UNIVERSITY OF MINDANAO

College of Business Administration Education

Business Economics

Physically Distanced but Academically Engaged

Self-Instructional Manual (SIM) for Self-Directed Learning (SDL)

Course/Subject: CBM 122 Economic Development

Name of Teacher: Natividad Dulce David Madrazo

THIS SIM/SDL MANUAL IS A DRAFT VERSION ONLY; NOT FOR REPRODUCTION

AND DISTRIBUTION OUTSIDE OF ITS INTENDED USE. THIS IS INTENDED ONLY FOR
THE USE OF THE STUDENTS WHO ARE OFFICIALLY ENROLLED IN THE
COURSE/SUBJECT.
EXPECT REVISIONS OF THE MANUAL.

1
 TABLE OF CONTENTS

I. QUALITY ASSURANCE POLICIES ………………………………….. 3

II. INSTRUCTION PROPER ……………………………………………… 7

Week 1-3 Introduction To Economic Development ……………….... 7

Big Picture / Unit Learning Outcome ………………………………….. 7
Metalanguage ……………………………………………………………. 7
Essential Knowledge ……………………………………………………. 9
Let’s Check ………………………………………………………………. 10
Let’s Analyze …………………………………………………………….. 11
In a Nutshell ……………………………………………………………… 14

Week 4-5 Various Theories On Economic Development …………... 16

Big Picture / Unit Learning Outcome ……………………………………16
Metalanguage ………………………………………………………….….16
Essential Knowledge ……………………………………………………..19
Let’s Check ……………………………………………………………….. 20
Let’s Analyze ……………………………………………………………... 21
In a Nutshell ………………………………………………………………. 23

Week 6-7 Measuring Income Inequality And Absolute Poverty ……. 25

Big Picture / Unit Learning Outcome …………………………………… 25
Metalanguage ………………………………………………………….…. 25
Essential Knowledge …………………………………………………….. 27
Let’s Check ……………………………………………………………….. 28
Let’s Analyze ……………………………………………………………... 30
In a Nutshell ………………………………………………………………. 33

Week 8-9 Economic Development And Population, Urbanization,

Human Capital, Agriculture, Environment, International Trade …………. 35
Big Picture / Unit Learning Outcome …………………………………… 35
Metalanguage ………………………………………………………….…. 35
Essential Knowledge …………………………………………………….. 36
Let’s Analyze ……………………………………………………………... 38
In a Nutshell ………………………………………………………………. 44

2
 Course Outline: CBM 122 – Economic Development
Course Coordinator:
Email:
Student Consultation:
Mobile:
Phone:
Effectivity Date:
Mode of Delivery:
Time Frame:
Student Workload:
Requisites:
Credit:
Attendance Requirements:
Course Outline Policy
Areas of Concern
Contact and Non-contact Hours
Assessment Task Submission
Natividad Dulce David Madrazo, MM
nmadrazo@umindanao.edu.ph
By LMS, email
(082) 227-5456 Local 131
June 25, 2020
Blended (On-Line with face-to-face or virtual sessions)
54 Hours
Expected Self-Directed Learning
BE 221
3
A minimum of 95% attendance is required at all
scheduled virtual or face-to-face sessions.
Details
This 3-unit course self-instructional manual is designed
for blended learning mode of instructional delivery with
scheduled face-to-face or virtual sessions. The
expected number of hours will be 54 including the face-
to-face or virtual sessions. The face-to-face sessions
shall include the summative assessment tasks or
exams.
Submission of assessment tasks shall be on 3rd, 5th, 7th
and 9th week of the term and emailed to the course
coordinator indicating the:
- name of the student (SURNAME first please)
- class hour
- assessment task module number
- date of submission
You are expected to have already paid your tuition and
other fees before the submission of the assessment
task.
If the assessment task is done in real time through the
features in the Blackboard Learning Management
System, the schedule shall be arranged ahead of time
by the course coordinator.
3
 You are required to take the Multiple Choice Question
exam inside the University and this is non-negotiable.
This should be scheduled ahead of time by the course
coordinator.

Turnitin Submission To ensure honesty and authenticity, all assessment

(if necessary) tasks are required to be submitted through Turnitin
with a maximum similarity index allowance of 30%.
This means that if the paper goes beyond 30%, you will
either opt to redo the paper or explain in writing
addressed to the course coordinator the reasons for
the similarity. In addition, if the paper has reached
more than 30% similarity index, you may be called for a
disciplinary action in accordance with the University’s
OPM on Intellectual and Academic Honesty.

Please note that academic dishonesty such as cheating

and commissioning other students or people to
complete the task for you will be penalized ranging from
reprimand, warning, expulsion.

Penalties for Late The score for an assessment task submitted after the
Assignments/Assessments designated time or the due date, without an approved
extension of time, will be reduced by 50% of the
possible maximum score for said assessment.

However, if the late submission of assessment paper

has a valid reason, a letter of explanation should be
submitted and approved by the course coordinator. If
necessary, you will also be required to present/attach
evidences.

Return of Assignments/ Assessment tasks will be returned to you two (2) weeks
Assessments after the submission. This will be returned by email or
via Blackboard portal.

For group assessment tasks, the course coordinator will

require some or few of the students for online or virtual
sessions to ask clarificatory questions to validate the
originality of the assessment task submitted and to
ensure that all the group members are involved.
Assignment Resubmission You should request in writing addressed to the course
coordinator your intention to resubmit an assessment
task. The resubmission is premised on the student’s
failure to comply with the similarity index and other
reasonable grounds such as academic literacy

4

Re-marking of Assessment
Papers and Appeal
Grading System
Preferred Referencing Style
Student Communication
standards or other reasonable circumstances like
illness, accidents, financial constraints.
You should request in writing addressed to the course
coordinator your intention to appeal or contest the score
given to an assessment task. The letter should explicitly
explain the reasons/points to contest the grade. The
course coordinator shall communicate with you on the
approval or disapproval of the request.
If the request is disapproved, you can elevate your
case to the program head or the dean with the original
letter of request. The final decision will come from the
dean of the college.
All culled from BlackBoard sessions and traditional
contact
Course discussions/exercises – 30%
1st formative assessment – 10%
2nd formative assessment – 10%
3rd formative assessment – 10%
All culled from on-campus/onsite sessions (TBA):
Final exam – 40%
Submission of the final grades shall follow the usual
University system and procedures.
APA 6th Edition.
You are required to create a umindanao email account
which is a requirement to access the BlackBoard
portal. Then, the course coordinator shall enroll the
students to have access to the materials and resources
of the course. All communication formats: chat,
submission of assessment tasks, requests, others shall
be through the portal and other university recognized
platforms.
You can also meet the course coordinator in person
through the scheduled face-to-face sessions to
raise your issues and concerns.
For students who have not created their student email,
please contact the course coordinator or program head.
5

Contact Details of the Dean
Contact Details of the Program
Head
Students with Special Needs
Online Tutorial Registration
Library Contact Details
Well-being Welfare Support Help
Desk Contact Details
Course : CBM 122 Economic Development
Prepared by : Natividad Dulce David Madrazo
Reviewed by: CMC
College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131
Vicente Salvador E. Montaño, DBA
Email: vicente_montano@umindanao.edu.ph
Phone: 082-227-5456 Local 131
Claudio A. Bisares, MSE
Email: cbisares@umindanao.edu.ph
Phone: 082-227-5456 Local 131
Students with special needs shall communicate with the
course coordinator about the nature of said special
needs. Depending on the nature of the need, the
course coordinator with the approval of the program
head may provide alternative assessment tasks or
extension of the deadline of submission of assessment
tasks. However, the alternative assessment tasks
should still be in the service of achieving the desired
course learning outcomes.
Brigida E. Bacani Head – LIC
Phone: (082) 300 – 5456
Hotline No. 0951 376 6681
library@umindanao.edu.ph
Dra. Ronadora E. Deala – Head - GSTC
Email: ronadora_deala@umindanao.edu.ph
Phone: (082)300-5456
GSTC Facilitator: Rhoda Neileen P. Luayon
Email: gstcmain@umindanao.edu.ph
P a g e 6 | 15
 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

MODULE 2 – VARIOUS THEORIES ON ECONOMIC DEVELOPMENT (Weeks 4 – 5)

Unit Learning Outcome: At the end of the unit, you are expected to:

1. Acquire extensive information and examine each economic development theories

from 1950s to the early 21st century.

CF’s Voice: In this second module of CBM 122 - Economic Development, you will be
introduced to different economic development theories that were utilized by developed
nations.

CO: Exploring the above theories will allow you to explain the extent which economic
theories may be helpful in designing development policies among developing nations (ULO
2).

LET’S PROCEED!

METALANGUAGE

This section relates to the more essential terms needed for you to understand this unit. To
demonstrate the ULO 2, you will refer to the following definitions should you have some
queries along the way.

1. Big push A concerted, economy-wide, and typically public policy–led effort to initiate
or accelerate economic development across a broad spectrum of new industries and
skills.

2. Center In dependence theory, the economically developed world.

3. Complementarity An action taken by one firm, worker, or organization that

increases the incentives for other agents to take similar actions. Complementarities
often involve investments whose return depends on other investments being made
by other agents.

4. Coordination failure A situation in which the inability 
of agents to coordinate their
behavior (choices) leads to an outcome (equilibrium) that leaves all agents worse off
than in an alternative situation that is also an equilibrium.

Course : CBM 122 Economic Development

Prepared by : Natividad Dulce David Madrazo
Reviewed by: CMC P a g e 7 | 15
 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

5. Dependence The reliance of developing countries on developed-country economic

policies to stimulate their
own economic growth. Dependence can also mean that
the developing countries adopt developed-country education systems, technology,
economic and political systems, attitudes, consumption patterns, dress, and so on.

6. Dominance In international affairs, a situation in which the developed countries

have much greater power than the less developed countries in decisions affecting
important international economic issues, such as the prices of agricultural
commodities and raw materials in world markets.

7. Dualism The coexistence of two situations or phenomena (one desirable and the
other not) that are mutually exclusive to different groups of society—for example,
extreme poverty
and affluence, modern and traditional economic sectors, growth
and stagnation, and higher education among a few amid large-scale illiteracy.

8. False-paradigm model The proposition that developing countries have failed to

develop because their development strategies (usually given to them by Western
economists) have been based on an incorrect model of development, one that, for
example, overstresses capital accumulation or market liberalization without giving
due consideration to needed social and institutional change.

9. Free markets The system whereby prices of commodities or services freely rise or
fall when the buyer’s demand for them rises or falls or the seller’s supply of them
decreases or increases.

10. Free-market analysis Theoretical analysis of the properties of an economic system

operating with free markets, often under the assumption that an unregulated
market performs better than one with government regulation.

11. Harrod-Domar growth model A functional economic relationship in which the

growth rate of gross domestic product (g) depends directly on the national net
savings rate (s) and inversely on the national capital-output ratio (c).

12. Lewis two-sector model A theory of development in which surplus labor from the
traditional agricultural sector is transferred to the modern industrial sector, the
growth of which absorbs the surplus labor, promotes industrialization, and
stimulates sustained development.

13. Market failure A market’s inability to deliver its theoretical benefits due to the
existence of market imperfections such as monopoly power, lack of factor mobility,
sig- nificant externalities, or lack of knowledge. Market failure often provides the
justification for government intervention to alter the working of the free market.
Course : CBM 122 Economic Development
Prepared by : Natividad Dulce David Madrazo
Reviewed by: CMC P a g e 8 | 15
 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

14. Market-friendly approach The notion historically promulgated by the World Bank
that successful development policy requires governments to create an environment
in which markets can operate efficiently and to intervene only selectively in the
economy in areas where the market is inefficient.

15. Multiple equilibria A condition in which more than one equilibrium exists. These
equilibria sometimes may be ranked, in the sense that one is preferred over another,
but the unaided market will not move the economy to the preferred outcome.

16. Neoclassical counterrevolution The 1980s resurgence of neoclassical free-market

orientation toward development problems and policies, counter to the
interventionist dependence revolution of the 1970s.

17. Neocolonial dependence model A model whose main proposition is that

underdevelopment exists in developing countries because of continuing exploitative
economic, political, and cultural policies of former colonial rulers toward less
developed countries.

18. O-ring model An economic model in which production functions exhibit strong
complementarities among inputs and which has broader implications for
impediments to achieving economic development.

19. Patterns-of-development analysis An attempt to identify characteristic features of

the internal process of structural transformation that a “typical” developing
economy undergoes as it generates and sustains modern economic growth and
development.

20. Periphery In dependence theory, the developing countries.

21. Public-choice theory (new political economy approach) The theory that self-interest
guides all individual behavior and that governments are inefficient and corrupt
because people use government to pursue their own agendas.

22. The term self-discovery somewhat whimsically expresses the assumption that the
products in question have already been discovered by someone else (either long
ago, or recently in a developed economy); what remains to be discovered is which of
these products a local economy is relatively good at making.

23. Stages-of-growth model
of development A theory of economic development,

associated with the American economic historian Walt W. Rostow, according to
which 
a country passes through sequential stages in achieving development.

Course : CBM 122 Economic Development

Prepared by : Natividad Dulce David Madrazo
Reviewed by: CMC P a g e 9 | 15
 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

24. Structural transformation The process of transforming
an economy in such a way

that the contribution to national income by the manufacturing sector eventually
surpasses the contribution by the agricultural sector. More generally, there is a
major alteration in the industrial composition of any economy.

25. Structural-change theory The hypothesis that underdevelopment is due to under-

utilization of resources arising from structural or institutional factors that have their
origins in both domestic and international dualism. Development therefore requires
more than just accelerated capital formation.

26. Surplus labor The excess supply of labor over and above the quantity demanded at
the going free-market wage rate. In the Lewis two-sector model of economic
development, surplus labor refers to the portion of the rural labor force whose
marginal productivity is zero or negative.

27. Underdevelopment An economic situation characterized by persistent low levels of

living in conjunction with absolute poverty, low income per capita, low rates of
economic growth, low consumption levels, poor health services, high death rates,
high birth rates, dependence on foreign economies, and limited freedom to choose
among activities that satisfy human wants.

The key words in this module include Rostow’s stages of growth, Harrod-Domar model,
Lewis two-sector model, Patterns of Development, the Neocolonial dependence model, the
False-paradigm model, the Dualistic-development thesis, the Free-market approach, the
Public-choice approach, the Market-friendly approach, the Multiple equilibria, the Theory of
big push and the O-ring theory.

ESSENTIAL KNOWLEDGE

To perform the aforesaid big picture (unit learning outcome) for the next two (2) weeks of
the course, you need to fully understand the following essential knowledge that will be laid
down in the succeeding pages. Please note that on top of the resources below, you are
expected to utilize other books, research articles and other resources that are available in
the university’s library e.g. ebrary, search.proquest.com, others.

In Chapter 3 pages 120-121, you will read the Linear Stages of Growth models by Walt W.
Rostow and duo economists British Roy F. Harrod/ American Evesey Domar more popularly
known as Harrod-Domar growth models. Rostow detailed his stages of growth that all
countries must go through. Harrod-Domar, on the other hand related the importance of
savings and investment to propel economic growth.

Structural change models that you will find in pages 124 and 129 have two notable theories
Course : CBM 122 Economic Development
Prepared by : Natividad Dulce David Madrazo
Reviewed by: CMC P a g e 10 | 15
 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

by W. Arthur Lewis and Hollis B. Chenery and his coauthors. Lewis had his two-sector
surplus model where the labor of the agriculture sector transferred and were employed in
the urban sector. Chenery and coauthors studied postwar patterns of development of
several countries and their empirical work identified different features common among the
countries.

1970 saw the emergence of International Dependence models since “developing countries
are beset by institutional, political, and economic rigidities, both domestic and international,
and caught up in a dependence and dominance relationship with rich countries”. Major
streams of thought are the neocolonial dependence model, the false-paradigm model, and
the dualistic-development thesis that you will find in pages 131 and 133.

Ten years after, the Neoclassical Counterrevolution surfaced where economists argued that
“underdevelopment resulted from poor resource allocation due to incorrect pricing policies
and too much state intervention by overly active developing-nation governments”. You will
read in pages 135-137 the three (3) approaches being, the free-market approach, the public-
choice approach, and the market-friendly approach.

Finally, you will read some new models of economic development as influenced by
complementarities and coordination failures under pages 165, 168, 174 and 187. You will
dip into the multiple equilibria, the theory of big push and the O-ring theory. To cap this unit
is the topic on economic development as self-discovery on page 192.

LET’S CHECK

1. Enumerate Rostow’s stages of growth

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2. What the two sectors under Lewis model?

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Course : CBM 122 Economic Development

Prepared by : Natividad Dulce David Madrazo
Reviewed by: CMC P a g e 11 | 15
 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

3. Give the common features Chenery and coauthors revealed from their study.

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4. Define the following:

a. coordination failure

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b. complementarity

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LET’S ANALYZE

1. Explain the Harrod-Domar model.

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2. Analyze each and every International Dependence models.

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Course : CBM 122 Economic Development
Prepared by : Natividad Dulce David Madrazo
Reviewed by: CMC P a g e 12 | 15
 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

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3. List the Neoclassical counterrevoluton approaches. What do you think is the

approach that the Philippines should employ? Defend your answer.

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4. Pick one of the new models of economic development and discuss extensively.

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5. How will you adapt economic development as self-discovery in the Philippines?

Elaborate your answer.

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Course : CBM 122 Economic Development
Prepared by : Natividad Dulce David Madrazo
Reviewed by: CMC P a g e 13 | 15
 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

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IN A NUTSHELL

All discussed economic development theories from the 1950s to the early part of the 21 st
century offered a broad range of experience that developing nations could explore,
scrutinize and probably redesign to their particular state of affairs.

I have listed below lessons learned and arguments from this unit. You have to list your own
too.
1. Due to the earlier notions of development that a country is considered developed
when it is industrialized, so many agricultural lands and efforts have been put aside
and neglected. People in the rural sector has this contorted concept to this day thus
governments have much work to do to erase the same. They have to restore the
“glory” of the agricultural sector.

2. Can the Philippines really be out of the shadow of its colonizers especially the US? It
is of everyone’s knowledge of the Filipinos’ colonial mentality where imported goods,
expatriates, foreign-schooled Filipinos are more looked up to than their local
counterparts.

YOUR TURN

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Course : CBM 122 Economic Development

Prepared by : Natividad Dulce David Madrazo
Reviewed by: CMC P a g e 14 | 15
 College of Business Administration Education
2nd Floor, SS Building
Bolton Street, Davao City
Telefax: (082)227-5456 Local 131

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8. ____________________________________________________________________
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END OF MODULE 2

Reference: Todaro, Michael P. & Smith, Stephen C. (2015). Economic Development (12th ed.).
New York University, New York: Pearson

Course : CBM 122 Economic Development

Prepared by : Natividad Dulce David Madrazo
Reviewed by: CMC P a g e 15 | 15