A policy is a plan of action to guide decisions and actions based on a set of preferences and choices. The term may apply to the work of government, private sector groups and individuals. A policy is comprised of two main elements:
A policy objective.
One or more policy instruments used to serve the objective and produce specific, related outcomes. Public policy instruments can be one of two main types:
• Actions taken by the state that affect the rules governing the economy as a whole (macroeconomic policy) or governing a particular economic sector (sector policies). These rules affect the behaviour and decisions of the agents operating in the economy and can contribute to establishing conditions favourable to development (e.g. investment, production, provision of services). They usually translate into policy documents, laws or regulations. • Basic principles that direct action by the government on the economy. This includes specifying the role of government, public organizations, parastatal organizations, private organizations and firms and the principles that guide their operation (i.e. internal regulations). Implementing policy may require new legal texts and regulations and specific programmes or investments.
Policies are formulated through a policy process that engages stakeholders in producing new or revised policies...