Theories of Growth

Look at investmentgdp at world prices vs gdp growth

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Unformatted text preview: the rich for how much they needed Rewrite sforeign = v x (g* + d) – (sprivate + spublic) G* = desired/targeted growth rate Total s needed is just v x (g* + d) This is the financing gap The people funding this would like to see it invested in capital stock (machines) Then people will somehow show up and build stuff using machines, get employed, and growth will come from increased savings (take money as wages and save some of it) Policy implications: Main message: Aid money should lead to improvements in investment (capital stock) Investment should lead to growth Specific economic policies can unlash growth: Increase domestic saving Invest in capital, rapid industrialization A test of the model: does investment lead to GDP growth? Look at investment/GDP at world prices vs GDP growth...
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This document was uploaded on 03/28/2014 for the course INAF 252 at Georgetown.

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