The Harrod-Domar Model is the simplest and best-known production function used in the analysis of economic development. This model explains the relationship between the growth and unemployment in advanced capitalist societies. However, the Harrod-Domar Model is used in developing nations as an easy way of looking at the relationships between growth and capital requirements. This model does explain the differences in growth performances between countries. The model allows you to predict an estimate of growth for a nation. Which can be compared to predictions of growth for a different country.
The sources of growth is a different form of the production function. This new function gives the analyst the ability to separate out the different causes of growth. The factors of this equation concern the growth rate of any variable, share of income in any input, national product, capital stock, labor, arable land & national