Economic freedom, technology and planning for growth

In the underdeveloped countries emphasis has come to be laid increasingly on the mobilization of domestic resources for raising the level of investment. As a method, it is like trying to inflate the size of a total (national income), which is assumed as, say, twice the number of elements contained, as a part of the total, in a red (investment) box, by increasing the size of the latter through a transfer of elements from a black (consumption) box, where the remaining elements of the total lie. Physical ex perimentation with boxes and balls, the latter as elements, can be depended on to show that it is impossible to increase the size of the total in this manner. Analysing this in the framework of an economic system, it is shown in this study that it is also im possible to increase the rate of economic growth by increasing the rate of domestic saving, notwithstanding the observed and even theoretically valid relationship between capital and output, saving and investment, and all that, analogously as it is to lift himself up for an individual, who is though capable of lifting an object as much as again his own weight. It is further shown that only by resorting to factors which are exogenous to the econo mic system can an acceleration of the economic growth process be obtained. Also identified in this study is an exogenous factor, the technological development, which is sufficient to initiate the development process-measured with reference to the per capita income-in a closed or a nearly closed economy.