Varun Aggarwal Preeti Kumari Sapna Rana Nitin Kumar
• What are the major economic development models ? • How India as a more developed nation among the developing, applied these models and what are the results ? • What model we suggest for accelerating the rate of economic and social
• Focus on capital goods and infrastructure development
. with secondary importance accorded to the services and household goods sector • Regulation of private sector economic activities through a complex system of controls.Mahalanobis
• Strong emphasis on investment goods industries sector.
Rostow • Rostow is an economic historian • Countries can be placed in one of five categories in terms of its stage of growth:
.ROSTOW – STAGES OF GROWTH
• The work of American Walt W.
• Characterised by – subsistence economy – output not traded or recorded – existence of barter – high levels of agriculture and labour intensive agriculture
.ROSTOW – STAGES OF GROWTHSociety 1.
– Development of mining industries – Increase in capital use in agriculture – Necessity of external funding – Some growth in savings and investment
The use of some capital equipment can help increase productivity and generate small surpluses which can be traded.
.ROSTOW – STAGES OF GROWTH 2.
– Increasing industrialisation – Further growth in savings and investment – Some regional growth – Number employed in agriculture declines
At this stage.
. The level of technology required will be low.ROSTOW – STAGES OF GROWTH 3. industrial growth may be linked to primary industries.
technology plays an increasing role in developing high value added products.
.ROSTOW – STAGES OF GROWTH 4. Drive to Maturity:
– Growth becomes self-sustaining – wealth generation enables further investment in value adding industry and development – Industry more diversified – Increase in levels of technology utilised
As the economy matures.
entertainment. finance. High mass
consumption – High output levels – Mass consumption of consumer durables – High proportion of employment in service sector
Service industry dominates the economy – banking. leisure and so on.ROSTOW – STAGES OF GROWTH 5. insurance. marketing.
efficiency. and growth Economic growth depends on two factors: A. the saving ratio
.HARRODDOMAR GROWTH The Harrod-Domar model
developed in the 1930s Harrod and Domar expressed the dynamic relationship between saving.
• To grow. economies must save and invest a certain portion of their GNP. the faster they grow. • If more they can save and invest. • If we look at the relationship between savings and economic growth in India. we find the paradox of high savings and low growth despite preferential tax treatment to savings.
NATURAL RATE OF GROWTH WARRANTED GROWTH ACTUAL GROWTH
and the need to synchronise them with
• This focuses on transfer of labour from agriculture. where there is surplus labour. to the modern industrial sector where employment and productivity are expected to rise. without any reference to the appropriate Domestic technology. • This model considers the possibility of the Endogenous component of Domestic Human potential transfers.
are progressively offered to private parties.• The effect is that all the nationalised sectors as well as those in the exclusive control of the government in India. including competitive bidders from international locations.
• The false-paradigm model • The dualisticdependence model
• Free market approach • Public-choice theory • Market-friendly
even after 61 years of Independence
. BOTTOM LINE
• Exogenous rule • Endogenous rule • What is happening to India.