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According to the Solow growth model, what are the two general ways a country can grow...

According to the Solow growth model, what are the two general ways a country can grow in the long run? Use graphs to demonstrate each

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Answer #1

The the solow growth model does not depend on the saving for the long run growth rate. The long run growth can be increased through the following ways:

  • Self developing the new technology. The new technology would increase the growth rate of economy.
  • Further, the a country can import the new technology to achieve the high growth rate in the economy.

following is the diagram:

In the above diagram, the growth rate in the long run depends on the technological development. The rise in the technology would shift the production function and saving function upward thereby leading to the higher growth rate.

The saving does not affect the growth rate in the long run.

The per worker capital rises from the K to K1.

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