In this article, we discuss some basic models of economic growth which lay the foundation for any comprehensive study of the process of economic development. The aggregate production function lies at the heart of every model of economic growth.
The process of economic growth is a highly complex phenomenon and is influenced by numerous and varied factors such as economic, political, social and cultural factors. It is believed by some economists that the capital is the only requirement for growth and therefore the greatest emphasis is laid on capital formation to bring about economic development.
But this is wrong.
Capital is a necessary but not a sufficient condition of progress. The quantity and quality of natural resources play a vital role in the economic development of a country. Important natural resources are land, minerals and oil resources, water, forests, climate, etc.
The quality of natural resources available in a country puts a limit on the level of output of goods which can be attained. Without a minimum of natural resources there is not much hope for economic development.
It should, however, be noted that resource availability is not a necessary condition for economic growth. This is because resources have not been fully utilised for productive purposes. Thus it is not only the availability of natural resources but also the ability to bring them into use which determines the growth of an economy.
On the other hand, Japan has a relatively few natural resources but has shown a very high rate of economic growth and as a result has become one of the richest countries in the world. How has Japan done this miracle? It is international trade that has made possible for Japan to achieve higher growth rate.
It then exports manufactured goods to the countries that are rich in natural resources. Thus experience of Japan shows that abundant natural resources are not a necessary condition for economic growth. It should also be noted that the scarcity of certain natural resources can be overcome by synthetic substitutes.
For example, the synthetic rubber is being increasingly used in the place of natural rubber in advanced countries.
Further, nylon which is a synthetic substance is being largely used in place of silk which is a natural substance.
The use of natural resources and the role they play in the economic growth depend, among other things, on the type of technology. The relationship of resources to the kind and level of technology is very intimate. One does not have to go back very far in history to find when an item currently as valuable as petroleum was of little or no significance.
It is only recently that the various radioactive elements have come to be regarded as valuable. In many developing economies there are, no doubt, deposits of many minerals that are not being used because of technological deficiencies.
Labour is combined with capital to produce goods and services. Workers need machines, tools and factories to work. In fact the use of capital makes workers more productive. Setting up of more factories equipped with machines and tools which raise the productive capacity of the economy.JOURNAL OF ECONOMIC DEVELOPMENT 2 sympathetic to Keynes, have rejected the Har rod-Domar model as being neoclassical.
3 In this paper, we argue that a properly defined Harrod-Domar model provides a. Nell'ambito della teoria della crescita in economia, il modello di Solow, o modello di Solow-Swan o anche modello neoclassico di crescita, prende il nome dal Premio Nobel Robert Solow, che lo sviluppò in un noto lavoro del Il modello studia la dinamica della crescita economica di un paese nel lungo periodo e venne sviluppato da Solow a partire dal modello Harrod-Domar.
Evsey David Domar (Russian: Евсей Давидович Домашевицкий, Domashevitsky; April 16, – April 1, ) was a Russian American economist, famous as co-author of the Harrod–Domar model.
The AK model of economic growth is an endogenous growth model used in the theory of economic growth, a subfield of modern benjaminpohle.com the s it became progressively clearer that the standard neoclassical exogenous growth models were theoretically unsatisfactory as tools to explore long run growth, as these models predicted economies without technological change and thus they would.
Michael P. Todaro's Model of Rural-Urban Migration: The unlimited supplies of labor models as presented by Lewis and Ranis-Fei failed to pay attention over migration. Sample Test Questions for Development Economics.
Below are a set of sample test questions taken from previous exams in Development Economics. The answers are indicated by the *.