Factors Influencing Growth And Development Flashcards
What are the factors influencing growth and development?
Primary product dependency
Volatility of commodity prices
Saving gaps : Harrod-Domar model
Foreign currency gap
Capital flight (assets or money leave country rapidly)
Demographic factors
Debt
Access to credit and banking
What is the Harrod-Domar model?
It states that economic growth is dependent on the level of savings and the capital output ratio
Increase savings can lead to increased finance for investment
Increased investment the capital stock of an economy
This leads to increased output and therefore economic growth
What is the Harrod-Domar formula
Rate of economic growth (Y) = Level of saving (S) / Capital output ratio (K)
What are the impacts of non-economic factors
Corruption
Civil wars
Institutional factors
Political instability
