1. How would you use the Harrod-Domar Growth Model to support the first series o
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Question
1. How would you use the Harrod-Domar Growth Model to support the first series of the development theory (1950s- 1960s)? 2. What are the criticisms of the Stages Model? 3. What are the assumptions of Lewis' two-sector model? Can you give some examples that could this model fail? 4. According to Todaro model, why would we say that to work in the manufacturing sector is risky? Please use his model and related mathematics formula to support your statement. 5. Follow slides 7, page 37-38, derive the formula of total fertility rate, and state why the countries shown up in slides 7, page 11 could have same total fertility rate, but different age-specific fertility rate curves.Explanation / Answer
1. During the first phase of development of 1950s- 60s, it has been seen that growth in GNP and average per capita income does not necessarily improves the quality of standard of living of people. In order to achieve rapid growth, environmental sustainability, gender issues and income inequalities received less consideration.
Harrod-Domar growth model explained growth in terms of rate of saving and productivity of capital in the economy. Output is assumed in this model as a function of capital and these two are related linearly. It states the greater the quantity of labour and investment level, greater would be the growth of the economy in terms of output. This type of growth policies were taken during the early stage of development in 1950s-60s. Due to this reason, poor economies suffered from the crisis of scarcity of capital and experienced debt crisis for the repayment of loan. Inequalities between developed and developing countries increased that time. Dominance of developed countries over the developing nations was the reason of existence of underdevelopment.
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