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Difficulty: MediumDevelopment Planning Strategies and Models

Match each economic development planning model or strategy with its defining feature or core theoretical mechanism.

  • Harrod-Domar Growth ModelPosits that national output growth depends directly on the national savings ratio and inversely on the incremental capital-output ratio (ICOR).
  • Unbalanced Growth StrategyFocuses on strategic public investment in key leading sectors to generate strong forward and backward linkages.
  • Balanced Growth StrategyAdvocates simultaneous, synchronized investment across complementary industries to overcome low market demand and the vicious cycle of poverty.
  • Dual-Sector ModelExplains economic expansion through the transfer of surplus labor with zero marginal productivity from subsistence agriculture to modern industry.

Answer

Harrod-Domar Growth Model matches the principle that national output growth depends directly on the national savings ratio and inversely on ICOR. Unbalanced Growth Strategy matches strategic investment in key leading sectors to generate forward and backward linkages. Balanced Growth Strategy matches simultaneous, synchronized investment across complementary industries to break the vicious cycle of poverty. Dual-Sector Model matches economic expansion through the transfer of surplus labor from subsistence agriculture to modern industry.
Each model is correctly paired with its founding premise: Harrod-Domar emphasizes g=s/kg = s/k; Unbalanced Growth focuses on sector linkages; Balanced Growth focuses on multi-sector investment to boost market demand; and the Dual-Sector Model explains surplus agricultural labor migration to urban industrial sectors.

Step-by-Step Solution

1
Analyze Harrod-Domar Growth Model core equation and assumptions.
Identified that Harrod-Domar links growth directly to savings and inversely to the capital-output ratio (g=s/kg = s/k).
It is the fundamental macroeconomic growth model focusing on savings and capital productivity.
2
Differentiate between Hirschman's Unbalanced Growth and Nurkse's Balanced Growth theories.
Unbalanced growth relies on deliberate sector imbalance and backward/forward linkages, while balanced growth requires synchronized investment across all complementary consumer sectors.
Understanding sectoral investment allocation mechanisms resolves both strategy matches.
3
Examine the Lewis Dual-Sector Model.
Identified surplus labor transfer from traditional agricultural sector to urban industrial sector.
The model focuses on structural transformation in developing countries with dual economic sectors.

Key Concept

Development Planning Strategies and Growth Models
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Topics

Development Planning Strategies and Models

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