homework help

Neoclassical Growth Theory

Personalized homework help for all major subjects.

Order confidently with our risk free, 14-day money-back guarantee.

  • ✔️ No sign-up required
  • | 🔒 100% Confidential

Our Expert Writers

We proudly boast a team of expert professionals with verified academic credentials, selected for their proven skills and flexibility through a strict process.

Engage with experts from the top universities across the globe.

Get Homework Help Instantly

Say goodbye to homework stress! 📚 Just share your details and we’ll whip up an affordable quote in no time – often within 15 minutes.

Get started now for FREE!

Submit Your Homework

Let our experts help you with your college homework

According to this theory of neoclassical growth in population, there is a real growth in GDP of per person, courtesy to certain changes that are associated with their GDP factor. These associated factors include, certain technological changes that further causes greater saving and investment, which on an extension results in growth of per hour labor supply.

 According to diminishing marginal returns in regards to both labor as well as capital, the total amount of growth stops if there is no technological change. This theory was suggested in the 1950’s by Robert Solow of MIT. It is this unique view on population growth that has resulted in its increasing popularity in present times.

Theory of population growth and neoclassical growth:

The 18th century England saw a sudden growth in population courtesy to certain factors. It is this sudden population explosion that created the classical theory of growth and after a certain point of time, the growth process ended. There was a fall in rates of birth, rise in death rates, and increase in population was fairly moderate.

There was a huge sociological change during this period that resulted in sudden decrease of this increased growth rate. The opportunity cost associated with a woman’s time was now being attributed to the economy. There was an increase in women’s wage rates, which further increased their prominence in the service sector, with widened opportunities, and it also raised opportunity costs of children. Naturally, in such a scenario, a family, to manage expenses in a proper manner and with a wish to improve standard of living, will have fewer children. This further leads to a reduction in birth rates and on the whole population explosion is managed to a great extent.

Also, it is to be noted that when technological advancements are introduced in the economy, there arises facilities of health care and this extends life to a great extent. Thus, higher income is a necessity in present times to have a life that is better. Hence, it can be seen that due to this income rise, there is decrease in both birth rates and death rates, which further results in opposing forces forming a tie with each other, further causing an increase in population rates.

However, both these modern format of population growth as well as historical trends that are existent to a great extent places a view that is against the classical view that is placed forth by the economists. For them, there will be more people on this planet than what people can actually support.

Changes in technology and diminishing returns:

As per the neoclassical theory of growth, the economic growth rate is influenced to a great extent by rate of technological change. However, economic growth rate in no way can influence the rate of technology that is present in the society, since these changes are purely based on inventions and people’s demand.

To correctly understand the theory of neoclassical growth, it is important to understand the world when this theory was introduced. Back in 1950’s, according to Robert Solow’s ideas, income per person was on an average of $12,000 in current monetary status. With an average population growth to be taken at 1 percent, it can be seen that both investment and saving constituted up to 20 percent of GDP amount. With all these details, the quantity of labor on an hourly basis was kept at a constant. The per capita income was growing but at an acceptable pace.

At the next step, technology increases to a great extent and other associated activities rise at a rapid pace. Some of the best examples that were to be found in the 18th century in terms of scientific inventions and technological changes include, presence of new plastics, interstate highway systems as well as jet airlines. Thus, on the whole, it is a huge technological boost that happens.

 This technological boost brings forth another set of associated advances wherein, businesses advance to a great extend as well as profits, investment, savings increase to a great extent. As per the neoclassical growth theory, this prosperity that the economy faces will continue for a long time, however with technology not increasing to a great extent it is not possible that growth will also continue in the same manner.

This prosperity level continues to a great extent primarily because, there is no growth in classical population that would result in fall in rate of wages. Hence, per person gain is maximum in regards to this.

But this is not the same with growth rates, since a stop in technological growth rate will also reduce this rate to a great extent. The diminishing marginal returns to capital factor starts working in regards to that, since the high rates of profit bring forth both saving and capital accumulation. However, at times negative returns can be found.

Keeping in tune with higher rates of profit, it can be found that a greater number of projects are taken up, which to a great extent reduces the rate of diminishing marginal returns. This results in failure in return that further reduces incentives that are available on each of these products. Hence, more and more people tend to reduce their incentive rates when it comes to such products and therefore with lower incentives to save and invest, it so happens that both capital accumulation rates as well as saving rates are reduced to a great extent.

Now as a result, it happens that capital accumulation reduces comparatively and it is in tune only with population growth. Per worker capital range is maintained at a constant during this scenario.

Issues associated with Neoclassical theory of growth:

Since, all the technologies that are being introduced in the market are similar, it can be taken into account that capital that is to be used on a global rate is free all over the market and therefore rate of real interest associated with it is also similar.

Until the rates at which returns are taken to be equal to each other and per hour rate of capital are equal, capital amount will keep flowing. Also, rates of income and GDP will converge for people who are placed all over the world. But the problems are, convergence rates are slow and it is not imminent for all the countries available.

It is this backlog of neoclassical theory that New Growth theory helps in ending.

 

Links of Previous Main Topic:-

Links of Next Macroeconomics Topics:-

Your Price: $11.00 $10.00

Pricing may change based on requirements

Descriptive text for the image

Get Homework Help In

Maths and Statistics

Science

Humanities & Arts

l

Essay Writing

How Our Homework Service Works

FAQ number 1

Share your requirements

FAQ number 2

Make secure payment

FAQ number 3

Get homework answers

FAQ - Frequently Asked Questions

Discover quick answers in our FAQ, covering the most common customer questions about our homework help service.

Is your homework service confidential?

M
L

Absolutely! Confidentiality is one of the basic guarantees of our service at MyHomeworkHelp.com.

When our customers make their homework orders, they know their information remains 100% confidential.

Even your homework writer will not be provided with your personal details. So, when you hire a professional homework helper on our website, rest assured that your information will remain private and safe.

For a comprehensive understanding of how we protect your privacy, please refer to our Privacy Policy.

Who will help me with my homework?

M
L

We work with subject experts from all over the world. We hire them with the help of complex tests in the disciplines of their expertise. We also verify the IDs and academic transcripts of our homework writers to be sure that our experts have a bachelor's or master’s or a PhD degree. This is how we can be sure of the proficiency of our panel of experts who will help you with your homework.

Is it legal to ask for help with homework?

M
L

Seeking homework help is perfectly fine and shows your proactive approach to overcoming challenges. But it's important to use our homework service to enhance your understanding, not to replace your own efforts.

Our homework service offers original solutions for personal use, including:

  • Generating ideas or arguments for your research.
  • Deepening your subject comprehension.
  • Direct citation, with proper referencing.

However, it's crucial to avoid plagiarism by not submitting our work as your own. Make sure to check your institution's academic integrity policies before using our services. Our goal is to support your educational journey in a responsible and beneficial way. Refer our honor code for more details.

Is myhomeworkhelp.com legit?

M
L

Yes, myhomeworkhelp.com is completely legitimate. We've been successfully connecting students with top experts worldwide since 2012, offering direct, secure communication for a seamless learning experience. With over thousands of students helped and a commitment to innovative, effective education tools, we're dedicated to making learning easier and more accessible for everyone.

You can read our reviews here on Trustpilot and Sitejabber (Independent, verified reviews from buying customers) like you!

Is there a possibility of plagiarism in my completed order?

M
L

Unlike our competitors who use cheap and ineffective in -house plagiarism software, MyHomeworkHelp.com uses credible software to check your homework solution originality. We guarantee that your paper will pass TurnItIn checks with a low percentage of similarity. In addition, we also check submitted papers for ai-content using Originality.ai.

You will receive a complemantary plagiarism free report with your completed order.

What makes you one of the best homework help website?

M
L

We are not number 1 (yet!). We're an independent, bootstrapped business standing up to Big EdTech for last 12 years. So it means a lot that folks like you are willing to consider our services for your educational needs.

Myhomework Help is recognized as one of the premier websites for homework answers for three key reasons.

  1. Firstly, we pride ourselves on the expertise and qualifications of our tutors/experts, who are selected through a rigorous vetting process to ensure they can provide best academic assistance across a wide range of subjects.
  2. Secondly, our response time to student inquiries is fast (as early as few minutes), reflecting our understanding of the importance of timely support in an academic setting.
  3. Lastly, we keep our pricing very student friendly. Our aim is to provide the best learning experience to students like yourself without burning a hole in your pockets.