It is the idea that the economic growth is dependent on capital-output ratio (k, calculated as: Total output produced/total capital invested i.e. efficiency) and the saving ratio of the population.
The assumptions it makes are:
- Output is a function of capital stock
- The marginal product of capital is constant.
- Capital is necessary for output
- The product of the savings rate and output equals saving which equals investment
- The change in the capital stock equals investment minus the depreciation of the capital stock
It states that
Rate of growth of GDP = Savings ratio/ Capital output ratio.
according to harrod domar model the level of savings remain constant to the proportion of income.Harrod-Domar model assumes a simple production function y=f(k), where k is capital
By the Harrod-Domar model, net investment should be greater than depreciation rate or there should be an increase in the productivity of the factors of production.
difference between horred-domer and solow model
It assumes that savings and investment are all that is needed for growth. No diminishing returns to capital is an implicit assumption.
A socioeconomic model tells you more than an economic model does, so in most cases I would say the socioeconomic model is better.
Domar serfdom model was created in 1970.
according to harrod domar model the level of savings remain constant to the proportion of income.Harrod-Domar model assumes a simple production function y=f(k), where k is capital
By the Harrod-Domar model, net investment should be greater than depreciation rate or there should be an increase in the productivity of the factors of production.
1991
difference between horred-domer and solow model
in 1991 in 1991
It assumes that savings and investment are all that is needed for growth. No diminishing returns to capital is an implicit assumption.
well i think this model really addresses growth and not development. you need to ask yourself whether economic growth equates development. the third world in its developing state may not necessarily develop in the linear manner as suggested in this model. further, many of the third world countries are dependent on the first world so any form of economic growth usually does not translate into development as most of the money leaves these countries to support the economies of the north.
The modernization model is a theory that suggests that societies evolve from traditional to modern forms through a series of stages, typically including economic development, urbanization, industrialization, and social change. Proponents believe that societies progress through these stages in a linear fashion toward greater wealth, technology, and equality. Critics argue that the model oversimplifies the complexities of societal development and fails to account for differences in cultural context and historical circumstances.
Criticism of the core-periphery model includes oversimplification of global economic relations, neglect of regional variations within core and periphery regions, and limited focus on non-economic factors influencing global inequality. Additionally, some critics argue that the model reinforces a binary view of development that fails to account for nuances and complexities in global economic dynamics.
A socioeconomic model tells you more than an economic model does, so in most cases I would say the socioeconomic model is better.
Khairul Hasan has written: 'Regional and inter-regional input-output model as a planning tool for economic development in Indonesia'