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Unformatted text preview: 3) the service sector becomes increasingly dominant the harwaod- domar model (1939-1946) every economy must save a portion of its national income to replace the worn out capital however in order to grow new investments are necessary if we assume there is a position relation between capital stock and output it follows that any new investment will increase the flow of output in addition to investment there are two other fato frowth labourforece ttechnological progress labour force is abundant in a developing country and can be in proportion to capital investment technological progress can be expressed as a decresase in required and ratio- net saving is some proportion of national income s = sY net investment is defined as change in the capital stock I = change K net saving = net investment S=I K / Y = R change K / Change Y = R => change K = R change K From 3 s = I = change K Rchange K change Y = R change y...
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- Fall '11