ENTREPRENEURSHIP

Detailed explanation-1: -The Harrod–Domar model is a Keynesian model of economic growth. It is used in development economics to explain an economy’s growth rate in terms of the level of saving and of capital. It suggests that there is no natural reason for an economy to have balanced growth.

Detailed explanation-2: -The model was developed by economists Roy Harrod and Evsey Domar in the 1930s and 1940s. The basic idea of the Harrod-Domar model is that economic growth depends on the amount of capital that is available for investment, and that the rate of capital accumulation is proportional to the rate of savings.

Detailed explanation-3: -The Harrod-Domar models of economic growth are based on the experiences of advanced capitalist economies to analyse the requirements of steady growth in such economy. The Harrod-Domar economic growth model stresses the importance of savings and investment as key determinants of growth.

Detailed explanation-4: -Domar relates investment forward to the increase in income but Harrod is concerned with the way the investment is traced back to the rate of income. 4. Harrod uses three distinct rates of growth i.e. actual rate (G), warranted rate (Gw) and natural rate (Gn) while Domar uses one growth rate.

Detailed explanation-5: -Harrod introduced the concepts of warranted growth, natural growth, and actual growth. The warranted growth rate is the growth rate at which all saving is absorbed into investment.