indicative planning

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An attempt to promote economic growth by influencing expectations. Indicative planning attempts to combine the advantages of decentralization and central planning. Growth in an economy may lag because of pessimistic expectations: firms do not expect other firms to invest, and do not feel that market prospects make it profitable for them to invest. Central planning would tell firms to invest, but this is thought to be too rigid. Under indicative planning the government sets out to produce a set of forecasts of activity in various sectors, which if believed would persuade each firm that its own investments would be profitable.

Subjects: Economics.

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