Course: Economic Development of Pakistan-II (4660) Semester: Autumn, 2021
Q.l Economic development of Pakistan naturally divides itself into three historical periods, the 19670s, the early and the mid 1970s and the period since 1978. Differentiate the process of Economic Development Planning between three periods.
Pakistan is a developing country. The economy is semi-industrialized, with centres of growth along the Indus River. Primary export commodities include textiles, leather goods, sports goods,
The economy of Pakistan is the 26th largest in terms of purchasing power parity (PPP), and 46th largest in terms of nominal gross domestic product. Pakistan has a population of over 220 million people (the world’s 5th-largest), giving it a GDP per capita(nominal) of $1,543 which ranks 181st, and giving it a GDP per capita(PPP) of $5,964 which ranks 174th in the world.
The growth poles of Pakistan’s economy are situated along the Indus River; the diversified economies of Karachi and major urban centers in the Punjab, coexisting with lesser developed areas in other parts of the country. The economy has suffered in the past from internal political disputes, a fast-growing population, and mixed levels of foreign investment. Foreign exchange reserves are bolstered by steady worker remittances, but a growing current account deficit – driven by a widening trade gap as import growth outstrips export expansion – could draw down reserves and dampen GDP growth in the medium term. Pakistan is currently undergoing a process of economic liberalization, including privatization of all government corporations, aimed to attract foreign investment and decrease budget deficits.
As of May 2021, the Pakistani government has predicted that future growth rates will be 5%, one of the highest in South Asia. According to the World Bank, poverty in Pakistan fell from 64.3% in 2002 to 2.3% in 2018. The country’s improving macroeconomic position has led the Moody’s Investors Service to upgrade Pakistan’s debt outlook to “stable”.
In 2017, Pakistan’s GDP in terms of purchasing power parity crossed $1 trillion. By May 2019, the Pakistani rupee had undergone a year-on-year depreciation of 30% vis-a-vis the US dollar. In 2020, CPEC Phase 2 has been started, with new billion dollar agreements.
Amidst massive inflow of American aid, political stability enabled Pakistan to sustain high rates of growth in the 1960s. 26 Poverty incidence (poverty headcount ratio expressed as a percentage of population) ranged from almost 50% in the early 1960s to 54% in 1963-64. 27 In the 1960s, Pakistan achieved an agricultural growth rate of 5% per annum by achievingsignificant investments in water resources, increased incentives for farmers, mechanization of agricultural production processes, increased usage of fertilizers and pesticides, and the increased cultivation of high yielding varieties of rice and wheat. 28 The large-scale manufacturing grew at a rate of 16% per annum during 1960/61-1964/65 due to protection of domestic industry from imports and subsidies for exporters. 29 In the wake of the PakistanIndia War of 1965, the reduced foreign economic assistance caused the large-scale manufacturing to grow at a lower rate of 10% per annum during 1965-70. 30 Pakistan achieved an average annual growth rate of 6.7% in GDP during 1960-1970. 31 In 1969-70, poverty incidence declined to 46%32 and Per Capita GNP was Rs.504 in West Pakistan and Rs.314 in East Pakistan – indicating a widening of the regional economic disparity noted earlier.
Because of growing interregional economic disparity, East Pakistan revolted against West Pakistan and became independent (Bangladesh) in 1971. Then, the martial law authorities empowered the socialist Pakistan People’s Party amidst very difficult macroeconomic circumstances33 − poverty incidence rose to 55% in 1971-72, 34 there was an increase in Pakistan’s import bill due to the October 1973 world oil price shock, a serious post-1973 global recession during 1974-77, failures of cotton crops in 1974-75, pest attacks on crops, and massive floods in 1973, 1974, and 1976-77. 35 Pakistan experienced the worst inflation during 1972-77, when prices increased by 15% per annum. 36 During 1973-77, annual average fiscal deficit/GDP ratio was 8.1%. 37 Trade balance deficits were US$337 million in 1970-71 and US$1,184 million in 1976-77. 38 A military coup d’état occurred on 5 July 1977, and the martial law regime accomplished denationalization, deregulation, and privatization. 39 Agriculture grew at a rate of 2.4% per annum and the large-scale manufacturing grew at a rate of 5.5% per annum in the 1970s. 40 While the large and medium-scale private manufacturing contributed 75% of the value-added and 70-80% of the total investment in manufacturing in the 1970s, the remainder of the 25% of the value-added was contributed by the small-scale manufacturing.
Hallmarks of the 1980s were the reversal of the nationalization regime of the 1970s42 and the revival of private sector’s industrial investment, which led to high rates of growth. 43 Poverty incidence declined to 29.1% in 1986-87. 44 Unemployment rate declined from 3.7% in 1980 to 2.6% in 1990. 45 During 1985-88, the Government tried to implement the Islamic interest-free banking system, which introduced Islamic business partnerships between entrepreneur and the owner of capital based on the principle of sharing profits and losses. 46 Pakistan achieved a national savings/GDP ratio of 16% in 1986-87 amidst massive inflows of worker remittances from the Middle East. 47 However, Pakistan experienced the problems of negative public savings and declining public investment/GDP ratio throughout the 1980s and used a large portion of the additional national savings to finance the enlarged fiscal deficits – a result of both the steep growth in the public sector’s non-development expenditures and the tendency of the tax revenue/GDP ratio to decline – since the 1980s. 48 The increasingly enlarged budget deficits in the early 1980s were financed mainly via non-bank domestic borrowing. 49 Domestic debt grew from Rs.58 billion in mid-1981 to Rs.521 billion in 1988. 50 Consequently, the public debt/GDP ratio was 77.1% in 1988, 81.9% in 1989, and 82.6% in 1990. 51 This explosion of the domestic debt resulted in large interest payments, public expenditure, and fiscal deficits. 52 Democracy was restored in 1985. 53 During 1980-1990, Pakistan’s average annual growth rate of GDP was 6.3%. 54 A manufacturing exports’ boom occurred in the 1980s, with an annual large scale manufacturing growth rate of 8.8% and an annual agricultural growth rate of 5.4%.
Q.2 Write short notes on the following:
- Economic Planning in Pakistan
- Population growth and Economic Developmen
Economic Planning in Pakistan
Economic planning began in 1948 when Prime Minister Liaquat Ali Khan presented the first Five-Year plans at the parliament of Pakistan on 8 July 1948. The first plan was conceived by the Ministry of Finance (MoF), and were studied and developed by the Economic Coordination Committee (ECC) based on the theory of Cost-of-production value,
Economic planning is a resource allocation mechanism based on a computational procedure for solving a constrained maximization problem with an iterative process for obtaining its solution. Planning is a mechanism for the allocation of resources between and within organizations contrasted with the market mechanism. As an allocation mechanism for socialism, economic planning replaces factor markets with a procedure for direct allocations of resources within an interconnected group of socially owned organizations which together comprise the productive apparatus of the economy.
There are various forms of economic planning that vary based on their specific procedures and approach. The level of centralization or decentralization in decision-making depends on the specific type of planning mechanism employed. In addition, one can distinguish between centralized planning and decentralized planning. An economy primarily based on planning is referred to as a planned economy. In a centrally planned economy, the allocation of resources is determined by a comprehensive plan of production which specifies output requirements. Planning can also take the form of indicative planning within a market-based economy, where the state employs market instruments to induce independent firms to achieve development goals.
A distinction can be made between physical planning (as in pure socialism) and financial planning (as practiced by governments and private firms in capitalism). Physical planning involves economic planning and coordination conducted in terms of disaggregated physical units whereas financial planning involves plans formulated in terms of financial units.
Different forms of economic planning have been featured in various models of socialism. These range from decentralized-planning systems which are based on collective decision-making and disaggregated information to centralized systems of planning conducted by technical experts who use aggregated information to formulate plans of production. In a fully developed socialist economy, engineers and technical specialists, overseen or appointed in a democratic manner, would coordinate the economy in terms of physical units without any need or use for financial-based calculation. The economy of the Soviet Union never reached this stage of development, so planned its economy in financial terms throughout the duration of its existence. Nonetheless, a number of alternative metrics were developed for assessing the performance of non-financial economies in terms of physical output (i.e. net material product versus gross domestic product).
In general, the various models of socialist economic planning such as a socialist mode of production exist as theoretical constructs that have not been implemented fully by any economy, partially because they depend on vast changes on a global scale. In the context of mainstream economics and the field of comparative economic systems, socialist planning usually refers to the Soviet-style command economy, regardless of whether or not this economic system actually constituted a type of socialism or state capitalism or a third, non-socialist and non-capitalist type of system.
In some models of socialism, economic planning completely substitutes the market mechanism, supposedly rendering monetary relations and the price system obsolete. In other models, planning is utilized as a complement to markets.
Population growth and Economic Developmen
Population growth helps the process of development in certain ways and hampers it in certain other ways. This is so because the relationship between population growth and economic development is intricate, complex and interacting. On the positive side, an increasing population means an increase in the supply of labour— a basic factor of production.
The main contribution of this book lies in its focus on real alternatives in future population growth. At some time-taken as 1956 in India for this case study-a low-income country may have the option of effectively promoting the reduction of fertility, or of permitting fertility to remain at high levels. This book clearly shows the nature and extent of the economic gains resulting from fertility reduction. Since most low-income areas are destined for rapid population growth even with substantial fertility declines, the emphasis is placed between moderately rapid and very rapid growth. The extensive quantitative population projections show the importance of the growth rate itself and of changes in age distribution in addition to population size. The results for India have direct implications for all low-income, primarily agrarian areas entering a program of economic development. Originally published in 1958. The Princeton Legacy Library uses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These editions preserve the original texts of these important books while presenting them in durable paperback and hardcover editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905.
Q.3 Discuss the merits and demerits of post-substitution type of industrialization in Pakistan.
Industrialization is the development of industries in a region or a country on a wide scale. It is also the period of economic and social change that transforms human societies from agrarian tendencies into one that has the purpose of manufacturing. When the incomes of workers rise, then the markets for different consumer goods and services expands. That results in a further stimulus to economic growth and industrial investment.
The first steps toward industrialization took place in the middle of the 18th century. The initial focus was on specific areas of North America and Europe, with Great Britain leading the way into this new economy. Its initial characteristics included shifts from rural work, technological progress, and changes in class consciousness.
These steps led to changes in family structure as industrialization continued to develop. Pre-industrial societies have extended connections because several generations likely remained in the same location. Industrial societies tend to keep the nuclear family together only, with the desire to remain mobile to continue relocating to where job opportunities exist.
Several advantages and disadvantages of industrialization are worth taking into consideration.
List of the Advantages of Industrialization
- Industrialization brought us the current import-export market.
Businesses use the concepts formed from industrialization to have a more abundant supply available for particular goods and services. When domestic demands were not enough to help optimize production levels, multinational firms began forming. Countries could expand their import and export markets for the goods getting made.
The world started to see that the balance of trade was shifting to the producer, increasing the wealth of businesses, and adding tax revenues to society.
- It allows us to become more productive.
Industrialization brought us a series of new and useful items, hand tools, and additional ways to be productive. This benefit promptly led to the development of new channels and shipping methods that could carry more products and people from one place to another. That led to the creation of roads that could support higher traffic levels.
Communication processes improved because of industrialization, eventually leading us to the telephone and fiberoptic cables. Even machines like the loom allowed manufacturers to create more items in a shorter time. When electricity became available, then humanity’s standard of living increased even further because of these efforts.
- Industrialization makes goods and services more affordable.
Labor is the most expensive part of the manufacturing process for most industries. When people were creating items by hand, including books and clothing, then they needed to be compensated for their efforts. With machines helping humans to create products with greater speed, then the cost of labor per unit went down.
This advantage applies to services because industrialization provided equipment that made jobs easier to complete. Imagine the difference between manually cleaning a rug versus using a vacuum cleaner. It is an advantage that eventually led to higher levels of income for everyone in the economy.
- It improves the quality of life for each person and household.
Before the world experienced industrialization, comfort and convenience were typically reserved for the wealthy, nobles, military leaders, and high-ranking politicians. The introduction of mass production changed how everyone could access goods or services. It was a change that led to mass production of numerous items, lower costs and improved availability to the average family. This event would lead to the first time in history when the “poor” or “middle class” could save money while still meeting their needs.
You could own property without needing to be a farmer or a royal. You didn’t need to grow your own food through homesteading efforts. Some companies were even building towns to give homes to families in exchange for their labor.
- Industrialization improved our medical care.
The technological advances that led to our modern approach to medicine came about because of industrialization. Diagnostic equipment that we often take for granted today, such as MRI and CAT scans, wouldn’t be possible without this evolution. Factories made it easier to produce everything from scalpels to new laboratory equipment, making it possible for more people to become doctors, nurses, and caregivers.
Instead of having regionally-based care, the improvements to communication networks allowed researchers to share their findings in real-time with their colleagues. This process led to the development of new best practices, eventually leading to improved patient outcomes.
- It allows a worker to focus on specialization.
Farmers who focused on monoculture and people with individual skills were the only specialists in the pre-industrialization economy. Once societies began to focus on manufacturing, this developed allowed families to begin training for jobs that could pay them better. Instead of going through a long apprenticeship or being born into the “right” family, anyone could change their stars by putting in enough hard work.
- Industrialization created more jobs for the global economy.
New manufacturing equipment required additional employment opportunities in each community. Factories that had higher quotas to meet needed new workers on the floor working to produce goods. Each new invention or best practice that came about because of industrialization led to more jobs for the global economy. It created structures where the average person could earn a decent living while having more time with their family, even if the conditions were sometimes unsafe or unsanitary.
When the workers with higher wages could invest their savings into new ventures, each economy benefitted because new cash pools help to fund new ventures. It shifted money away from the aristocracy to the average household.
- It shifted our perspective of wants vs. needs.
When people made products before industrialization, the labor required to create something meant that each item required a specific purpose. We made things because of their usefulness, which limited our innovation. Factories could make clothing faster while helping it to last longer. It allowed people to step outside of the family business to try something new. This advantage would eventually lead to a stronger free-market economy where those with the most innovation could get rewarded for their creativity.
- Anyone could make a name for themselves because of industrialization.
The story that often gets told when discussing industrialization is the life of Charles Goodyear. He sacrificed almost everything in his pursuit of vulcanization. He went into a lot of debt, lost almost everything in 1837, and then accidentally combined sulfur and rubber on his stove to change the world. Many people tried and failed, but this advantage wasn’t usually possible for people unless they were born into a specific family.
List of the Disadvantages of Industrialization
- The working conditions declined during industrialization.
Industrialization brought people more money and better access to goods and services, but it also increased the amount of risk that people faced. Employees were expected to put in long shifts, often working 12-hour days with only Sunday off to spend time with their families. If you were sick or got injured, then you’d probably get fired.
The work was also quite dangerous. There weren’t any regulations in place to protect employees, so many people worked with equipment that didn’t have safety features. During the 19th century, it was not unusual to see people working with a finger, a limb, or worse.
- Child labor was an essential component of industrialization.
We often take for granted the child labor laws that exist today. Those regulations came about because of society’s experience with this issue during the first days of industrialization. Many factories hired kids to work in unsafe conditions, preferring them because they’d work for lower wages than adults.
Children were expected to work the same 12-hour days that adults put in while on the job, reducing their opportunities for schooling. It was not unusual for families to lose multiple children in these early factories.
- Living conditions around the new factories were not always better.
Factory towns like Hershey had a reputation for providing workers with quality housing and access to needed resources. This outcome didn’t always happen. When the cities became crowded with people moving away from their farms on a chance to earn a better income, then it led to living conditions that weren’t better than the working conditions in the factories. Large slums began forming in many of the communities where entire families were sometimes living in studio apartments.
When that many people lived close together in unsanitary conditions, it was not unusual for diseases to start spreading rapidly. Since there was little medical care available during the early years of industrialization, it was not unusual for most families to lose multiple members in their quest to make a better life.
- Industrialization created more income inequality for the top 0.1%.
We often look at names like Jeff Bezos, Elon Musk, and Bill Gates and their combined wealth of about $400 billion and wonder how a few people can hold so much. During the initial days of industrialization, people like John Rockefeller and Andrew Carnegie held that much money by themselves. The three richest people in the world at the turn of the 20th century held a combined wealth of over $1 trillion when accounting for inflation.
Rockefeller by himself was responsible for almost 2% of the U.S. GDP each year. No one at any other time in history outside of a monarchy controlled that much of the economy.
- It created the foundation for global warming and climate change.
The carbon levels before the 19th century were under 300 parts per million. After industrialization, CO2 rates rose to 400 parts per million. Oceans have a more acidic pH level. We have plastics pollution everywhere, with microplastics entering the human food chain because animals consume these small items.
This disadvantage has led to changes in our soil composition, water quality, and the air that we breathe. It’s reducing biodiversity while our economies grow. Unless action gets taken to curb this issue, we will one day reach a tipping point where a recovery might not be possible.
- Industrialization altered the political landscape of the planet.
We still experience the fallout from industrialization in our global politics. Fewer than 40 countries have gone through a modern economic revolution to fully incorporate these technologies, giving those that have a massive advantage over the “developing” world. There are more opportunities for success in these countries, requiring people who want an advanced education to leave their homes to receive it.
Q.4 As an industrial planner, what policies would you suggest to the government to follow to boost industrialization in Pakistan.
It is generally accepted that a country’s energy supplies are considered of utmost importance at the level of national energy planning. As such, policies are established in order to afford Government a measure of control on overall consumption, without dire consequences to either its industry or commerce.
Countries which had turned to oil in preference to other fuel forms, due to its competitive prices and convenience of use, were suddenly faced with high inflation rates and large deficits in their balance of payments as a direct result of the energy crisis in 1973. To disengage themselves from such imbalances and their economic vulnerability to fluctuations in the oil supply market, governments made strident efforts to establish, what was hoped would be, effective energy policies without compromising existing strategy towards growth in industry and commerce.
Indeed the legacy of the “oil embargo” has left the major industries of the developed countries with a greater respect as to the real importance of energy in their operations. The forest products industry for their part, previously complacent to the role of energy in their overall operation, now regard it as an area where potential savings may be made, thereby affording significant reductions to production costs. Yet, in spite of the fact that the present day oil glut has allowed a relaxation in most energy conservation investment projects, both government, industry and commerce, on a worldwide basis, are seen to be keeping a wary eye on developments in the oil market.
An upward trend in energy prices is inevitable, though to what extent is difficult to predict, nor can events such as civil disturbances, local wars or failure in diplomatic relations be foreseen so as to avoid the sharp increases in oil prices, as took place during the years 1973/74, and to allow governments the lead time necessary to establish buffer stocks and implement effective energy conservation measures.
The establishment of the Special Economic Zone (SEZ) at Rashakai under the aegis of China Pakistan Economic Corridor (CPEC) will boost industrialization and create more jobs in Pakistan. On September 14, Chinese enterprises signed the Development Agreement of Rashakai SEZ with Pakistan, which is the first SEZ development agreement signed between China and Pakistan under the framework of CPEC, to which both governments attach great importance.
The signing of the agreement means that the project will soon enter the substantive construction stage, which is believed to play an important demonstration and leading role in industrial cooperation between the two countries, boost the high-quality development of CPEC and strengthen the internal driving force of Pakistan’s economic development.
According to the Board of Investment (BOI), the Rashakai SEZ, also known as the REZ will pave the way for the establishment of new zones, which will lead to a prosperous and industrial Pakistan. Besides the REZ, which is located in the Khyber Pakhtunkhwa Province, other SEZs being established under the CPEC, include the China Special Economic Zone Dhabeji at Thatta, in the province of Sindh; Bostan Industrial Zone in the Province of Balochistan; Allama Iqbal Industrial City (M3), Faisalabad in Punjab; ICT Model Industrial Zone, Islamabad; Development of Industrial Park on Pakistan Steel Mills Land at Port Qasim near Karachi; Special Economic Zone at Mirpur, Azad Jammu Kashmir; Mohmand Marble City in former FATA and the Moqpondass SEZ at Gilgit-Baltistan.
The SEZ at Mirpur will have a mixed bag of industries, the details of which are being worked out while Mohmand Marble City will cater to the marble industry
The BOI informs that while the various zones are being prepared for business, REZ is gearing up to handle Fruit and Food processing and Packaging along with Textile Stitching and Knitting. Dhabeji project is working on the feasibility of industries to be included. Bostan Industrial zone will comprise Fruit Processing, Agriculture machinery, Pharmaceutical, Motor Bikes Assembly, Chromite, Cooking Oil, Ceramic industries, Ice and Cold storage, Electric Appliance and Halal Food Industry. The Allama Iqbal Industrial City, which has been planned as the largest SEZ, will include the industries comprising Textile, Steel, Pharmaceuticals, Engineering, Chemicals. Food Processing, Plastics and Agriculture Implements. The Islamabad Capital Territory Industrial Zone will provide for the industries pertaining to Steel, Food Processing, Pharmaceutical & Chemicals, Printing and Packaging and Light Engineering. The Industrial Park at Port Qasim will house facilities to support Steel, Auto & allied, Pharma, Chemical, Printing and Packaging and Garments industries. The SEZ at Mirpur will have a mixed bag of industries, the details of which are being worked out while Mohmand Marble City will cater to the marble industry. The Moqpondass SEZ at Gilgit-Baltistan will address the industries of Marble, Granite, Iron Ore Processing, Fruit Processing, Steel, Mineral Processing Units and Leather.
The geographical proximity between Pakistan and China will help in populating SEZs as well as contribute to mutual economic gains. For the REZ, at least Rs3 billion have been allocated to provide 210 MW of electricity and 30 million cubic feet per day (mmcfd) gas. The timely construction and development of the zone will be possible with the provision of all the basic facilities required as the REZ is being constructed with the help of an investment worth Rs128 million, covering an area of 1,000 acres. The REZ was designated as a special economic zone in August 2019 and portends prosperity for the region.
The writer is a retired Group Captain of PAF. He is a columnist, analyst and TV talk show host, who has authored six books on current affairs, including three on China
Q.5 Critically analyze the importance of foreign sector component in formulation of nation development plan.
The Town and Country Planning Act (“TCPA”) 1990 originally contained (in Part 2) all of the primary legislation relating to the formulation of the development plan. The PCPA 2004 then introduced new systems for England and Wales; Part 6 of that Act contained the development plan system for Wales. More recently it has been significantly amended by the Planning (Wales) Act (“P(W)A”) 2015. 6.2 The development plan includes national, regional and local policies and proposals for land use within the relevant area. In Wales, it consists of 1) the national development framework (the NDF) (the successor to the Wales Spatial Plan),1 2) strategic development plans (where they exist),2 and 3) local development plans.3 6.3 Each of these is used to help guide planning authorities and inspectors when making determinations of planning applications, and in a number of other situations (see Chapter 5). 6.4 Each of the components of the development plan listed above relates to a different tier of governance. The national development framework is a statement of the Welsh Government’s national policies as to the use and development of land, and developments of national significance. Strategic development plans contain the working out of those policies at a regional level, while local development plans refer to the policies and plans of local planning authorities
We also noted that the final text of the NDF is likely to be published in 2020, and that no strategic development plans have yet been produced; 5 and that the Welsh Government was undertaking a review of the law relating to regional governance. Each of those might lead to further pressure for legislative change, but to consider possible changes now would be inappropriate.6 6.7 Consultation questions therefore focused on the restatement of the current law, or made recommendations for amendments of a more detailed nature. And our principal proposal was thus that the statutory provisions relating to the formulation of the development plan should once again be integrated into the main planning Act. 6.8 All 42 consultees who provided a response to this consultation question were in principle supportive of this approach. Many urged us to review the expiry date for local development plans, with Sirius Planning recommending a requirement be inserted for local development plans to be reviewed every five years. Cardiff Council suggested that “the expiry date…should be deleted”. Huw Williams (Geldards LLP), on the other hand, suggested that an additional requirement that local plans are no more than 100 pages “would help focus policy planner’s minds”. 6.9 We understand the desire for a statutory requirement as to the duration of a plan. However, it is unlikely to be suitable for primary legislation. If such requirements are (at least on paper) too restrictive, they have to be accompanied by a mechanism to enable out-of-date plans to be “saved”; such procedures are used all too often, so that the requirement is ineffective. We therefore consider that strongly-worded guidance is more appropriate. 6.10 We note that the Welsh Government is currently undertaking a review of its local development plan manual. This document is likely to contain detailed guidance about the desirable duration and size of a local development plan, and it would therefore be more appropriate for these matters to be addressed directly in that context. 6.11 We therefore still consider that the new Bill should contain the provisions of the PCPA 2004 relating to the formulation of development plans, as amended or substituted by the P(W)A 2015, subject to appropriate formatting changes to bring them into line with the remainder of the Bill. This will be simply a restatement of the existing law, but their inclusion in the main Planning Bill will be a significant improvement.
Policy formulation clearly is a critical phase of the policy process which also is an explicit subject of policy design. The public policy formulation is part of the pre-decision phase of policy making including to craft the goals and priorities and options, costs and benefits of each options, externalities of each option. It involves identifying a set of policy alternatives and public policy tools to address a problem as a result that a prepared set of solutions is done for the final solutions from which decision makers actually choose by judging the feasibility, political acceptance, costs and benefits. But the attention to policy formulation is also embedded in work on policy communities and policy networks, who does the design? (see Chap 6, Studying Public Policy (Howlett, 2003)). On the other words, the formulation process will need the motivation and participation of different actors with their entrances of new actors and new ideas who will actually play their roles in the policy design process. In the context of developing countries, this paper aims to examine the model of policy formulation and the type of feasible solutions or options for resolving the policy problems. Thus, the structure of the sub-system with two components of the discourse community and interest network will decide the participation of different policy actors and final chosen public policy solutions.
The involvement of businesses and civil society – consumers, private entrepreneurs, employees and citizens and community groups, NGOs in designing public policy is critical if the Government of developing countries are to improve the transparency, quality and effectiveness of their policies as well as establishing the legitimacy of the public policy. Socio-economic and political conditions of a country determine or shape the network of a particular policy, so we explore recent research examining linkages between models of economic development and welfare regimes in developing countries where are known as weak institutional capacity, lack of accountability to the citizen to predict the policy formulation in developing countries. 2 As a preliminary effort to remedy this shortcoming in the literature, we offer a political logic for the observed variation in the character of institutions of social policy established by nondemocratic regimes. Pross (1986) described the policy community as a network of individuals, groups, government departments, organizations, and agencies that dominate decision making in a specific policy field. Accordance to Hai Do (2010), the dominant model of policy formulation in developing countries is the bureaucratic politics amongst the interrupted equilibrium, organizational process, and rational actor. Frans Van Waarden (1992) combined Rhodes’s analysis with eight basic types of subsystem in Atkinson and Coleman (1992) to issue seven criteria on which the network can be varied: number and type of actors, function of networks, structure, institutionalization, and rules of conduct, power relations, and actor strategies. Howlett and Ramesh (1998, 2003) continued to construct the taxonomy of discourse communities which are two dichotomous dimensions in dominant idea set and numbers of idea set can be realistically applied for the analysis in a place of policy formulation. In additional, studying the interest networks, the taxonomy of interest networks which are again dichotomous dimensions of dominant actor and number of members, so these variables are shaping the structure and behavior of the policy networks (Howlet and Ramesh, 1998, 2003). The two variables and additional dominant idea set and numbers of idea set are used to discuss on the process of public policy formulation in developing countries.