note, The complement of the consumption in the income, equal to saving, is Lnvea t.ed, If'
,a'
represent,l' the anves tmen't , we have by definitionIDEP/ET/921 Page 19.
When we accept specifically that the main engine of development is capital e~uipment, it is important to know whether we are to sacrifice the present (re~uce the aggregate consumption C) for the benefit of the future (increasing the investment J); we shall thus have "a bright tomorrc,:"
.. .
but also immediate restrictions •Without dwelling on this problem (choice of an investment ratio), we will only recall that it.is closely linked to that of the choice of a discount or present worth factor.
e) Physical planning.
For the time being, we have only been concerned with problems
raised at the aggregate level and, more particularly, with the eJmminatj.o'·
of the main ~uantities in the e~uilibrium e~uation:
(6) I
- - - - l
It Btill remains for us to think about the long-term human and economic geography of the country to be developed, that is to imagine a physical planning scheme for 20 or 25 years ahead, and to build a strategy in accordance with this planning.
Hi thout dwelling much on this delicate problem of physical pLanna.r.
let us simply note that the two extreme options indicated above are conceivable. With, of oourse, all the intermediate variants:
- either settle people near economic activ~ties, which they infact de spontaneously by migrating to towns (phenomenom of urban concentration) where they find the secondary and tertiary activities which are expand- ing more rapidly than agriuulture.
- or bring economic activities to the people by trying to develop the populated regions whioh are economically backward.
IDEP/ET/921 Page 20.
In any case, we must never forget that economic efficiency cften goes hand in hand with concentration, and that, oonversely, "sprinkling"
often leads to wastage.
x X
x
To conclude, let us suppose that the strategy adopted, taking into account existing resouroes an~ oonstraints, can reasonably enable a country to attain its aims within a period of 15,20 or 25 years.
To move on to action, it is important to break down this strategy into successive phases forming a whole in logical sequence.
Every phase will show qualitatively the directions in which the country must go in order to emerge from its under development, and. the results which Can be expected.
The first phase, covering a period of five to ten years, is obviously by far the mcst important; it is for this phase that quantitative targets, and particularly production targets will be set.
II - SECTORIAL PLANS
Once the d.evelopment strategy is settled, certain sectorial trend.s must be deduced and quantified. in the long and medium term. Not all the seotors of the economy are then studied; only some of them form the eub- ject of a partial d.evelopment plan known as sectorial plan. We shall give below a possible list of these sectorial plans.
For the purpose of subsequent synthesis and arbitration, there is every reason to present these plans in a form as identical as possible in order to facilitate comparison and aggregation., It is'therefore important to use a single form of presentation for all the plans. Two
IDEP/ET/921 Page 21.
possible forms of presentation are shown below: one, a very briof outline corresponds to tho first planning work done in Algeria in about
1957,
the otter, more complete, relates to planning work done in Tanzania in about 1963. Experience has shown that, while it was quite easy to complete tho Algerian form, it waS not easy to fill tho Tanzanian one, ,·,hich was much more oumbersome. The "acceptable" for- mula would therefore probably be somowhero between these two layouts.Note that we include in this same section both long-term planning, that is, to our mind, planning for 10-15 years, and medium-term planning, that is a planning for about 5 years. We thought it advisable to oover this in a single section, because although the first type of planning certainly entails much vague~ targets than the secon~ one (we afton talk of lIperspectives ll for long terP.l plans)s ·tr~3re is no creat di.f'f'ece-ic e between them from the metholologicc.l point of' vie".
1. Sectorial Plans
a) Sectorial plans generally deal '"ith tho f'o Ll ow xng sec',ors:
crop farming - broken do,m by typo of crop animal husban~y
forestry fishing mining
fuel and. power
industry - distinguishing between light and heavy industry transport and cOQffiunication routes
telecommunications tourism
to,m planning education health Commerce..
Sectorial plans do not therefore cover all sectors; personal
IDEP/ET/921 Page 22.
services, banking, insurance and administration in the wide sense of the word are almost always exoluued.
b) Sectorial plans are generally compiled by the relevant ministries in collaboration with the "Planning Office" which Can be a-Ministry OT a Commission ••• Besides this, many countries, following the French model, have set up planning commissions to help in formulating sectorial plans. These commissions are known as "vertical" commilj)sions as OppOSGJ.
tc horizontal commissions which, fcr instance, will deal with manpower, finance, "regionalization". The horizontal commissions will thus be dealing with only one of the aspects of sectorial planning, but one which covers all the seotorial plans.
The interest of these commissions lies in the fact that the plans a~c
not considered 8.S s'Jmatbing merely imposed by the g:)vernm8nt but rat})::;:r c.1~,::
a collective task where private and public interests blend are closely bound up together, with a view to facilitating their execution.
THE ALGERIAN FORMULA
(1957)
In Algeria round about
1957-1958
during the preparation of the"Ten-Year~ perspectives of economic development (horizon
1967),
every sectorial plan was given -a standard form ,of presentation. For the sector "making of macaroni-type foods and e oueocue" the f or-m., used is shown b210>l.This form contains:
the trend of the different economio quantities characterizing the sector, the prcduction and the employment. These quantities were lat8r projected to the horizon year
1967,
taking into account past trends, data on household consumption, export possibilities ••• and the possible share of Algerian production in the Algerian market.- information conoerning the base year
(1954)
and the final year of theIDEP/ET/921 Page 23.
projection (1967) 1)
This first formula~ionwas supplemented by a second one presenting data on the gross investment necessary for the ten-year period considere,1
(additional investments and annual replacements fer a median year) anl t:"
pattern of expenditure of the sector (value, added).
Furthermore, certain information not appearing on the form was indicated qualitatively; this dealt with:
the main impediments to the development of the ,sector
measures to be taken to "release the brakes" anti to accelerate the development of this sector •
... . . . / ...
1) The "Ten-Year Perspectives" in fact did not cover the changes in the situation from year to year, but only the possible state of the Algerian economy for the final year.
IDEP/ET/921 Page 23 A
Algeria 1957. Form for
Tren~s observed in:
:1951:1952:1953:1954:t955:1956:1957:Perspectives fOI 1967
Number of factories 41 2. froduction
Quantities in 1000 quintals (m2-caroni
(ccuscous
(rnac~roni + couscous :228 :242
:200 :73
254: 273 : 337: 384: 386: 500 Values in 1000 francs (1954)
(iTI3caroni (couscous
(macaroni and cousqous
:
3. Em~,1!l,"It6n"'J
Individual entrepreneurs (a)without wage~earners (b)with wage-earners
Wage earners (number) Ind.entrep.
(with wage-earners)
.t· : :
:
:3000:
15 :1215:
: 1230:
: : 6000
20 2380 2400
prOductio1 (&'0",) \
p
Years
----
r-- -
---
(E)
I
- - --+- -+--+- -+- - t-- +-- --j-- -' __
-- / '::0,.(1) Example of "macaroni and couscous production" Sector.
E/Cn.14.CAP.12 IDEP/ET/9 21 Page 24.
Algeria 1957. Form for Seotorial Plan-II
'\[alue
in millions of 1954 francs Available production capacity
'f,
usedProduction in 'value
Increase in production to be obtained(1)
-with existing capital equipment
(2)
-with new capital equipment
Investments to be carried out(1), (3)
Situation in 1954
57%
3000
Sjtue,tlon in 1967
-equipment, tools
-buildings,civil engineering Fixed Capital
-e'luipment -buildings
tools
civil engineering
600 (450 ( 150
Average annual replacement
-replacement (5) -equipment, tools
-buildings civil engineering -major repairs (6)
-equipment, tools
=E~!~~in~~~~~!!_~~§~~~~~~~g '
C1)--oYer the period'1955 - 1966
(2) because of idle produotion capacities
(3) determined ~ith a capital-output ratio of 0.15 for a 75% utilization of production capacities
(4) half-way through the period
(5) life: 20 years for equipmen~80 years for buildings.
(6) 2% of the existing capital for e'luipment; 0.5% for buildings •
. . . / ..
IDEP/ET/921 Page 25.
( c ea.)
Value Situation in Situation
in millions of 1954 franos 1954 in 1967
Produotion oosts (inputs) (7 ) 2 500 4 800
-Agrioultural raw materials
. .
( 100 ( 200-fuel and pO>Ter ( 100 \I 180
-other goods (2 200 (4 220
-intermediate services ( 100 200
Value Added 500 ; 200
- >Tages ( 265 600
other oharges ( 55
,
( 140- taxes ( 110 ( 260
- depreoiation ( 40 ( 70
- Balanoe or net operating inoome ( 30 ( 130
---~-,---_._------
The Tanzanian form (1963)
In Tanzania, in 1963 the Ministry in oharge of development planning (DEVPLAN) tried to make the relevant ministries compile as oomplete files as possible, with the he~p ~f personalities in each of the sectors
ooncerned, setting out the past trend and future targets.
This future period waS moreover divided into two parts, one lasting 5 years and the other 15 (medium and lon~term plan)~ Experience has shown
that it was very difficult to obtain targets for 15 years.
The d.ocumerrt tty be filled up, reproduced here; was divided into four parts dealing >Tith:
production targets for the horizon year
the results to be expected from the implementation of the targets, partioularly as regards the income oreated.
- the resources to be used in order to achieve these targets the measures to be taken.
7)
Tho expenditure forecasts "for 1967 are made >Tith the assumption that there__i l l be a slight improvement in produotivity.IDEP/ET/921
Page 26.
Tanzania 1963. Form for Sectorial Plan - I Part I Production targets for the horizon year
1. Changes in Price of goods manufactured by the Sector 1.1 world price
1.2 production price (with a possible improvement in pr oui.ctivi.toY) 2. Evaluation by DEVPLAN of the horizon year targets in quantities and value
2.1 extrapolation, of trends
2.2' correlation between value of product and an aggregate, e.g the gross monetary domestic product
2.3 direct estimate of demand by product - world demand : exports
household demand : final consumption
intermediate demand of sectors (agriculture, construction and public works, industries ••• )
- variations in stocks
2.4 possibilities of satisfying this demand by production.
2.5 other estimates based on resources in raw materials, international comparisons
3. Ve.lnotion of Horizon ye,Ptr targets by Ministries and competent perso,"!,: . hUes
3.1 list of probable difficulties to be encountered
3.2 measures to be taken in order to overcome these difficulties (coste 3.3 final evaluation of production levels and necessary meaSures
(costs).
. .... /:. ...
IDEP/ET/9 21 Page 27.
Tanzania 1963 Form for Sectorial plan-II 4. Probable uses of the horizon year production
E S U S
: Quantities-Values : PRODUCTIONS
Subsistence: Monetary Sector _ Sector :Household: Inter: EXPOl~,<_
:consump- :media:
:tion :te con:
: (1) :sump- :
: tion
__________
~ ~ ~ ~ (2+-_~---_:Nature of
productions
(1) Brokendown if possible into urban household consumption and rural' household consumption
(2) broken down by using sector
---~---
5. Evolution of Production and exports Productio
Expf'rt
P
E
""''---
...____1
I
I
I
I
I
I
I - - I
'---t---+--i---+---+- + ~---";>
Year5.1 to determine the evolution of the share of exports in production 5.2 to take into account delays in the implementation of measures.
IDEP/ET/921 Page 28.
Tanzania 1963. Form for Sectorial plan - III
Part 2, The Results (inoome created in the horizon year.)
1. For ~ach sector, a projected revenue and expenditure table will be compiled for the horizon year, by making contact with all the personal i-
. . _. ---
..:ties :well acqua Int ed with the sector. The consumption of intermediate products can be calculated,
in the aggregate using only purchases/sales ratios.
product by product, with the same detail as the resources - uses table
~f goods and services which must be available for.the.past and for tho base year
- as results of particular studies available, fuel market, transport market .".
These consumptions will be broken down into imported products ~nd
produots whioh could be manufactured locally.
2. An attempt ·...rill also be made to compile a table showmg the differer'c categories of population concerned in the development of the seotor in order to have a valid estimate of household demand>.
Population reoeiving inoome from the Sector
Nationals Foreigners Total
Wages
. .
Other incomes Total r-enu- maratiOl~
...
"... / ..
DlEP/ET/9 21 Page 29
Tanzania 196} -Form for sectorial plans IV
Sectcr
N°
A Current 'l'ransactions
--~~===~~=============
Expenditure or Uses
Year
"Monetary " Subsistence Consumption of raw material and semi-
finished products - local products -imported products Taxes
In-teres t on loans:
-on domostic loans -on foreign loans
" 11 ,
lvages
-other payments -Reserves (1)
Total current expenditure Revenue or ReKources Value of production :
••••••
• • ,t 0 • •
Value of by-products:
· ...
..
.
.... .
"! • • • • •
"
II
II
II
Aid received (a.s.stabiliza tion funds) ""
"
,, ITctal current revenue
"
" "
II1) The reserves fund.
. . . _ _ I
include the non distributQd profits and the depreciation
IDEP/ET/921 Page 30
B. Capital Transactions Expenditure or Uses Increase in stocks
Purchase cf equipment and tools lccal products
imported products Construction
Repayment of loans - dcmestic lcans - foreign lcans Human Investment
Total oapital expenditure
Revenue or resouroes Reserves (1)
Sales of plant and capital equipment New loans
Equipment subsides Human investment
Total capital receipts
II IT
,, 11 _
11 "
"_.
---"
" "
1) The reserveS inolude the non distributed profits and the depreciation fund.
IDEP/ET/921
Page 31
Tanzania 1963 - Form for sectorial Plan V
Part III - Resources to be used in crder to ach~~ve th~?,rgGt~
1. Land
For all agricultural production targets, the needs in land musc b o estimated by region. This estimate makes it possible later to compile a balanc€ sheet of the available land and to take measures to reserve part of it. In regionalizing agricultural targets it is necessary to take into account the estimates and opinions of regional authorities ani other competent persons (Ministries,producers ••• )
The same thing should be done for factories, administrative buiLd- ings, housing and tOID1S.
2. Manpower
A distinction should be made between wage earners and non wage-e~rnors
(independent family helpers) Future employment levels will be estim~t6~
taking into account known variations in labour productivity by scctc,'
a,-,,::
on the basis of assumptions which it is possible to make on tho f'ut.ur-e wage policy in agreement with the competent authorities; we Can imagin'
that:
wage rates and social charges will remain constant
they will increase as a function of the increase in labour productivity.
they will increase at a rate fixed in advance.
The following employment tables are to be compiled:
...
"."... / ..
IDEP/ET/9 21 Page 32.
l
Tanzania 1963, Form for Sectorial Plan VI:Ease, year ; "Eo:::-izon yea-';
:---:
---_._--
~Variations in total employment of the Sector non remunerated labour
independent workers family helpers remunerated labouT
Composition of employment by professional category (1)
~ high-grade middle-grade -skilled
-Semi-s tall ed -unski11ed 3. Investment
To attain the targets of the horizon year, t,w sorts 0:': Lnvea t.mon r
expendituro will be necessary;
replacement (renewal) + maintenance extension + new factories.
The sum of this gives the total gross investment. Estimates "0'.11 bo
~ade using direct information from representatives of sectors or using a
cap~ta: O-X~Pll-t 1"2,t~o for each sector.
3.1 Total volume of investment to be made between the base year and the hor-rncn yer:-tre
1) Categories to be defined in conj~~~icnwith Human ResourCes Commission (Jvlanpo""er) •
IDEP/ET/9 21 Page 33.
3.2 Breakdown of the total volume of investmeiltiiCioording' to financing resources (financing plan):
local public, commULe budgets national public general budg~t~_
bilateral aii, including loans - multilateral aid, LncIud.Lng loans - Semi - public
- Cooperative - domestic p~ivate
- foreign private, by monetary zones
" , J .
i . .
Tanzania 1963. Form for sectorial plan VII
I
This breakdown by financing sources should,by simple subsequent summation, make possible a better approaoh to financing needs.
3.3 Estimate of the investment to be made in the horizon year.
( mean )
Given the investment of the base year,Io,and the averageLinvestment, Im,over the plan period, and with the help of an assumption as to the trend of annual investment, the investment in the horizon year,Ih,can be de- duced.
investment'Ih
10
Base Average Horizon (mean)
L_~_ _--:-_-.L_--=_,.L-_ _
-7
YearIDEP/ET/9 21 Page 34.
3.4 Breakdown,by type of investment goods, bUildings, machinery, vehicles, etc., of the investmGnt of the horizon year.
3.5 Brea}down of the volume of investment by region.
4. Supporting expenditure borne by the government.
4.1. Annual expenditure for management and supervisory personnel:
example, agricultural instructors in the cotton sector. Provision must be made for such personnel in the staffing of the Government Sector and in the expenditure of the sector studied for at least an average year and if possible for the base year and the horiz~n year.
Government Services agriculture
national service
• •
• •
police, army
Effective Cost
Tanzania 1963. Form for sectorial plan VIII
4.2 Supporting investment expenditure over the plan period, for instance:
penetration routes, additional services village settlement~
prospecting activities water supply •••
• 0 • • • • •/ • •
IDEP/ET/921 Page 35.
Part 4.
1• fiscal measures ,'
2. Tariff measures 3. Quotas
4. Other measures ( to be specified)
Measures to be taken
III. Medium - term Plans
The synthesis of sectorial plans makes it possible to present a possible and desirable situation of the future econo,
,y,
5 or 10 years abead, since the sectorial plans bave been prepared in accordance with tbe strategy adopted - the strategy itself being designed, taking into account the existing resources and constraints
( 'possibl-e'; aspect) to attain certain fundamental ends ("desirable" aspect).
Nevertbeless, it may happen that this situation harbours some "defects"
which it is very impcrtant to rectify before proceeding with the plan preparation. These "defeots" may be of t,w kinds:
---firstly inconsistencies between sectorial plans, reflected in the failure to respect simple rela tionshipsl,_'Or instance, the fact that a
sector d~ew up its plan too independently from its customers and supplie3, - Secondly,_ discrepancies between the resources (financial, human••• )
'- j ,
needed to implement these plans and the efforts which the population or the outside world may be willing to contribute for their implementation.
The first defects, virtually technical ones, are easily corrected;
but the second ones, being more political, require arbitration by the pUblic authorities.
1. Synthesis of Sectorial plans
Sectorial plans contain, in principle, a description of the situation of every sector fer the h9rizon year (see the forms for Algeria 1957
and for Tanzania 1963 in the previous chapter).
IDEP/ET/9 21 Page 36.
It is consequently pcssible to present a description of the general situaticn of the country for the hor;zon year, by adding together the existing partial plans and by supplementing the results so obtained by forecasts for the sectors which are not the subject of a partial plan.
a) the description of the future situation is very frequently done by using an accounting framework. Bearing in mind the forms for sectorial plans of the French type shown above, the most suitable and also the simplest accounting framework would seem to be the Resources - Uses framework.
The expected trading accounts of the horizon year will be entered in the Resources - u~es table, the rec?ipts on cne side and the expendi- ture on the other, each line corresponding to an item of the accounts •
•Items-.---Rec
eipts--.--EXpendIture--- .
:-Pl~n.-Pl;n:---:-Pl~n-~--Pla;~---
______
~_1g 1 g _
:
There will cf course be a number of empty columns correspondin~to the services sector, the administrative sector•••• These columns must b8
completed ",ith the help of the equilibrium relations of the (resources-- uses) rows, the technical ratios, the behavioural relation. Thus a real small-scale working "model" of the economy will be built up. The Resour·-·
ces-uses talJle may contain as many headings as we want.
In particular it will show:
in the rows: the products incomes, the capital variations
IDEP/ET/921 Page 37.
in the columns: the various agents or sectors, particularly households, Government and the rest-of-the-world, for which "trad- ing accounts" will have to be compiled.
b) besides the description of the country's situation in the horizon year, we need a synthesis of the resources to be used to bring about this si tuation.
The sectorial plans once prepared, plus some additional estimates, will enable us to set' the totals of:
the necessary capital equipment for the plan period (5 to 10 years) men working in t hef'inal year
training needs duritJg th-e p-Ian period.
the corresponding expenditure to be iricurred
c) Finally there must be.a, synthesis of measures to be taken to bring
,
-
. _.--. _. _. -- - --._._.~-_.-.._-
about the necessary harmonization; measures of a contradictory character must not be allowed to co-exist.
2. Economic consistency for the horizon year.
The existence of a Resources - Uses table based on Sectorial plans and balanced for the horizon year is in itself some guarantee of consis- tency. Ne~ertheless, several checks must be made. They mainly concern:
a) Transactions or Operations (the consistency of operations is shown ty
the equilibrium of a row in the table).
The consistency" of the products is only the reflection of the account-- ing equality:
Production + Impcrts = Local uses + Exports.
This must be checked Whatever arrangement is used for the presentation of the'-Resources - Uses table; the equality must hold at the two extremes:
- at tbe aggregate level where we find the well known equation:
[ ---
P + I = C + J + E
I
---.
IDEP/ET/921 Page 38.
P
=
ProductionC
=
Consumption I=
ImportsJ Investment E
=
Exportsat the product level, where the validity of foreign trade must be checked. For example: there must be a strict equality between pro- duction and consumption of domestic transport and in general between production and oonsumption of services; the imports of weighty goods must be restricted as much as possible, since the transport of these commodities is very costly; the imports of certain capital goods (reads, houses •••• ) aaanot exist.
Similarly, ,;':;'1 the incomes "IHeated and the available capital must be used at homo or abroad until they are exhausted.
b) The Agents (the consistency of agents is shown by the equilibrium of two columns of the table.
The oonsistency of eaoh agent taken in isolation must be checked.
In principle for sectors which have a partial plan, technical consistency is a priori ensured, that is to say in the partial plans. On the other hand, since there is no partial plan for the productive sectors, the different social groups (households), the gcvernment and even the rest-of- the world, require a thorough analysis.
For the productive sectors which have no
are technically consistent.
necessary to cheek whether economic table and whether
they they
are perfectly
"individual p1.a.uB,it is integrated into the
- For households, we must make sure that the behaviour reflected in the table is in fact in line with observations made and with the forecasts which may deduced from 1ihQm.
Furthernore, the employment in the horizon year must be compatible with the manpower availabilities of the different categories (see belo'l
