Us Classic Theory of Economics Growth and Development

Stages of Growth

All countries in the world tend to go through roughly to the same pattern to transform from a poor economy to a rich one. United State is a country that followed the pattern when United State (US) had transformed their poor economies into the rich one during the nineteenth and twentieth century’s. US had practice the Rostow’s Stages of Growth and also the Harrod-Domar Growth Model. US begins as “subsistence economy” which means that most of the population in United State works in agriculture sector such as a farmer, and each one of the farmer can barely grow food in order to feed their family. During that time, US was at a very low literacy rates, unpaved roads that cause the transporting goods across long distance become very expensive and there were unhealthy population characterized by short life expectancy, high infant mortality rates and widespread hunger. In average, the citizens can’t grow with enough food to eat, and they have no surplus money to spend for their health or education of their own or their family. The average person generates income about US$300 per year. Then, US had experience a large boost in agriculture productivity called Industrial Revolution. At this time, US economy had moving past subsistence and becoming a commercial economy. The farmers at this era have surplus of wealth in order to invest in the health and education for their family. The division and specialization of labour had occurs since there were fewer of the farmers able to grow enough food for the entire population. According to the Rostow’s and Harrod-Domar models, a country needs more on funding and investment in order to growth well. So that, with the tiny surplus of wealth, the country’s citizen and also the government had take an initiative by making an investment that allow US economy function become more efficiently. As an example, government can invest for the hospital and the citizens consume it. The citizens also had invested on education for...