Non-Classical Theory Of Economic Growth
1.1 Entrepreneurship: Entrepreneurship is “the willingness and capability to develop, organize and run a business venture along with all of its risks in order to make a profit.” In other words “Entrepreneurships is an innovative process that involves with multifaceted and diversified activities for providing new things to the society.” The starting of new business is most understandable example of entrepreneurship. Entrepreneurial spirit is characterized by innovation and risk taking, and is most important part of nation’s ability to succeed in an ever changing and progressively more competitive global market place. Entrepreneurship is an important engine of economic growth. Schumpeter (1934) describes the entrepreneurship as the undertaking …show more content…
Classical theory of economic growth is the combination of economic work done by three economists Adam Smith, David Richardo and Thomas Robert Malthus in the eighteenth and nineteenth century. These economists developed an idea of “subsistence level” to model the theory. They strongly believed that temporary increases in real GDP per person would cause a population explosion that would cause decrement in real GDP. 1.3.2 Neo-Classical Theory of Economic Growth: “Growth comes from adding more capital and labour inputs and also from ideas and new technology.” The American economist Solow and British economist J.E.Meade are the famous contributors to Neo-classical theory of economic growth. This theory was developed in late 1950’s and 1960’s of the twentieth century. This theory is based on the thought that the collection of capital and decision of savings related to it as an important determinant of economic growth. Additionally, the relationship between the capital and labor of an economy determines its output. Moreover, it added technology to the production function as an exogenously determined factor. 1.3.3 Modern Day or New Growth Theory: The new growth theory argues that “real GDP per person will continually increase because of people hunt of
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