science

Kaldor's growth model

Kaldor's growth model is a science topic covered in the lgStudy science library. This page brings together a partial reference excerpt, illustrations, worked examples, real-world applications and a short study plan, so you can understand Kaldor's growth model rather than just read about it. In short: Nicholas Kaldor in his essay titled A Model of Economic Growth, originally published in Economic Journal in 1957, postulates a growth model, which follows the Harrodian dynamic approach and the Keynesian techniques of analysis. In his growth model, Kaldor attempts “to provide a framework for relating the genesis of technical progress to capital accumulation”, whereas the other neoclassical models treat the causation…

Key takeaways

Kaldor's growth model belongs to science; place it in that map before memorising details.
Learn the definition first, then one example that makes the definition concrete.
Connect Kaldor's growth model to a quantity you can measure, compute or draw — that is where exam questions come from.
Reproduce the core statement of Kaldor's growth model from memory before moving on to harder problems.

Reference excerpt

Nicholas Kaldor in his essay titled A Model of Economic Growth, originally published in Economic Journal in 1957, postulates a growth model, which follows the Harrodian dynamic approach and the Keynesian techniques of analysis. In his growth model, Kaldor attempts “to provide a framework for relating the genesis of technical progress to capital accumulation”, whereas the other neoclassical models treat the causation of technical progress as completely exogenous. According to Kaldor, “The purpose of a theory of economic growth is to show the nature of non-economic variables which ultimately determine the rate at which the general level of production of the economy is growing, and thereby contribute to an understanding of the question of why some societies grow so much faster than others.”

Assumptions The basic properties of Kaldor's growth model are as follows:

Short period supply of aggregate goods and services in a growing economy is inelastic and not affected by any increase in effective monetary demand. As it is based on the Keynesian assumption of “full employment”. The technical progress depends on the rate of capital accumulation. Kaldor postulates the “technical progress function”, which shows a relationship between the growth of capital and productivity, incorporating the influence of both the factors. Where the capital-output ratio will depend upon the relationship of the growth of capital and the growth of productivity. Wages and profits constitute the income, where wages comprise salaries and earnings of manual labor, and profits comprise incomes of entrepreneurs as well as property owners. And total savings consist of savings out of wages and savings out of profit. General price level is constant.

Worked examples

Example 1 — a first encounter with Kaldor's growth model

Start with the simplest possible case. Write down what Kaldor's growth model claims or describes in one sentence, then invent the smallest concrete situation in which that sentence is true. In science, the smallest case is usually a single object, a single equation or a single measurement. Check that every symbol or term in your sentence has a meaning in that case.

Example 2 — changing one variable

Take the situation from Example 1 and change exactly one quantity: double it, halve it, or set it to zero. Predict what should happen to Kaldor's growth model before you calculate. Comparing your prediction with the result is the fastest way to find out whether you understand the idea or only the words.

Example 3 — an exam-style question

Typical questions about Kaldor's growth model ask you to (a) state it precisely, (b) apply it to given data, and (c) explain a limitation. Practise writing all three answers in under five minutes; the third part is what separates a full-mark answer from an average one.

Applications of Kaldor's growth model

In research: Kaldor's growth model appears in science research whenever the underlying quantities have to be modelled precisely. Papers usually cite it as a starting assumption and then explore where it breaks down.
In technology and industry: Engineering practice reuses Kaldor's growth model in design rules, simulations and safety margins. Knowing the idea lets you read a specification sheet and understand why the numbers look the way they do.
In the classroom: Kaldor's growth model is common in secondary-school and first-year university syllabi. It links to neighbouring topics Economic growth, Macroeconomics stubs, so understanding it makes those chapters shorter.
In everyday life: Look for Kaldor's growth model outside the textbook — in sport, cooking, traffic, electronics or the sky above you. An example you found yourself is remembered far longer than one you were given.

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How to study Kaldor's growth model in 20 minutes

Read the reference excerpt below once, without taking notes.
Close the page and write down what Kaldor's growth model means in your own words.
Compare your version with the excerpt and mark what you missed.
Work through the three examples above with pen and paper.
Explain Kaldor's growth model out loud to somebody else — or to Teacher Smith in the lgStudy chat.

Frequently asked questions

What is Kaldor's growth model in simple terms?

Why does Kaldor's growth model matter?

Because it connects several science ideas at once: it gives you a definition you can apply, a quantity you can calculate, and a way to check whether a result is plausible.

How should I study Kaldor's growth model?

Read the excerpt, restate it from memory, then work through the examples and applications listed on this page. The five-step study plan above takes about twenty minutes.

What does this page cover?

It gives you a compact reference excerpt plus original lgStudy explanations, examples, applications and study material on Kaldor's growth model.