Question

Explain the difference between central command planning and indicative planning. An example of a country that uses indicative planning is France; explain how indicative planning has been applied in France and its relative success. Given the complexity of the interdependencies in modern industrial technology, explain how indicative planning might complement a more successful industrial development for a country. What is the weakness of indicative planning in this regard? Carefully explain.

Answer 1

• Indicative Planning - it indicates the most desirable and expected economic planning and reforms

It manages and supervises the working of all the sectors of an economy in different situations

It makes the future economic strategies more transparent and risk free

It works on the model of policy-making and planning

It coordinates the relationship between the relation between public and private activities

• Central Command Planning - under this the decision-making powers are envisaged to the central government authorities only

the major decisions are made for the allocation of economic resources like - land, labour, capital, and other natural resources

The prices of the different goods and services are also controlled and checked

The coomands and decisions made by the planning authorities are beneficial for the economic activities in the long-run

Hence, Indicative Planning indicates what is desirable for the upliftment and growth of an economy and expects that its indications will be taken in consideration.

While, the Central Command Planning plans, commands and instructs different measures to make the economy work more efficiently.