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An economic model is a theoretical construct representing economic processes by a set of variables and a set of logical and/or quantitative relationships between them. The economic model is a simplified, often mathematical, framework designed to illustrate complex processes. Frequently, economic models posit structural parameters. [1]
Michael Todaro, known for the Todaro and Harris–Todaro models of migration and urbanization; Economic Development. Robert M. Townsend, professor at the Massachusetts Institute of Technology known for his Thai Project, a model for many other applied and theoretical projects in economic development.
Sometimes an economic hypothesis is only qualitative, not quantitative. [106] Expositions of economic reasoning often use two-dimensional graphs to illustrate theoretical relationships. At a higher level of generality, mathematical economics is the application of mathematical methods to represent theories and analyse problems in economics.
Whereas economic development is a policy intervention aiming to improve the well-being of people, economic growth is a phenomenon of market productivity and increases in GDP; economist Amartya Sen describes economic growth as but "one aspect of the process of economic development".
The Rostow model has serious flaws, of which the most serious are: (1) The model assumes that development can be achieved through a basic sequence of stages which are the same for all countries, a doubtful assumption; (2) The model measures development solely by means of the increase of GDP per capita; (3) The model focuses on characteristics ...
The theory is generally associated with Hirschman. He presented a complete theoretical formulation of the strategy. Underdeveloped countries display common characteristics: low levels of GNI per capita and slow GNI per capita growth, large income inequalities and widespread poverty, low levels of productivity, great dependence on agriculture, a backward industrial structure, a high proportion ...
The "Dual Sector Model" is a theory of development in which surplus labor from traditional agricultural sector is transferred to the modern industrial sector whose growth over time absorbs the surplus labor, promotes industrialization and stimulates sustained development. In the model, the traditional agricultural sector is typically ...
Graph showing growth without development. In the Fei-Ranis model, it is possible that as technological progress takes place and there is a shift to labor-saving production techniques, growth of the economy takes place with increase in profits but no economic development takes place. This can be explained well with the help of graph in this section.