Journal of Business & Economic Policy

ISSN 2375-0766 (Print), 2375-0774 (Online) DOI: 10.30845/jbep

Guatemala and Libya: How the Harrod-Domar Growth Model Helped Define Economic Growth
Jon West, Economics Major; Kishore G. Kulkarni, Ph.D.

Since year 2020, growth in many developing nations has slowed down due to the advent of global Coronavirus. Though this global pandemic has recently exposed many global disparities and displayed the global social and economic injustices that create havoc on the developing world, this does not account for the disparities prior to 2020. Libya and Guatemala are two countries on the opposite sides of the world, yet they share many similarities in social and economic strife. Both countries have seen incredible political unrest, war, and a duality within society where the rich seem to get richer, and the poor cannot escape the level of subsistence. This paper addresses a brief political and economic history of each country and looks at how the Harrod-Domar theory of growth can explain the economic advancement, if any, each country has experienced over the last 25 to 30 years; as well as addressing if further progress can be made when looking at Harrod-Domar’s and other neoclassical growth theories. The first section is an introduction and brief overview of Guatemalan and Libyan political rule and economic landscape. The second section addresses literature regarding both countries, as well as an introduction to studies based on the Harrod-Domar Theory. The third, method section defines the Harrod-Domar model as well as the data used for the conclusion. The fourth section includes the conclusion regarding if Harrod-Domar model was the best model to demonstrate growth in Libya and Guatemala.

Full Text: PDF