A DYNEX-BASED LEARNING LABORATORY FOR
ECONOMIC DEVELOPMENT PLANNING
Khalid Saeed
Asian Institute of Technology
Bangkok, Thailand
ABSTRACT
This paper describes a user-friendly learning medium that revisits the
problem of economic development with a behavioral perspective. Formal
modelling and computer simulation create a laboratory which makes it
possible to experiment with ideas without incurring the costs and risks of
action research. Besides sharing the insights gained by the author inhis
experiments, the package also invites further experimentation by the readers
through the use of the accompanying software.
INTRODUCTION
Laboratories and studios are an integral part of the curricula in engineering,
physical science and fine arts. ‘These allow students to learn to organize their
thinking through experimentation. Laboratories for facilitating learning in the
fields of management and planning are, however, almost non-existent. There
have been some attempts made at developing such laboratories, presented as
games or "flight simulators" designed for specific contexts.
The oldest of the system dynamics games is the so-called Beer-Game, which
has been inuse for more than a decade for teaching system dynamics. Its
originator is unknown. 1 Other well-known games include Stratagem-1,
developed by Dennis Meadows in 1984, and Stratagem-2, developed by John
Sterman in1985.2 A Management Flight Simulator concerning the main
operations of a firm, developed by High Performance Systems in 1987 isa
relatively recent addition to the inventory of such games .3
The bundling of STELLA software with extensive text materials is one of the few
attempt to create an experimental learning facility related to a professional
field [Richmond, et. al. 1987a, 1987b]. Few other serious attempts have been
made to create learning media combining the discussion of theory and
empirical evidence with a facility to experiment with the theoretical
constructs ina particular professional field.
This paper describes a learning laboratory developed by the author consisting
of a book addressing the issues of design and implementation of economic
development agenda using system dynamics modelling and a DYNEX~based
computer program which allows interactive experimentation with the models
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of the book. Although currently considered an interesting but maverick
product by the book publishers, such products should become increasingly
available in the future for self-study and for use as text or supplementary
text for teaching.
DESIGN CONSIDERATIONS
Donald Schon suggests that education in professions should aim at cultivating
"reflective practice," which should allow the practitioner to engage ina
meaningful discourse with the demonstrations of his or her own ideas while
preparing a design. In some professions outside of engineering and physical
sciences, such as architecture and music, this might be possible to
accomplish by learning to critically examine the outcomes of the initial
designs since these can be quickly translated into visual or aural media for
demonstration [Schon 1983,1987].
However, any reflective practice in the professions of planning and
management would require experimenting with the perceived behavioral
relationships forming part of a design, which has not been possible except ina
limited way. This is due to the inadequacy of the traditional methods available
for such experimentation, namely qualitative reasoning and formal
mathematical logic. The former, being inexact, is unable to assist the
reflective process ina reliable way. The later can handle only very limited
complexity while its application requires specialized skills; hence its scope is
limited.
System dynamics overcomes some of the limitations of the traditional methods
by providing well defined organizing principles to model the designs of
complex social processes, existing as well as new, and affect improvements
in these designs through experimentation. The study of organizing principles
of systems, together with the possibility to simulate on a computer the
outcomes of the hypothesized system relationships, provides an easy-to-use
means for such experimentation [Forrester 1968, Simon 1969]. Most
experienced system dynamists would also agree that the process of modeling
is of great value as a reflective exercise; sometimes, even of greater value
than the model itmay create in the end [Forrester 1985]. Thus, system
dynamics seems ideally suited to introducing the concept of reflective practice
in the teaching of management and planning, but this would require redesigning
teaching formats and preparing textbooks and materials to facilitate teaching
and learning in the new formats.
These were the considerations leading to the development of the learning
laboratory discussed in this paper.
ORGANIZATION OF THE LEARNING LABORATORY
The contents of the laboratory have been organized into three parts: 1) the
main text of the book containing discussions of the structure of the models
provided for experimentation, the related empirical evidence and the key
experiments performed by the author; 2) the technical appendices containing
mathematical details and operating instructions for the computer program;
3) two floppy diskettes containing the software. The software can be
implemented on any IBM personal computer, or compatible, operated with MS-
DOS version 3.2 or higher.
The software accompanying the book is based on the DYNEX utility of Profession
DYNAMO Plus package. Menus in this program have been prepared in plain
English and these allow one to select between the various models [for
example, see Figure 1], recognize and modify model assumptions [for
example, see Figure 2], recognize and select policy choices [for example, see
Figure 3], simulate models [for example, see Figure 4], and display results
[for example, see Figure 5]. Some of the relatively lengthy menus are only
for providing theoretical premises [for example, see Figure 6].
By following these menus, one can assemble a model with the assumptions of
one's choice and also make policy runs with any number of policies selected
from the menus. No programming or other computer related experience is
needed to experiment with this program, although it is helpful. Knowledge of
DYNAMO simulation language is also helpful but not required.
Select model you wish to experinent
with:
: ncome
ME STRISUTION Figure 1: The Main Menu
for Selecting
a Model and
Going to Plot
Options.
LONG TERM LABOR WAGE
Select one of Following choices:
a default assumption that Long Term Labor wage Figure 2: Example of a
depends on econsay-wide average of MREW, ana go to Menu for
next selection for modifying model assumptions. Modifying Model
Assumptions
2. Long Term Labor Wage Rate to be based on econony-wide
average of Consumption Expenditure per Worker
‘Type your option (1, 2) and press snter key -
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PRODUCTIVITY IMPROVEMENT —————————_
select one of following choices:
a time
1. Productivity is increased by 50% at designates
2. You specify fractional improvement in productivity
3. No change, skip this policy
3) and press Snter key -
‘ype your choices (2, 2,
Would You Like to Continue
with Simulation?
Select Your choice (Y, N) and preas Enter —
PLOPTING OPTIONS
‘Select one of following choices:
j1.Plot Land owned by formal sector, and by self-employed
2:plot capital owned by formal sector, and by self-employed
{Plot MRPW in formal and self-employed sectors
fé:plot MRPK in formal and self-omployed sectors
5:plot land-worker ratio in fornal and self-enployed sectors
plot MRPL in formal and self-employed sectors
7 {plot all of the above
‘type your option (1, 2, 3, 4, 5, 6, 7) and press mter key-
‘THEORETICAL ASSUMPTIONS
‘The default model is based on the neo-classical econonic|
theory. Following are its critical simplifying assumptions:
1, Labor Wage depends on the marginal revenue product of
labor in the long run and labor market conditions in the
in the short run.
2. Renting of land or capital inputs is not allowed.
3. Financial market is perfect and investment decisions are
based only on economic efficiency.
4, Technology of production is uniform in all sectors of
the economy.
5. Capital inputa available are of ONE type only, Traditional!
Press Enter to continue
Figure 3:
Figure 4:
Figure 5:
Figure 6:
Example of a
Menu for
Specifying
Policy Options
Menu for
Ordering
Simulation
Example of a
Menu for
specifying
Plots
Example of a
Menu for
Providing
Theoretical
Premises
AUDIENCE
The learning laboratory addresses the issue of design of change for economic
development. It would not only be a good reading and experimental facility for
the serious practitioner, it would also make a suitable text or supplementary
text for an advanced course or a professional development workshop on the
subject of the package.
An effort has been made to keep the three parts of the package as self-
contained as possible, so the audience could pursue these independently of one
another, depending on its interests, A casual subject may like only to go
through the main text of the book which qualitatively describes the models of
the package and discusses their behavior and empirical evidence concérning
these models. A scientist interested in knowing the mathematical structure of
the models may like also to study the technical Appendices. A professional
considering application of the concepts discussed in the book may wish to
further experiment with the models using the software provided. All three
parts would be used if this book is applied as part of a text for a course.
COVERAGE
The process of the design of change requires a deep understanding of the
dynamics of the existing system, which is greatly facilitated by computer
simulation and the heuristical protocol of the system dynamics method.
Without the attempt to understand the social organization in which development
is to occur, planning is reduced only to wishful thinking or moral statement
making, although such uncontextualized thinking has been widely practiced in
preparing development plans, and has been taught in the universities.
Formal modelling of the organizational processes involved in economic
development should, however, be viewed only as a vehicle to facilitate
understanding of the development agenda, not as a source of design. To
reduce the complexity of formal modelling, the problem should be partitioned
into smaller components, provided that this does not disconnect important
symbiotic processes subsuming the variety of experience over time and
geographic location.
Guidelines for partitioning complex problems into multiple models are
discussed in the main text. Models containing conservative systems capable
of generating a large number of time variant patterns, which in reality are
separated by time and location, appear to be sound instruments for facilitating
the design of change. Following these guidelines, the developing country
system is partitioned in into three sub-systems: 1) social relationships of
production and income distribution, 2) ecological and technological factors
governing the utilization of natural resources, and 3) political relationships
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affecting the ability of government to support public welfare. Policy
experiments with the models are addressed to the following issues.
a) Changing Income Distribution
The analysis provided in the main text identifies two types of instruments for
changing wage and income distribution patterns -- those creating fundamental
forces of change and those facilitating change. The fundamental instruments
of change identified are to discourage absentee ownership and promote artisan
ownership, This may be operationalized through fiscal policies that increase
the cost of owning capital resources in absentee form, for example by
imposing a tax on income accrued from such ownership. The facilitators
include the well-known technological and financial development policies and
community assistance programs which have been the main fare of the past
development effort.
Experimentation with the model of social relationships creates the recognition
that mere implementation of the facilitating factors may not cause any change
in wage and income distribution patterns; this is borne out by the experience of
the developing countries. The facilitatorsmay, however, speed up the
process of change, if the primary engine of change suggested above has been
provided.
The experimentation also allows combining the fundamental and the facilitating
policies in designing an appropriate path of change depending on the
government's ability to intervene, and to cope with change.
b) Achieving Food Security And Eradicating Poverty
Experimentation with the model of social relationships also establishes that
policies, which directly address the symptoms of the problems of poverty and
hunger, such as agricultural development, financial and technical assistance
for the poor and population control, may be defeated in the long run since
socio-technical arrangements of the system favor persistence of poverty and
vulnerability to food shortage.
The solutions to the problems of poverty and hunger appear to lie in attempting
to influence the internal goals of the system by introducing indirect
instruments that encourage transfer of ownership of resources to the self-
employed workers possibly through taxing rent income, and building up a food
slack possibly through adopting staples which require substantial quantities of
cereals to be produced.
c) Managing Natural Resource System
Experimentation with the model of the resource system addresses the
controversy arising from the comparison of the criteria of.the neoclassical
and the environmentalist models. They are internally consistent, but
otherwise have little overlap.
Experimentation leads to the recognition that a sensible resource use policy
must incorporate considerations of both the throughput and the boundary
interaction of human society with its resource environment. These
considerations call for gathering more geological information about
resources. This information should then form the basis for influencing the
prices and the course of technological development so that a tendency to
select appropriate materials for use is encouraged by the market itself
instead of being imposed directly by a government.
d) Managing Technology
The adoption of technologies in the developing countries has generated a wide
variety of performance patterns and this has confused the issue of what might
be an appropriate choice. Experimentation with the various models of the
package allows the problem of choice of technology to be examined keeping in
view the dynamic systems representing the political and social organizations
and the resource environment in which a selected technology must function.
e) Understanding Government's Role
A design of change for economic development cannot ignore the government's
role since it would be impossible to implement development agenda without
government support. Experimentation with the model of the political system
allows to identify critical organizational mechanisms that may assure that a
government is able and willing to support development agenda.
The experimentation creates the recognition that contrary to the many truisms
about economic development being aided by the presence of a "strong"
government that exercises a high level of control, limiting the power of the
government so that it is unable to suppress civil rights appears to be the key
organizational factor for sustaining its support of the development process.
CONCLUSION
The experimental procedure adopted in the package distinguishes itfrom the
purely conceptual edifices on economic development abundantly found in the
literature. The numerical simulation technique used has been in existence for
about half a century, while the heuristical method of system dynamics was
developed some 35 years ago. These approaches could not be used
productively to address a wide range of problems due to the high cost and the
limited availability of computing hardware and software. A significant
technology introduced over the eighties has been personal computing and the
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concept of software user-friendliness. These developments have been
integrated with empirical evidence, social theory and behavioral science
principles in the creation of the learning laboratory.
Such a framework would also be valuable for designing learning laboratories
in other areas of policy design in the social and ecological systems.
NOTES
1. One of the versions of the beer game can be obtained from the author on
request.
2. Available respectively from Dennis Meadows, University of New Hampshire;
and John Sterman, MIT, Cambridge, MA 02139, USA.
3. Available from High Performance Systems, 13 Dartmouth College Highway,
Lyme NH 03768, USA
4, Available from Pugh-Roberts Associates, Five Lee Street, Cambridge, MA
02139, USA
REFERENCES
Forrester, Jay W. 1985. A Model Versus a Modeling Process. System
Dynamics Review. 1(1): 1985.
Forrester, Jay W. 1968. Principles of Systems. Cambridge, MA: Wright-
Allen Press
Richmond, Barry., et. al. 1987a. An Academic User's Guide to STELLA.
Hanover, NH: High Performance Systems Inc.
Richmond, Barry., et. al. 1987b. STELLA for Business. Hanover, NH: High
Performance Systems Inc.
Schon, Donald A. 1983. The Reflective Practitioner. New York: Basic Books
Schon, Donald A. 1987. Educating The Reflective Practitioner. San Francisco:
Jossey-Bass Publishers
Simon, Herbert. 1969. The Sciences of the Artificial. Cambridge, MA: MIT
Press
