Essay Sample on Effective Economic Planning for Sustainable Development and Prosperity

Introduction

Economic development and prosperity require effective planning process (Angang, 2011). Economic planning involves the used model like aggregate growth model, project appraisal, and input-output analysis. Planning involves control and command mechanisms in an organization because the authorities provide directives that ensure compliance with the laws and regulations. The three models have similar objectives for economic growth (Roux, 2016). The models focus on the pivotal factors of development like population, the amount of income of the people in the developing country and the financial intervention adopted by the government. Another similarity between the models is the ability to consider the effects of social services like medical care and education on the financial status of developing countries. Lastly, all three planning models demonstrate how foreign aid can be coordinated for maximum impact on economic growth and development in the country.

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Despite similar objectives, the models have characteristic operational differences in developing countries. Input-output analysis and aggregate growth models account for important economic variables like GDP, investments, consumption, and savings of the people in the developing countries while project appraisal does not analyze these variables because it focuses on the evaluation of the projects intended to bring economic prosperity. Project appraisal involves the use of available evidence on economic development (Morrissey & Udomkerdmongkol, 2012). The models enable economist to evaluate both public and private economic utilities, therefore, allowing the government to improve the outcomes of development by ensuring that all social and private costs align to the established goals. The models also enable governments to determine the percentage of incentives and subsidies to provide in developing countries. The weakness of the models is the failure to identify and analyze some of the barriers to economic growth in developing countries.

Impacts of Private Foreign Investment in Less Developed Countries

Private foreign investment plays a role in stimulating economic growth in less developed countries. Another role of foreign investment is to provide financial aid and loans to governments in developing countries. Foreign investment has both negative positive impacts on the economies of the less developed countries. Encouragement of private foreign investments in the less developed country offers a lot of economic importance (Osinubi & Amaghionyeodiwe, 2010). First, private foreign investors create favorable competitions that ensure that effective development in the country. Another positive impact is the ability of the investors to provide new skill, approaches, and strategies for improving productivity and profit maximization in the country. The local investors will learn from the skills offered by foreign investors; therefore, creating inclusive participation in economic development. Foreign Private Investment creates employment for the local residents; therefore, improving the lifestyles of the people and the subsequent increase in the GDP of the country. Lastly, foreign investors introduce forward and backward linkages and transfer technology that improves the rate of production in the country.

Despite the positive impacts, foreign private investment has negative impacts on the economic growth in the less developed countries because most of the investors exploit workers in their companies; therefore, interfering with effective development. Economic strategies provide crucial approaches for ensuring effective economic impacts of foreign private investment. The main strategy is the integration of domestic markets to fit global economic systems (Roux, 2016). In this intervention, the investor sells his/her commodities in most local markets instead of exporting them to foreign markets. Encouragement of investor participation in local markets attracts more investors from different parts of the world; therefore, leading to economic development and minimizes the negative impacts of the practice.

References

Angang, H. (2011). The Democratization of Public Policy Making with Chinese Characteristic: Formulation of China's 12th Five-Year Plan [J]. Journal of Tsinghua University (Philosophy and Social Sciences), 2.

Morrissey, O., & Udomkerdmongkol, M. (2012). Governance, Private Investment and Foreign Direct Investment in Developing Countries. World development, 40(3), 437-445.

Osinubi, T. S., & Amaghionyeodiwe, L. A. (2010). Foreign Private Investment and Economic Growth in Nigeria. Applied Econometrics and International Development, 10(2), 189-204.

Roux, A. (2016). Everyone's Guide to the South African Economy 12th edition. Penguin Random House South Africa. Retrieved from https://scholar.google.com/scholar?hl=en&as_sdt=0%2C5&q=ECONOMIC+DEVELOPMENT+12TH+EDITION&btnG=#d=gs_cit&u=%2Fscholar%3Fq%3Dinfo%3A2a87EuT6DRsJ%3Ascholar.google.com%2F%26output%3Dcite%26scirp%3D3%26hl%3Den