Abstract
The original Harrod-Domar model was Keynesian, or if you like ‘ultra-Keynesian’ in conception. Its two basic propositions, the savings function and the Acceleration Principle, were offered as behavioural relationships. Harrod indeed used them to show that instability was endemic in the system and that it was a system subject to negative feedback. Deviations from the knife-edge of equilibrium were self-amplifying. Domar’s conclusions were the same, but with a different stress — on the ever-increasing rate of growth of investment that was needed if full employment demand was to be maintained. His starting point was the same pair of definitions (those giving the Multiplier and the rate of growth of capacity from given investment) but his conclusion was the requirements for full employment equilibrium. Yet even Domar’s full employment conditions required exogenous elements. Hans Singer’s2 contribution which brings in population belongs to the Harrod-Domar genre. For his was the first application of the model to the developing countries, identifying the structural dynamic of per capita growth relationships, and offering a broad framework for policy.
This paper owes much to the assistance of Joan Wright (Wolfson College) especially in Section III.
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Notes
Singer, H. W., ‘The Mechanics of Economic Development’, Indian Economic Review, 1952.
E.g. Griffin, K. B. and Enos, J. L., Economic Development and Cultural Change, April 1970.
See Stuvel, G., ‘Uses of National Accounts in Economic Analysis’, Income and Wealth, series IV (1956).
Broderick, J. B., ‘National Accounts at Constant Prices’, Review of Income and Wealth, series 13 no. 3 (Sept 1967).
Singer, H. W., ‘Distribution of Gains between Investing and Borrowing Countries’, American Economic Review, Vol. XL, May 1951 Preprinted in Readings in International Economics, edited by Caves, R., and Johnson, H. G.].
Stone, R., Quantity and Price Indexes of National Accounts (OECD, 1956) ch. VII esp. pp. 90–6.
Burge, R. W., and Geary, R. D., ‘Balancing a System of National Accounts in Real Terms’, (IARIW Income and Wealth series IX, 1959).
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© 1976 Alec Cairncross and Mohinder Puri
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Ady, P. (1976). Growth Models for Developing Countries. In: Cairncross, A., Puri, M. (eds) Employment, Income Distribution and Development Strategy: Problems of the Developing Countries. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-81529-6_8
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DOI: https://doi.org/10.1007/978-1-349-81529-6_8
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