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Sea Economic Development
Topic 6: Economic development
planning and management
Instructor: Ph.D Nguyen Trong Dac
Group 12: Bui Thi Huyen
Pham Thao Hang
Tran Thi Thuy

I.
NATURE AND FUNCTIONS OF
ECONOMIC DEVELOPMENT
PLANNING AND MANAGEMENT.

Strategic Economic Development Planning
(SEDP):
 Respresents a way of thinking about local
economic change and its management.
 An interactive and integrated process of
analysis which enables a community to adapt
to change through the critical, and ongoing,
assessment of its status relative to the
evolution of its operating environment

 Strategic economic development planning
focusses on key actions implementable by
the community; lengthy "wish-lists" of
goals, objectives, and policies are
avoided.
 To stimulate, and convert, thought about
economic development problems and
potentials into tangible, co-ordinated
actions.

The Strategic Economic Development
Planning (SEDP) Process:
 Stage 1: Organizing for SEDP
 Stage 2: Context-Setting
 Stage 3: Planning Becomes Action
 Stage 4: Monitoring and Evaluation

Stage 1: Organizing for SEDP
 Must be in place prior to start-up of strategic
economic development planning.
 SEDP will require team-work
 The lead co-ordinative role is usually taken
by the municipal government. The resources
of local government, the private sector, not-
for-profit agencies, and special interest
groups should be identified and "tapped"

Stage 2: Context-Setting
 collection and interpretation of the
information necessary
 to assess the relative internal strengths and
weaknesses of the community in terms of
the external opportunities and threats
identified in the community's economic
development operating environment

Stage 3: Planning Becomes Action
 The plan is operationalized
 To attain the selected goals
 Priorities are set, project, policy, and
program staging determined, and
responsibilities delegated that reflect the
community's economic development
interests and resources.

Stage 4: Monitoring and Evaluation
 Performance measures should be developed
and applied
 The appropriateness of the strategies should
be constantly evaluated as the process
evolves; adaptation of the strategies and
tactics in response to changes in the
operating environment is a fundamental part.
of the strategic economic development
planning process

II. National and
International background
for planning and management
of economic development

1. National background
Economic conditions
Social conditions

Economic condition
Agriculture
Industry
Services
Inflation
GDP
Financial Domestic Resources

Region A: Agriculture
 Agriculture is a vital
development tool for achieving
the millennium development
goals.
 In 2015 it was reduced to
half of those suffering from
extreme poverty in the world.
This is the general message
of the World Development
Report in 2008.

Agriculture
 In the 21st century, looking on a global
scale, agriculture is still the primary tool for
sustainable development and poverty
reduction.
 Agricultural activities in the third world
characteristics: first, the national agricultural
second, the transition
countries, three, urbanized countries.

Agriculture in Malaysia
 Agriculture remains an important sector
of Malaysia's economy, contributing 12
percent (2012) to the national GDP and
providing employment for 16 percent of
the population.
 Agricultural exports such as rubber, oil
palm and cocoa are a major source of
export earnings and have significantly
contributed to the development of the
agricultural sector and the economy as a
whole.

Agriculture in Vietnam
• Becoming one of the world 's leading
rice exporter (8 million tons) and
second producer of robusta coffee.Now
• Exported 25 million tons of rice, earning
over U.S. $ 10 billion from 2005 to the
present. Value added from 3.7 to 4% /
year, exceeding the 5-year plan of the
Government's target of 3 - 3.2% / year.
In 2005
• The average rural household income
was 26 million, up 11 million over 2003;
cumulative average increase from 3.5
million in 2005 to 6.7 million in 2009.
In 2009

USA ‘s Agriculture
 In United State: In the early days of this
country, agricultural activity has held a major
position in the economy and American
culture.
 In 1940, 6 million farms and average farm of
about 67 acres each. By the late 1990s, only
about 2.2 million farms, but the farm has an
area of 190 hectares.
 It was also during this period, the number of
agricultural workers declined dramatically -
from 12.5 million in 1930 to 1.2 million at the
end of the 1990s - even though the U.S ‘s
population increased more than double

Industry
Industrial development and poverty alleviation
 Over 9 million people die worldwide each year
because of hunger, Approximately 1.2 billion
people suffer from hunger. Southeast Asia
countries are developing country, poverty rate
still remain high. So, solving the poverty problem
is important and necessary. Reducing the level of
poverty thus remain the Government’s major
develop challenge. Government will discuss
direct and indirect, medium-term and long- term
linkages that exist between industrial
development and poverty alleviation. Two basic
facts must be appreciated when formulating
industrial policy in the world.

Industry
Industrial development and regional
balance
 Formal industries will not locate in
rural areas unless a strong linkage
exist with a rural resource that has to
be processed on the spot. Industrial
development’s contribution to regional
balance will follow the two lines of
rural industrialization as well as formal
urban-based industrialization.

Industrial development and environment
 The central urban adopts the strategy of
removing the industrial enterprises but
encourage the service trade, it's to direct the
industrial enterprises' combination, relocation,
transformation and management. Accelerate
the environmental infrastructure construction,
which achieve the economic and effective
treatment on pollution. Environmental
infrastructure construction is an important
measure of pollution control as well as the
important foundation to support the national
long-term sustainable development.

Chinese Industry
 Chinese the rate of growth of industrial output in 2012
reached 10%, but this increase is lower than the 3.9%
growth recorded in 2011.
 During the month 12/2012, industrial production
increased by 10.3% compared with a year
earlier, slightly higher than the 10.1% increase in
November. Previously, the technology yields fell to the
lowest level of growth in the years into August with an
increase of only 8.9%.
 In heavy industry, industrial output jumped 10.6% year
over year, while light industry recorded a 9.6% increase.
 China's economy has accelerated in the fourth
quarter, reaching 7.9% after the lowest level since the
second quarter of 2009 to 7.4% in the previous quarter.

Japan Industry
 The industrial park focused on the
Pacific Rim including Keihin (In the
Kanto plains), Chukyo (Nagoya
concentrate around), Hanshin
(Osaka), Setouchi (Surrounding
Hiroshima) and Kitakyushu (Kitakyushu
Surrounds and Fukuoka). In
particular, the Keihin is most important
and 42% of Japan's total industrial
output.
 Along with the traditional sector is the
industrial and high-tech electronics. The
company is headquartered here include:
NEC, Sanyo.

Region C : Services in
Vietnam
• From 1995 to 2003, volume of freight nearly doubled.
• Over the past 20 years, the service sector has increased 5
percentage points in GDP economy. In 2004, this sector
contributed 3.02 percentage points to the GDP growth rate
(7.69%).
• The growth of the service sector is lower than the growth rate of
the economy. Compared Singapore, Thailand, Malaysia, countries
's service sector contribution to GDP is still low (38% compared
64.96%, 49.79%, 41.92% respectively).

Region D: Inflation
 Definition
Inflation means the rate at which the general
level of prices for goods and services is
rising, and, subsequently, purchasing power
is falling.

Measures
Inflation
Consumer
Price Index
( CPI)
Commodity
Price Index
Cost of
Living Index
( COLI)

In Asia
 Predicted inflation in India may be up to 10%, and in
Southeast Asia, this number will exceed 5%. forecast inflation
in China will increase to 4%, more than double the current
level
 Inflation in India has become an issue that the country's
central bank "headache" in the last year and that they can not
cut interest rates aggressively to stimulate the economy is in
a state of meager. Wholesale price index, the main inflation
gauge in India, rose 7.24% in November compared with the
same period last year.
 Home prices in Singapore rose 56% during the period from
2007 to date and most analysts predict this trend will continue
this year on the basis of interest rate home loan at a low
level.
 In Hong Kong, house prices have risen about 20% in
2012, after rising 60% in the last decade. The escalation of
house prices in this region comes from the interest rates for
home mortgages and record low cash flow in from the outside

Region E: Gross Domestic
Product
 Definition
In economics, the total domestic product or total gross
domestic product or GDP (Gross Domestic Product) is the
market value of all final goods and services produced
within a national territory for a certain period (usually in a
year)
 GDP = C + I + G +NX
- C (Consumer) is consumption of all individuals
(households) in the economy.
- I (Investment) is investment of many business in the
business sectors.
- G (Government) is total government spending
(government consumption).
- NX (Net export) = exports - imports

In Malaysia
 The Gross Domestic Product of Malaysia is
depends on its agricultural sector, manufacturing
industries and the service sectors. In 2008, the
agricultural sector had contributed 9.7 % towards
the country’s GDP. The contributions of the
manufacturing industries were estimated as
44.6% and that of service sector was 45.7 %
towards the country’s GDP. As per the GDP- PPP
(Purchasing Power Parity), Malaysia is ranked
29th in the world. A GDP growth rate of 20 %
was noticed towards the end of 20th century. The
Gross Domestic Product nominal of Malaysia in
2009 was estimated as US$ 207,400 billion in
2009 and that of GDP-PPP was estimated as $
3.9 billion. The GDP nominal per capita in 2009
was estimated as US$ 8.100.

Finance Domestic resources
 Dangerous levels of nonperforming assets at Thai
banks helped trigger the attack on the Thai baht by
currency speculators that led to the Asian financial crisis
in 1997–1998. By 2003 nonperforming assets had been
cut in half to about 30 percent.
 Despite a return to profitability, however, Thailand's
banks continue to struggle with the legacy of the
financial crisis in the form of unrealized losses and
inadequate capital.
 In addition, the Thai government is attempting to
strengthen the financial sector through the consolidation
of commercial, state-owned, and foreign-owned
institutions.
 The Bank of Thailand sought to stem the flow of foreign
funds into the country in December 2006. The massive
selling by foreign investors amounted more than
US$708 million

Social resources
 Human capital
 Policies
 Unemployment

Human capital
 Nowaday, people are considered to be a'' special''
resource, a source of economic development.
 There is the view that human resource development:
a value for human, material values and the spirit, the
mind and soul as well as professional skills, cause
people to become workers have the capacity and
quality of the new, higher, meet the big demand and
the increasing of economic development - social.
 Development is the process of improving human
capacity in all aspects: physical strength, mental
power, mind power, and distribution.
 High quality of human resources is a concept to
indicate a person, a specific employee skill levels
(professional and technical),certain techniques
(University, the universities, colleges, skilled technical
workers).

Policies
 (1) Average tariff rates
 (2) Extent of imports governed by
quotas and licensing
 (3) Average export taxes
 (4) The size of the black market
premium on the exchange rate

Unemployment
Frictional unemployment
 Is the time period between jobs when a
worker is searching for, or transitioning from
one job to another. It is sometimes called
search unemployment and can be voluntary
based on the circumstances of the
unemployed individual. Frictional
unemployment is always present in an
economy, so the level of involuntary
unemployment is properly the unemployment
rate minus the rate of frictional
unemployment, which means that increases
or decreases in unemployment are normally
under-represented in the simple statistics.

Cyclical unemployment
 Also known as deficient-demand unemployment, occurs
when there is not enough aggregate demand in the economy
to provide jobs for everyone who wants to work. Demand for
most goods and services falls, less production is needed and
consequently fewer workers are needed, wages are sticky
and do not fall to meet the equilibrium level, and mass
unemployment results. Its name is derived from the frequent
shifts in the business cycle although unemployment can also
be persistent as occurred during the Great Depression of the
1930s. With cyclical unemployment, the number of
unemployed workers exceeds the number of job vacancies,
so that even if full employment were attained and all open
jobs were filled, some workers would still remain unemployed.
Some associate cyclical unemployment with frictional
unemployment because the factors that cause the friction are
partially caused by cyclical variables. For example, a surprise
decrease in the money supply may shock rational economic
factors and suddenly inhibit aggregate demand.

Classical economists reject the conception
of cyclical unemployment and alternative
Occurs when a labor market is unable to
provide jobs for everyone who wants one
because there is a mismatch between the skills
of the unemployed workers and the skills
needed for the available jobs. Structural
unemployment is hard to separate empirically
from frictional unemployment, except to say
that it lasts longer. As with frictional
unemployment, simple demand-side stimulus
will not work to easily abolish this type of
unemployment.

Classical economists reject the conception
of cyclical unemployment and alternatively
 Suggest that the invisible hand of free
markets will respond quickly to
unemployment and underutilization of
resources by a fall in wages followed by a
rise in employment. Similarly, Hayek and
others from the Austrian school of economics
argue that if governments intervene through
monetary policy to lower interest rates this
will exacerbate unemployment by preventing
the market from responding effectively.
  Keynesian economists

Human capital in Thailand
 Thailand's labor force was estimated at 36.9
million in 2007. About 49% were employed in
agriculture, 37% in services, and 14% in industry.
In 2005 women constituted 48 percent of the
labor force and held an increasing share of
professional jobs. The labor force in 2001 totaled
some 33.4 million (compared with 21.7 million in
1981 and 15.1 million in 1967).
 In 1996, about 50% were engaged in agriculture
and related occupations, 20% in industry, and
30% in services.
 In 2001, unemployment amounted to 3.9% of the
economically active population. Because of
persisting government opposition to
unions, organized labor was not a major factor in
Thai life prior to the 1970s.

II. International background
1. Developed countries
 High standard of living
 Developed industrial background
 Human development index (HDI) is high.
 High income
 High GDP per capita
 FDI strong flow
 Poverty rate is low

Japan‘s Background
 Poor natural resources
(except timber and seafood)
 Overcrowded population
 The majority of fuel
must be import
 Economy is destroyed
during the war

• Economy recovered
rapidly
1945-
1954
• Highly developed1955-
1973 • Slowdown growth
• Finance, industry and science -
technology ranked second (only
after the United States).
• The balance of trade surplus and
foreign exchange reserves on the
top
• Financial institutions (leading the
world).
1974-now

2. Developing countries
Low standard of living
Underdeveloped industrial background
(HDI) isn’t high
High population growth rate.
The unemployed and underemployed
high and increasing.
Mainly on agriculture production and
export base product.
Dominance, dependence, and weakness
of the international relations…

Indonesia’s Background
 Situated in the South- East Asia
 Spectacular economic
growth in 2011 was 6.5%,
6.3% in 2012.
 Having rich mineral resources
 Import oil, export natural
gas and coal.
 Export agricultural products
rubber, palm oil (leading world)
cocoa (third world)
 From now to 2050,
the average growth: 4.35%.
=> Being ranked 16th.

III. Economic development
planning and management

3.1Definition of planning
 Planning is the first function of the four functions of
management are planning, organizing, leading and
testing. Planning is a very important function for each
manager because it is associated with the selection of
goals and plans in the future and helped managers
determine the remaining functions to ensure achieve
security objectives.
 If the standing on the decision: "Planning is a
particular kind of decision to determine a specific future
that managers desire for their organizations."
Management has four basic functions are
planning, organizing, leading and testing. Planning is
like starting from the roots of a large oak, and from
there sprang up the "branch" organization, leadership
and inspection. At this point, the plan is functional and
vital beginning for each manager.

3.2 Role of planning and
management
 Plan is one tool that plays an important role in
coordinating the efforts of the members of a business.
Planning for this goal and how to achieved business
goals.
 Plan works to reduce volatility of the business, or
organization. Instability and change of environment for
planning becomes indispensable and essential for
every business, every manager.
 Plan to reduce duplication and waste activities of the
enterprise resources. When planning, the target has
been identified, the best method to achieve objectives
should choose to use resources efficiently, minimizing
the cost of the initiative because it is in the effective and
appropriate.
 Plan will establish standards to facilitate the inspection
of high efficiency. A business or organization without a
plan is like a piece of wood floating on the river of time.

IV.
ECONOMIC DEVELOPMENT
ANALYZING AND EVALUATION

Contents
 Part I: Introduction
 Part II: Main Content
 Part III: Conclusion

6.4 Economic development analyzing and
evaluation
 I, GDP

evaluation
Indonesia:
 Expects real GDP growth to accelerate from
6.2 percent in 2012 to 6.5 percent this
year, and 6.8 percent in 2014
Malaysia:
 Being one of ASEAN’s strongest domestically
driven economies, Malaysia is likely to enjoy
sustained investment growth in 2013

Myanmar:
 Expects foreign direct investment (FDI)
inflows to be a key driver of growth in
2013 and beyond, with further
diversification of investment from the
energy sector to the manufacturing,
tourism, agricultural, and banking sectors

Philippines:
 2013 is likely to be another year of
domestically driven growth for the
Philippines
Singapore:
 Singapore’s growth outlook for 2013
remains subdued

Thailand:
 In a 2013 GDP growth rate of 4 percent.
Vietnam:
 Vietnam has approved a master plan to
boost the economy, focusing on
restructuring the banking sector and state-
owned enterprises during the 2013-2020
period

evaluation
Inflation
- Definition: the rate at which the general level of prices
for goods and services is
rising, and, subsequently, purchasing power is falling.
Country 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Vietnam 4 -0.6 -0.3 3.9 3.1 9.5 8.3 7.5 8.3 24.4 7 11.8
Philippines 6.8 5 6 3.1 3.1 5.5 7.6 6.2 2.8 9.3 3.2 3.8
Malaysia 2.8 1.7 1.5 1.9 1.1 1.3 3 3.8 4.3 5.4 0.6 1.7
Cambodia 4.5 2.2 1.6 3.3 1.7 3.1 5.8 5 5.9 19.7 -0.7 4.1
Thailand 2.4 2.1 1.6 0.6 1.8 2.8 4.5 5.1 2.2 5.5 -0.9 3.3

evaluation
UNEMPLOYMENT
 Definition:
Unemployment is defined as a situation
where someone of working age is not able to
get a job but would like to be in full time
employment.

evaluation
Types of Unemployment
 Demand Deficient Unemployment.
 Structural Unemployment.
 Real Wage Unemployment.
 Frictional unemployment
 Voluntary Unemployment.

evaluation
 Demand Deficient Unemployment.
Demand deficient unemployment occurs in a
recession or period of very low growth

evaluation
Structural Unemployment
 Due to inefficiencies in the labour market.
It may occur due to a mismatch of skills
or geographical location.

evaluation
 Real Wage Unemployment

evaluation
Frictional unemployment
 This occurs when workers are in between
jobs
Voluntary Unemployment.
 This occurs when workers choose not to
take a job at the going wage rate

evaluation
Vietnam
0
1
2
3
4
5
6
7
2000 2002 2004 2006 2008 2010
rate of unemployment
rate of unemployment

V.
PUBLIC POLICIES FOR PLANNING
AND MANAGEMENT OF ECONOMIC
DEVELOPMENT.

6.5 PUBLIC POLICIES FOR PLANNING AND
MANAGEMENT OF ECONOMIC DEVELOPMENT
Fiscal policy
 Definition: is the means by which a
government adjusts its levels of spending
in order to monitor and influence a
nation's economy.

Balancing Act:
 Economy has slowed down…
˃˃˃Government:decreasing
taxation, giving consumers more spending
money….
 When The Economy Needs To Be
Curbed…
˃˃˃Government can use fiscal policy to
increase taxes

 Who Does Fiscal Policy Affect?
 Conclusion: One of the biggest obstacles
facing policymakers is deciding how
much involvement the government should
have in the economy

 Expansion fiscal policy
Expansionary fiscal policy involves
government attempts to increase aggregate
demand. It will involve higher government
spending and / or lower tax. In
theory, higher government spending will
increase aggregate demand (AD=C+I+G+X-
M) and lead to higher economic growth.

 Expansionary Fiscal Policy

 Leading to higher levels of consumer
spending.
 Leading to inflation because of the higher
demand in the economy.
 leading to an increase in the size of a
government’s budget deficit.

Evaluation of Expansionary Fiscal Policy
 The impact of expansionary fiscal policy:
- What else is happening in the economy?
- Does crowding out occur?
- State of the economy
- Lower income tax may increase incentive
to work
- Higher government spending on
education and training

Contractionary fiscal policy
 Definition: is a government policy of reducing
spending and raising taxes.
 Government Purchases
 Taxes

When contractionary fiscal policy is used:
 Inflation: Inflation is an increase in the
nominal price of items over time
˃˃˃Government will often use
contractionary fiscal policy to slow an
expanding economy to reduce the chances
of inflation.

 Economic Bubbles
An economic speculatory bubble will
emerge. Prices of stock and other assets in
bubble industries are overstated and unstable
and, when the bubble collapses, the
economy can suffer a significant setback.
When the government fears economic
bubbles, it may implement contractionary
fiscal policies.

Monetary policy:
 Definition: The actions of a central
bank, currency board or other regulatory
committee that determine the size and rate
of growth of the money supply, which in
turn affects interest rates

How to combine fiscal and monetary
policies in some country and experiment
for Vietnam.
 China:
- Period 1: (1979 – 1991)
- Period 2: (1991 until now)

Objectives of monetary policy:
 Economic growth
 Exchange stability
 Price stability
 Full employment
 Credit control
 Reduction in equality and wealth
 Creation and expansion of financial
institution

 India:
 Japan:

 Experiment for Vietnam
◦ Build up agency which includes
representative of Ministry of finance, treasury
and central bank. To make link to share
information, objective and method of activities
of each other’s.
◦ Using combination policy bases on real
situation in nation and internation in specific
period.

 Experiment for Vietnam
◦ To establish supply system
information, realize expectation policies
clearly
◦ determining financial and monetary
objectives, ensuring consistent combination
and performing to get objectives.
◦ when using fiscal and monetary policies, need
to consider combination with others
policies, specially method which control
macro carefully

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