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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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This note was uploaded on 09/28/2011 for the course ECON 383 taught by Professor Nafeezfatima during the Fall '11 term at Waterloo.
- Fall '11