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    Neo Classical Ke Notes Phone Mai Bhi Hai

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    ayushi garg
    The document summarizes 5 major limitations of the Neo-Classical model of economic growth. The limitations are that the model has a narrow scope by making unrealistic assumptions about factors like political stability. It also assumes economic development is a continuous process, when in reality it is discontinuous with possibilities of fluctuations. The model assumes full employment which is unrealistic. It does not recognize the important role governments can play in development. Finally, the analysis is based only on studies of developed countries and has little relevance for under-developed countries.

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    Neo Classical Ke Notes Phone Mai Bhi Hai

    Uploaded by

    ayushi garg
    48 views7 pages
    The document summarizes 5 major limitations of the Neo-Classical model of economic growth. The limitations are that the model has a narrow scope by making unrealistic assumptions about factors like political stability. It also assumes economic development is a continuous process, when in reality it is discontinuous with possibilities of fluctuations. The model assumes full employment which is unrealistic. It does not recognize the important role governments can play in development. Finally, the analysis is based only on studies of developed countries and has little relevance for under-developed countries.

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    schoools of management thoughts

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    Neo Classical

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    The document summarizes 5 major limitations of the Neo-Classical model of economic growth. The limitations are that the model has a narrow scope by making unrealistic assumptions about factors like political stability. It also assumes economic development is a continuous process, when in reality it is discontinuous with possibilities of fluctuations. The model assumes full employment which is unrealistic. It does not recognize the important role governments can play in development. Finally, the analysis is based only on studies of developed countries and has little relevance for under-developed countries.

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    © All Rights Reserved
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    48 views7 pages

    Neo Classical Ke Notes Phone Mai Bhi Hai

    Uploaded by

    ayushi garg
    The document summarizes 5 major limitations of the Neo-Classical model of economic growth. The limitations are that the model has a narrow scope by making unrealistic assumptions about factors like political stability. It also assumes economic development is a continuous process, when in reality it is discontinuous with possibilities of fluctuations. The model assumes full employment which is unrealistic. It does not recognize the important role governments can play in development. Finally, the analysis is based only on studies of developed countries and has little relevance for under-developed countries.

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    Neo classical ke notes phone mai bhi hai

    5 Major Limitations of Neo-


    Classical Model of Growth
    Article Shared by <="" div="" style="margin: 0px; padding: 0px; border:
    0px; outline: 0px; font-size: 14px; vertical-align: bottom; background: transparent; max-width:
    100%;">
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    The following points highlight the five major limitations of


    the Neo-Classical model of growth.
    Limitation # 1. Narrow in Scope:
    The neo-classical approach of the theory of economic development
    is narrow and inadequate.

    They assume the existence of such factors as political stability, the


    “will to develop”, strong habits of thrift, given tastes, adequate
    supply of trained labour and managerial skill, a high degree of
    factor mobility and free flow of knowledge between different
    countries.

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    Such assumptions have narrowed down the scope of their analysis.


    According to them, the main determinants of economic
    development are changes in the size of population, capital stock,
    natural resources and technology.

    They have minimised the significance of non-economic factors as


    the degree of political stability, the attitude of population, legal and
    social institutions etc. Marshall himself recognises the limited
    nature of his theoretical analysis.

    Limitation # 2. Economic Development is not Continuous


    Process:
    The neo-classicists believe that economic development is a gradual,
    continuous and harmonious process and hence they could not
    correctly analyse the possibilities of cyclical fluctuations in the
    process of development. Historically, economic development has
    been a discontinuous process.

    This fact should have been recognised by them. They also could not
    visualise the possibility of disharmony of interest at least in the
    initial stages of development.

    Limitation # 3. Unrealistic Assumptions:


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    Another drawback of the neo-classical analysis is its assumption of


    full employment which is very unrealistic. Because of this
    assumption they could not analyse how an economy can be
    maintained at the full employment level. In the field of capital
    formation they tend to over-emphasise the importance of interest
    rate and minimise that of institutional factors.

    Limitation # 4. No Importance to the Role of Govt.:


    The neo-classical could not recognise the important role which
    government can play in creating conditions for economic
    development. In the present era intervention of Govt., is must to
    solve various problems of the UDC’s.

    Limitation # 5. Study of Developed Countries Only:


    Their analysis also suffers from the drawback that they were mainly
    concerned with their own developed economies and hence their
    ideas and policies have little relevance for under-developed
    countries. For instance, their policy of free trade and international
    specialisation can hardly solve the problems of under-developed
    countries.

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