Harrod-Domar model

The Harrod-Domar model explains economic growth by emphasizing the roles of savings and investment. It suggests that a country's economic progress depends on how much of its income is saved and invested in productive activities. Higher savings lead to more investment, which in turn creates jobs, boosts production, and leads to growth. The model highlights that without sufficient savings and investment, an economy may struggle to grow. It underscores the importance of policies that encourage savings and investment to promote sustainable economic development over time.