Harrod’s Discontent with Harrodian Growth Theory

The ‘Harrod-Domar growth model’ is traditionally seen as the starting point of modern growth theory. Its core is found in two similar equations. The first (describing the growth rate of the economic system in terms of the proportion of income saved and the capital/output ratio) was expounded by Roy Harrod in ‘An Essay in Dynamic Theory’ (1939); the second (expressing the growth rate in terms of the society’s productive capacity and of the propensity to save) was formulated by Evsey Domar in “Capital Expansion, Rate of Growth, and Employment” (1946) and “Expansion and Employment” (1947). These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.