Full text: Study week on the econometric approach to development planning

industry models would then convert these demands into specific 
oroducts and decide how these products could best be pro- 
duced. The general model would then check the total primary- 
input requirements of the productive system and indicate 
whether any primary inputs were in short supply and, if so, 
to what extent they should be economised on. It would also 
change its initial cost structures and indicate revised output 
requirements. Such a treatment would allow for a manageable 
expansion of the initial model and at the same time would 
ensure that the information available was put to the best use. 
By the various methods I have suggested we may hope to 
increase the amount of information that the model can absorb. 
But cases may still arise where we are unable to formulate 
some of the relationships we need: some processes of real life 
cannot be represented in the model. All we can do is to observe 
certain influences and certain effects; we cannot relate the two. 
We must then turn to the ‘black box’ technique as adapted 
to economic and industrial problems by BEER [3]. 
Reduced to its simplest terms this idea can be formalised 
as follows. In the real world there is some system, the eco- 
nomy in our case, which produces a certain outcome: in a 
circuit diagram we could represent this process by an arrow 
eading from a box marked E to a box marked O. By studying 
this system we make a model of it and use this model to for- 
mulate a plan: this conceptual activity could be represented 
oy an arrow leading from a box marked M to a box marked P. 
The two sides of life are connected: the model is based on the 
real world, and so an arrow loads from E to M; and the plan 
influences the outcome, and so an arrow leads from P to O. 
Now, the model consists of certain relationships and these 
control the plan. If some of these relationships change in 
‘he real world but not in the model, then the plan determined 
by the model will always be wrong and the situation will get 
out of control. We could avoid this happening if between the 
model and the plan we could insert a device, the ‘black box’. 
[1] Stone - pag. 15

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