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How can the savings gap be plugged?
Low savings are a barrier type to growth. All developing countries have low incomes therefore low savings. A savings gap can be met through:
• Foreign aid: the UN target is for developed countries to offer 0.7% of Gross Domestic Product as aid.
• Foreign direct investment as like through multinationals
• Surplus through international trade
• Decreased domestic expenditure creates further savings.
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How is Harrod-Domar model used in planning? The Harrod-Domar model is helpful to government for setting target rates for saving required to deliver a specified rate of economi
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