Growth Strategies 

 


Strategy I - Steady State Growth
 

 


 
 gs  == 0.01

 

Now using the growth equations
(5) and (6) and starting from
initial conditions we can construct
the time path of  X
1,  Xand X.
(See the following table and Diagram.)
Note that the g's are percentage rates
of growth of respective variables.

 

 

It can be seen from the previous table and the following graph that both sector can grow by the same constant rate of growth, providing that investment are allocated proportionally. In this specific case the growth is very slow, just one percent per year. Over 15 year period the aggregate output increases from 200 to 232 and similarly the consumption increases from 50 to 55.9.  These are not very impressive results. Especially not for a Communist revolutionaries, who want to prove that the centrally planed socialist economy is by far superior to anarchic capitalism.

 

The upper line in this graph represents growth of aggregate output over the 20 year period. (Note that the graphs cover 20 years, while the table only 15.) The lower blue line is output of consumer goods. Output of producer goods is the orange difference between the two lines.

 

 

 

 

 

 

 

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