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• Harrod-Domar Growth Model


  A Keynesian approach to economic growth that emphasizes the roles of savings and investment
• Harrod-Domar Growth Model


  • The growth rate of an economy depends on the level of savings and the productivity of capital investment
• Key Concepts of Harrod-Domar Growth Model

  • Saving Rate
  • Capital Output
• Lewis Dual Sector Model


  Describes the process of structural change in an economy, focusing on the transition from a traditional, agricultural sector to a modern, industrial sector
• Lewis Dual Sector Model


  • Illustrates how labor moves from the low-productivity agricultural sector to the high-productivity industrial sector, fueling economic growth
• Key Concepts of Lewis Dual Sector Model

  • Surplus Labor
  • Industrial Sector
  • Labor Transfer
  • Mechanism
• Solow Growth Model


  A neoclassical model that emphasizes the roles of capital accumulation, labor growth, and technological progress in driving long-term economic growth
• Solow Growth Model


  • Highlights how these factors contribute to the steady-state equilibrium where the economy grows at a constant rate
• Key Concepts of Solow Growth Model

  • Capital Accumulation
  • Technological Progress
  • Steady-State Growth
• Saving Rate (s) - The proportion of national income saved and invested.
• Capital Output (k) - The amount of capital needed to produce one unit of output
• Solow Growth Model: Capital Accumulation - Increase in capital stock due to investment
• Labor Growth - Increase in labor force
• Steady-State Growth - A state where the economy grows at a constant rate without changing the capital-labor ratio
• Surplus Labor: Excess labor in the agricultural sector with zero or negligible marginal productivity
• Industrial Sector: Modern sector with higher productivity and wages
• Labor Transfer: Movement of labor from agriculture to industry, leading to industrial growth and increased overall productivity
• Mechanism: As the industrial sector expands, it absorbs surplus labor from the agricultural sector. This process continues until the surplus labor is exhausted, leading to wage increases and further industrial growth
• Authors of Harrod-Domar Growth Model - Sir Ray Harrod and Evsey Domar
• W. Arthur Lewis - Author of Lewis Dual Sector Model
• Author of Solow Growth Model - Robert Solow