# Part 1 Solow Model of Economic Growth. सोलो का आर्थिक विकास मॉडल

# part 2 Solow Model of Economic Growth. सोलो का आर्थिक विकास मॉडल https://youtu.be/syrzOOdj2oU

Robert M Solow (Neo Classical Economist) introduced long run economic growth model in 1956.

In 1987 Solow was awarded the Nobel Prize in Economics 
for his work.
Solow made his model an alternative to Harrod-Domar model of growth.

Prof. Solow assumed that Harrod-Domar’s model was based on some unrealistic assumptions like fixed factor proportions, constant capital output ratio etc.
Harrod-Domar’s Model can be rationalised and instability can be reduced to some extent.

He has shown that if technical coefficients of production are assumed to be variable, the capital labour ratio may adjust itself to equilibrium ratio in course of time.

In Harrod-Domar’s model of steady growth, the economic system attains a knife-edge balance of equilibrium in growth in the long-run period.
Assumptions:

Single composite good is produced in economy

There is only two factor of production such as labour and capital. Y= f(K,L)

The two factors of production are capital and labour and they are paid according to their physical productivities.

There is flexible system of price-wage interest.
The production takes place according to the linear homogeneous production function of first degree of the form
Y = F (K, L)
Y = Output
K = Capital Stock
L = Supply of labour force
Labour and capital are substitutable for each other.

The growth rate of labour force is exogenously determined. It grows at an exponential rate.

saving is the constant fraction of the level of output.

There is full employment in the economy.
Technical progress does not influence the productivity and efficiency of labour.

Investment is not of depreciation and replacement charges.

Видео # Part 1 Solow Model of Economic Growth. सोलो का आर्थिक विकास मॉडल канала Know Economics