as since the growth rate of machine stock is where is the proportion of the net national income that is saved. Therefore, we have which expresses the same thing in three forms namely the contribution that capital accumulation makes to the growth rate of the final output. Hence the basic relationship between the growth rate of real income per head and its three basic determinants can be expressed as: Meade explains the application of these equations by taking a simple numerical example. Suppose the people save one-tenth of their income such that and that the marginal product of real capital goods or the market profit rate is 5 percent per annum. Hence percent per annum. The contribution of capital accumulation to the growth of output, would be one-tenth of 5 percent per annum. Hence ½ percent per annum. The explanation of this is, out of a year's income of 1000, if people save 100 units of product and if a once-for-all addition of 100 units to the stock of machines increases annual output in every future year by 5 units, then the initial annual income of 1000 will be raised by this year's capital accumulation to 1005 or by ½ percent during the course of the year. Assuming initial annual income to be 1000 and the initial machinery stock to be 2000 and . Similarly, the same thing can be expressed by saying that the stock of machines had increased from 2000 to 2100 or by 5 percent per annum. Then and per annum. Thus the contribution of capital accumulation to the growth rate of the final output was one-tenth of 5 percent per year or ½ percent per annum. The same result can be obtained by multiplying the proportion of the national income going to profits , the proportion of the national income which is saved , and the annual income to capital stock ratio Our numerical example is: percent per annum. Critical appraisal of Meade's growth theory The growth theory provided by Meade is neo-Classical in nature. It is simple and attractive as it promises a state of steady economic growth. However, it suffers from a few drawbacks: First, for a steady state of economic growth to exist, technological progress should be assumed to be entirely labour-augmenting. This is a special case of Harrod-neutral technological progress. However, this does not seem to exist in the model. Second, the