Economic planning can be classified into two categories:
Aggregate Economic Planning
This is a type of development planning which deals with the entire economy. The whole economic system is seen as a unit. The major macro-economic variables like consumption, production, investment, saving, exports and imports which are critical for the performance of the economy, are analysed.
Aggregate economic planning models are used to determine possible growth rates of the national output under simplifying assumption about savings and investments.
It should be noted that aggregate model provides only a rough approximation of the general directions which an economy might take and does not constitute the operational development plan.
Disaggregated Economic Planning
This type of economic planning involves sector by sector analysis. It is a very detailed plan, because it involves the setting of target rates of growth for the various sectors of the economy. Total investment is broken down into details and specific investment projects are evolved for each sector as seen in the budget breakdown, e.g., industry, health, education, agriculture or water supply.
Other detailed analysis are also made, e.g. sources of finance for the plan, import and export policy, balance of payments projections and the type of manpower required for implementing the plan. The disaggregated economic planning is also known as “the sectoral growth model”.