Book contents
- Frontmatter
- Dedication
- Contents
- Illustrations
- Abbreviations
- Foreword
- Preface and Acknowledgments
- Executive Summary
- Chapter 1 What Is Inclusive Growth?
- Chapter 2 What Is the Main Constraint that Developing Countries Face?
- Chapter 3 Why Full Employment and Who Should Be Responsible for Trying to Achieve It?
- Chapter 4 Why Is Growth Unstable?
- Chapter 5 What Is the Role of Agriculture in the Process of Structural Change and in Delivering Full Employment? Full Employment I
- Chapter 6 What Is the Role of Investment in Delivering Full Employment? Full Employment II
- Chapter 7 Why Is “Planning Development” Necessary?
- Chapter 8 What Is Industrial Policy? Full Employment III
- Chapter 9 Structural Transformation, Industrialization, and Technological Change in Developing Asia: What Does the Empirical Evidence Show?
- Chapter 10 Why Do Export Diversification and Sophistication Matter?
- Chapter 11 Unemployment Versus Inflation: Which One Should Be the Public Enemy Number One?
- Chapter 12 What Should Be the Role of Fiscal and Monetary Policies for Development? Full Employment IV
- Chapter 13 Is It Possible to Achieve Full Employment in the Presence of Structural Transformation?
- Chapter 14 Should the Government (Public Sector) Intervene Directly and Become the Employer of Last Resort? Full Employment V
- Chapter 15 Can Competitiveness and Globalization Deliver Inclusiveness and Full Employment?
- Chapter 16 Export-Led Growth or Domestic Demand–Led Growth?
- Chapter 17 Is Education a Key Ingredient of Inclusive Growth?
- Chapter 18 Conclusions: How Can Developing Countries Implement an Inclusive-Growth and Full-Employment Strategy?
- References
- Author Index
- Subject Index
Chapter 7 - Why Is “Planning Development” Necessary?
Published online by Cambridge University Press: 10 September 2020
- Frontmatter
- Dedication
- Contents
- Illustrations
- Abbreviations
- Foreword
- Preface and Acknowledgments
- Executive Summary
- Chapter 1 What Is Inclusive Growth?
- Chapter 2 What Is the Main Constraint that Developing Countries Face?
- Chapter 3 Why Full Employment and Who Should Be Responsible for Trying to Achieve It?
- Chapter 4 Why Is Growth Unstable?
- Chapter 5 What Is the Role of Agriculture in the Process of Structural Change and in Delivering Full Employment? Full Employment I
- Chapter 6 What Is the Role of Investment in Delivering Full Employment? Full Employment II
- Chapter 7 Why Is “Planning Development” Necessary?
- Chapter 8 What Is Industrial Policy? Full Employment III
- Chapter 9 Structural Transformation, Industrialization, and Technological Change in Developing Asia: What Does the Empirical Evidence Show?
- Chapter 10 Why Do Export Diversification and Sophistication Matter?
- Chapter 11 Unemployment Versus Inflation: Which One Should Be the Public Enemy Number One?
- Chapter 12 What Should Be the Role of Fiscal and Monetary Policies for Development? Full Employment IV
- Chapter 13 Is It Possible to Achieve Full Employment in the Presence of Structural Transformation?
- Chapter 14 Should the Government (Public Sector) Intervene Directly and Become the Employer of Last Resort? Full Employment V
- Chapter 15 Can Competitiveness and Globalization Deliver Inclusiveness and Full Employment?
- Chapter 16 Export-Led Growth or Domestic Demand–Led Growth?
- Chapter 17 Is Education a Key Ingredient of Inclusive Growth?
- Chapter 18 Conclusions: How Can Developing Countries Implement an Inclusive-Growth and Full-Employment Strategy?
- References
- Author Index
- Subject Index
Summary
Unless India initiates a well-planned program to increase GDP growth to 8–9% on a sustained basis, we believe that the expanding work force could become an increasing threat to social stability.
— Morgan Stanley (2006, 28)One important implication of the discussion in the previous chapters is that, in general, many developing countries find it difficult to run on a balanced development path. Achieving structural equilibrium between investment and consumption and noninflationary economic development is vital for developing countries, although virtually impossible. For developing countries under pressure to accept the effects (good and bad) of globalization, introduce market reforms, and reduce the role of government, the political obstacles to development are phenomenal. Achieving inclusive growth in these circumstances is not easy. Amsden (2007) argues provocatively that the more freedom a developing country has to shape its own policies, the faster its economy will grow.
As Keynes (1936, 320) argued, “the duty of ordering the current volume of investment cannot safely be left in private hands.” For this reason, the strategy of full employment based on stepping up investment requires “planning”, a term that, unfortunately, has acquired a bad name (see, for example, Easterly 2006, 2008), although it is done everywhere. Indeed, most, if not all, medium- and long-term development plans of both developed and developing countries specify the amount of total (public) investment as well as the allocation across sectors. For example, Malaysia's Ninth Five-Year Plan, 2006–2010, and the Third Industrial Master Plan, 2006–2020, contain policies to push its industry up the value chain and have well-defined targets in terms of growth rates and sectors’ shares in output. Through the Malaysian Industrial Development Authority, the government executes policies and initiatives intended to shape an industrial base to face the future challenges of the country. The authority assumes the key roles of planning, coordinating, and promoting the growth of industries in the manufacturing sector (also, Pakistan Institute of Development Economics [PIDE 2006] for a development plan for Pakistan).
A balanced development path requires coherent planning, not only of the forthcoming volume of investment but also of the composition of investment (sectors and types of goods), which must be directed purposefully toward the breaking of bottlenecks in supply.
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- Inclusive Growth, Full Employment, and Structural ChangeImplications and Policies for Developing Asia, pp. 69 - 74Publisher: Anthem PressPrint publication year: 2010