Question

Compare and contrast the uzawa two sector growth model with feldman model.

Answer 1

Hirofumi Uzawa two sector growth model consider a solow swan type of growth model with two type of produced commodities, a consumer goods and an investment goods. Both these goods are produced with capital and labor force. In Uzawa two sector model we are using both labor and tractor to make corn and tractors. there is no barrier competition in the factor market hence their is free movement of goods and services in the sector and capital too across the sector. This implies that the wage rate and the profit rate must be the same for both the consumer goods and the investment goods industry.

Feldman model on the other side stated that the "'labor market is improving gradually'' an upgrade from "beginning to improve". Feldman two sector growth model was based on the macroeconomic concept of Karl Marx, Feldman first demonstrated that the higher aggregate growth of an economy, the more the capital had to be devoted to the producer goods and services sector. The greater the capacity to produce goods the faster the economy would grow