solow model

if you are in college studying economics, contemplating a phd programn in economics, ever want to take international development economics, or want to buy and read the british journal the economist, please don't. the following will save you time.

the solow growth model is all you need to know about development economics or any kind of growth economics for that matter, and it goes as follows:

in math:

d2k/dt2 = ck where c < 0 where

k - capital, as measure by GDP
t - time
c - some constant, here less than zero

it says that the acceleration of capital growth (d2k/dt2) is negatively correlated (c < 0) with the level of capital (k)

in english:

countries with low average incomes grow faster than countries high incomes

so what?

it explains - amongh many other things - why afganistan was the fastest growing country last year (28% GDP growth), why china now or the us 50 years ago grew at 9% (all low levels of capital), and why the us, japan and all of western europe have grown at 2% a year for past 20 years

reference

robert solow, nobel prize archive