Theories Of Growth Theory

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ENDOGENOUS GROWTH THEORY The endogenous growth theory can be called the new growth theory. The phrase "endogenous growth" embraces a diverse body of theoretical and empirical work that emerged in the 1980s. This work distinguishes itself from neoclassical growth by emphasizing that economic growth is an endogenous outcome of an economic system, not the result of forces that impinge from outside The endogenous growth theory is a new theory which explains the long run growth rate of an economy on the basis of endogenous factors as against exogenous factors of the neoclassical growth theory. Endogenous growth theory also called new growth theory is economic growth generated by factors within the production process (e.g., increasing returns or…show more content…
In contrast to the traditional neoclassical theory, these models hold GNI growth to be a natural consequence of the long-run equilibrium. The principal motivation of the new growth theory are to explain both growth rate differentials across countries and a greater proportion of the growth observed. More succinctly, endogenous growth theorists seek to explain the factors that determine the size of ʎ, the rate of growth of GDP that is left unexplained and exogenously determined in the Solow neoclassical growth equation. The new growth theory does not simply criticize the neoclassical growth theory. Rather, it extends the latter by introducing endogenous technical progress in growth models. The endogenous growth models have been developed by Arrow, Romer, Lucas, among other economists. The endogenous growth models emphasize technical progress resulting from the rate of investment, the size of the capital stock, and the stock of human…show more content…
 It is dependent on a number of traditional neoclassical assumptions that are often inappropriate for developing economies.  Its applicability for the study of economic development is limited because it overlooks influential factors such as inefficiencies arising from poor infrastructure, inadequate institutional structures and imperfect capital and goods market that affect economic growth in developing countries. References  The Origins of Endogenous Growth Paul M. Romer the Journal of Economic Perspectives, Vol. 8, No. 1. (Winter, 1994), pp. 3-22.  Barry.w.ickes, journal on endogenous growth models, sping 1996  M.L Jhingan; the economics of development and planning  M.P. Todaro, S.C. Smith; Economic Development  Krugman, Paul (August 18, 2013). "The New Growth Fizzle". New York Times.  Romer , P. (1990), “Endogenous Technological Change”, Journal of Political Economy, 98 (5), S71-S102.  Master in engineering and technology management ; 2002 economics of growth and innovation lecture
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