Essay On Economic Growth

Economic growth is by far the most important issue in political economy. Economic growth in a nation is fundamentally determined by its ability to produce goods and services. It uses two important inputs: labour and capital and combines them to know-how to produce output; economists refer to the knowledge about putting inputs together as technology.

Economic growth theory deals with the intention of enduring standards, a matter which is of the greatest significance to human welfare. It should be observed that economic growth, which is delineated in this work as growth in real per capita gross domestic product (GDP), is not the sole element which influences economic development; other important

Entirely the same, it excessively implies that in the steady state, there is a fixed capital-labour ratio, and zero productivity of capital, and therefore growth-generated endogenous factors (i.e. capital accumulation) are zero. This model has been named as an exogenous growth model, as in it the steady-state rate can be positive if an exogenous force such as technological development affects the

The endogenous growth theory demonstrated that, a change in the rate of technological progress or human capital accumulation, and hence changing investment in physical and human capital, could have an influence on steady, long-term growth. Equally, in this theory, there are externalities to human and physical capital, suitable choices and policies assist private agents to internalise these externalities, which could promote long-term growth. In this manner, a country’s general policy system, e.g. financial structures, market and regulatory systems, taxes, and macro-economic distortions, could change decisions on savings and investment in such a way as to change long-term