Harold Doumar model of economic growth

It is one of the most harmonious and common model that was developed in the forties. It is connected by the names of two economists: The British "Roy Harold" and the American "Ivry Douma".

The model focuses on investment as a vital necessity for any economy and shows the importance of savings in increasing investment as requirements to capital and its relationship with growth. The model assumes a link that connects the volume capital with the total national product. This linkage and the problem it causes to the ratio of the value of capital to the value of the output is known as capital coefficient. The model of Harold Domuar shows that the achievement of the development process requires the increase of savings, consequently rapid investment to increase growth rate. The basis of growth is that capital, which is created through investment in factories and equipment, is the main determiner of growth which depends on individuals and firms' savings which can do possible investments. As for the ratio of capital to products, Capital coefficient, it is simply a standard for the productivity of investment or capital.

Refutation of the theory:

If the model was used to raise the rates of economic growth of European countries and preparing them to enter a stage of emergence and taking off to the stage of maturity after WWII through the American Marshall plan, the position between these countries and underdeveloped countries differs completely. What applies to them may not apply to these underdeveloped countries which may be used to fix the expected development rates at fixing the volume of investment. As noted, development determiners according to the model of Harold Doumar are not available in the poorest countries which have less ratio of savings and investment because their national product is low and it hardly can meet their basic needs. In this case, these countries cannot fill the gap of savings except through external loans or through the profits of foreign investments in their countries. [1]

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[1] `Ablah `Abdul-Hamid Bukhari, ibid, P. 41, 42, 43.