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

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

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