Various Economic Development Models | Famous Books for UPSC Exam (Summary & Tests) PDF Download

Types of Models

In the realm of economic development, several prominent models have been proposed and studied. Each of these models emphasizes different aspects and factors contributing to a nation's growth trajectory. Let's explore these models in detail:

Harrod-Domar Growth Model

The Harrod-Domar growth model is founded on two critical factors: savings and investment. According to this model, economic growth can be accelerated by mobilizing savings and generating investments. The underlying principle is that investments lead to economic growth and are sourced from savings. As the income of a nation rises, so does the capacity for savings. This model measures economic growth through the saving ratio and capital input-output ratio.

Lewis Structural Change Model

The Lewis Structural Change Model, also known as the DUEL-SECTOR model, focuses on two sectors: the traditional sector and the modern sector. The traditional sector, often associated with agriculture, has a surplus of labor. On the other hand, the modern sector, representing industries, aims to transfer surplus labor from the traditional sector to foster growth and development.

Rostow's Model – The 5 Stages of Economic Development

The 5 Stages of Economic Development, formulated by American economist W.W. Rostow, presents a theory in which nations progress through five distinct stages of economic growth:

• The Traditional Society
• The Pre-conditions for Takeoff
• The Takeoff
• The Drive to Maturity
• The Age of High Mass Consumption

Rostow's model provides a comprehensive framework to understand a nation's journey towards economic development.

Chenery's Pattern of Development

Chenery and his colleagues analyzed patterns of development across countries with varying per capita income levels. Key features identified in this model include:

• A shift from agrarian to industrial production.
• A continuous accumulation of physical and human capital.
• Changes in consumer demands.
• Increased urbanization.
• A decline in family size, marking demographic transition.

Neoclassical Dependence Model

The Neoclassical Dependence Model posits that a country's economic development is dependent on other nations. It highlights the notion that dependence can be a significant determinant of a nation's growth trajectory.

The International Dependence Revolution (IDR)

In contrast to traditional models that prioritize Gross National Product (GNP) growth for development, the International Dependence Revolution (IDR) model places greater emphasis on international relations and policy reforms. According to this model, developing countries are influenced by institutional, political, and economic rigidities both domestically and internationally.

Traditional Neoclassical Growth Theory

The Traditional Neoclassical Growth Theory is rooted in three fundamental factors that influence economic growth:

• Output growth results from various economic activities.
• An increase in labor input contributes to growth.
• An increase in capital investments influences economic development.