04 ECON 383 Lecture 4

04 ECON 383 Lecture 4 - 3) the service sector becomes...

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Walt Whitman Rostow ( 1916 – 2003) Stage 1 traditional societies 1) subsistence economy – output is produced and consumed by producer rather than traded 2) bartar economy - any trades is arrived by barter where goodes are exchange directly for other goods Stage 2 transitional stage 1) increased specialization generates surpluses for trading 2) there is an emergence of a transport in fracture to support trades 3) increase saving and increase investment 4) external trade occurs ( primary products) Stage 3 take of 1) industrialization increases, with workers moving from agriculture to industry 2) growth is concentrate in one or two manufacturing industries 3) the level of investment is high Stage 4 the drive to maturity 1) The economies is diversifying into new areas 2) Technological innovation is the engine of growth 3) The economy is producing a variety of goods and services Stage 5 the age of high mass consumption 1) the economy is geared towards mass consumption 2) the consumer durable industries flourish
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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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04 ECON 383 Lecture 4 - 3) the service sector becomes...

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