Harrod-domar Model for Development Research Paper

Harrod-domar Model for Development - Research Paper Example This study declares that growth is a narrower concept than development. The latter implies there is an increase in the quantity or value of the goods and services as a result of the productivity of the resources available in the economy while the former implies an increase in living standards, improvement in self-esteem needs and freedom from oppression as well as a greater choice available for the people. As growth is felt and seen in the rise in GDP of a country, development happens in the living conditions of its people through the improved access to the economic needs like education, health and recreation. Economic growth is very important but not an adequate condition for an economy to have a progressive development. The increase in the real Gross Domestic Product brought about by the growth in the economy should result to a progressive change or development which can be seen in the structural changes like an increase in numbers of infrastructures in the economy. These additiona l infrastructures may be in form of factory buildings or facilities imply additional investments. Additional investments may also mean more economic opportunities available for the people residing near where the investment was made.According to the discussion economists proposed theories to explain the importance of economic growth to development and vice versa and tried to emphasize particular patterns that each economy must pursue to attain development. II. Research Problem This paper is about one of the commonly used economic theories in relating growth and development in an economy, the Harrod-Domar Growth Theory. Specifically, this paper will present the development of Harrod-Domar Theory and the economists behind its development. Several factors that linked economic growth to economic development will also be tackled in this paper to establish the applicability of the theory. Possible effects associated with the theory will also be examined to find out if it has its significan ce or implication to the development of an economy. III. Research Objective This paper seeks to establish a deeper understanding of the Harrod-Domar Growth Theory by answering the research problem. This is important in order to explain how economies may or may not develop and how may the growth barriers be identified and overcome in the future. After relating the theory’s significance to the economic condition, it aims to form suggestions which are believed to be appropriate in the formulation of different development policies. IV. Literature Review The theory of economic growth asks what factors determine the full- employment growth rate of output overtime. It is important to study growth theory because it both helps explain growth rates and development and why per capita income level differs among countries. This part will present a brief review of the factors significant or related to economic growth.