In macroeconomics, the balanced-growth path of a dynamic model is a trajectory such that all variables grow at a constant rate. In the standard
exogenous growth model
In a variety of contexts, exogeny or exogeneity () is the fact of an action or object originating externally. It contrasts with endogeneity or endogeny, the fact of being influenced within a system.
Economics
In an economic model, an exogeno ...
, balanced growth is a basic assumption, while other variables like the
capital stock
A corporation's share capital, commonly referred to as capital stock in the United States, is the portion of a corporation's equity that has been derived by the issue of shares in the corporation to a shareholder, usually for cash. "Share capi ...
,
real GDP
Real gross domestic product (real GDP) is a macroeconomic measure of the value of economic output adjusted for price changes (i.e. inflation or deflation). This adjustment transforms the money-value measure, nominal GDP, into an index for quantity ...
, and
output
Output may refer to:
* The information produced by a computer, see Input/output
* An output state of a system, see state (computer science)
* Output (economics), the amount of goods and services produced
** Gross output in economics, the value of ...
per worker are growing. Developing economies may adopt a
strategy of unbalanced growth to rectify previous investment decisions, as put forward by economist
Albert O. Hirschman
Albert Otto Hirschman (born ''Otto-Albert Hirschmann''; April 7, 1915 – December 10, 2012) was a German economist and the author of several books on political economy and political ideology. His first major contribution was in the area of de ...
.
In microbiology, the state of balanced-growth means "every extensive property of the growing system increases by the same factor over a time interval".
It is ideal for performing experiments because all bacteria are at about the same state (as opposed to
stationary phase, for example, where some cells are alive and others are dead). Machines like
chemostat
A chemostat (from ''chem''ical environment is ''stat''ic) is a bioreactor to which fresh medium is continuously added, while culture liquid containing left over nutrients, metabolic end products and microorganisms is continuously removed at the sa ...
s can be used to culture bacteria and keep them in a state of balanced-growth for
long-term experiment
A long-term experiment is an experimental procedure that runs through a long period of time, in order to test a hypothesis or observe a phenomenon that takes place at an extremely slow rate.
What duration is considered "long" depends on the academ ...
s.
Balance Growth refers to a specific type of economic growth that is sustainable in the long term. Balance Growth is opposed to the boom and bust nature of economic cycles.
According to Alak Ghosh, " Planning with balanced growth indicates that all sectors of the economy will expand in same proportion, so that consumption, investment and income will grow at the same rates. It stresses that the balanced growth can occur when the growth rates of the consumption, investment and income are equal to each other".
According to W. A. Lewis," In development programmes, all sectors of economy should grow simultaneously so as to keep a proper balance between industry and agriculture and between production for home consumption and. Production for exports. The truth is that all sectors should be expanded simultaneously.
See also
*
Steady state economy
A steady-state economy is an economy made up of a constant stock of physical wealth (capital) and a constant population size. In effect, such an economy does not grow in the course of time. The term usually refers to the national economy o ...
*
Nurkse's Balanced Growth economic theory
References
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Economic growth
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