Deborah F. Aquino
BSA 1202
Activity 3. Fill in the table below with the summary of the main argument and weaknesses/criticism (if there are any) of the
models/theories given.
Classic Theories in Economic Development Models/ Approaches Main Argument/ Criticism
Linear Stage of Growth Model Harrod-Domar Growth Model Main Argument: This model states that savings
led to the investment. When you save, you
invest, and when you invest capital stock
increases and it leads to an increase in the GDP
of the country. The higher GDP of a country
means the country’s economy is growing.
Simply, the basis of this model says that the
growth of the economy of the country is based
on savings and investment.
Criticism: The criticism of this model is that
not all people can save money for their income
is just sufficient for their basic daily needs. This
model is only applicable to a country with
higher income.
Theories and Patterns of Structural Change Lewis Model Main Argument: Lewis Model became the
general theory of the structural change models.
Lewis two-sector model focuses on the process
of transformation of the traditional sector to a
modernized sector. There is a called surplus
labor wherein there is a transfer of traditional
labor to a modern sector. The transfer of human
capital in the modern sector from the traditional
sector helps to promote industrialization,
making a new manufacturing business and
stimulating more work and jobs.
, Criticism: First criticism of this model is that
the higher the number of transfer labor from the
traditional sector to the modern sector, the
higher growth of the latter and the faster the rate
of creating a new job. The second criticism,
there is a large number of surplus labor in the
rural areas and the number of employment in
urban areas is full. A lot of workers are there in
the urban areas making their employment full
while the rural areas have lesser human capital
or workers. The third criticism is that the way of
life of people doesn’t change even though there
is progress in the transformation of work. And
the last criticism is that it doesn’t guarantee that
when your savings increases your investment
will also increase at some point. Not all things
are constant, changes are always there. There is
a possibility that capitalists will invest more in
machines rather than human capital.
International-Dependence Revolution a. Neocolonial Dependence Model Main Argument: This model states that
underdevelopment and poverty (low levels of
living) exist in developing countries due to
indecent policies and interference from other
developed countries.
Criticism: This model doesn’t give insights
into how countries can sustain their
development. It states that developing countries
are more likely to have a closed economy and
just have an exchange of goods and services
with other developing countries rather than in
developed countries.
b. False Paradigm Model Main Argument: From the word itself, this
BSA 1202
Activity 3. Fill in the table below with the summary of the main argument and weaknesses/criticism (if there are any) of the
models/theories given.
Classic Theories in Economic Development Models/ Approaches Main Argument/ Criticism
Linear Stage of Growth Model Harrod-Domar Growth Model Main Argument: This model states that savings
led to the investment. When you save, you
invest, and when you invest capital stock
increases and it leads to an increase in the GDP
of the country. The higher GDP of a country
means the country’s economy is growing.
Simply, the basis of this model says that the
growth of the economy of the country is based
on savings and investment.
Criticism: The criticism of this model is that
not all people can save money for their income
is just sufficient for their basic daily needs. This
model is only applicable to a country with
higher income.
Theories and Patterns of Structural Change Lewis Model Main Argument: Lewis Model became the
general theory of the structural change models.
Lewis two-sector model focuses on the process
of transformation of the traditional sector to a
modernized sector. There is a called surplus
labor wherein there is a transfer of traditional
labor to a modern sector. The transfer of human
capital in the modern sector from the traditional
sector helps to promote industrialization,
making a new manufacturing business and
stimulating more work and jobs.
, Criticism: First criticism of this model is that
the higher the number of transfer labor from the
traditional sector to the modern sector, the
higher growth of the latter and the faster the rate
of creating a new job. The second criticism,
there is a large number of surplus labor in the
rural areas and the number of employment in
urban areas is full. A lot of workers are there in
the urban areas making their employment full
while the rural areas have lesser human capital
or workers. The third criticism is that the way of
life of people doesn’t change even though there
is progress in the transformation of work. And
the last criticism is that it doesn’t guarantee that
when your savings increases your investment
will also increase at some point. Not all things
are constant, changes are always there. There is
a possibility that capitalists will invest more in
machines rather than human capital.
International-Dependence Revolution a. Neocolonial Dependence Model Main Argument: This model states that
underdevelopment and poverty (low levels of
living) exist in developing countries due to
indecent policies and interference from other
developed countries.
Criticism: This model doesn’t give insights
into how countries can sustain their
development. It states that developing countries
are more likely to have a closed economy and
just have an exchange of goods and services
with other developing countries rather than in
developed countries.
b. False Paradigm Model Main Argument: From the word itself, this
