The Economic Growth : Neoclassical And Endogenous Growth Theory

Economic growth is an increase in the capacity of an economy to produce goods and services from one period of time to another. In simple terms, it refers to an increase in aggregate productivity.

For instance, economic growth is mainly constrained by the policy and political environment, which indicates that the economic growth momentum is not strongly autonomous. The current consumption growth will mainly depend on policy guidance and encouragement in the national income distribution system. If there is no fundamental change in circumstances, the steady growth in consumption of endogenous mechanisms is hard to form.

Economic Development: Growth is associated with structural, social change and change in the important institutions of the economy.

Economic growth is a common term used by economists to describe in increase in production in the long run. According to Robinson (1972) economic growth is defined as increases in aggregate product, either total or per capita, without reference to changes in the structure of the economy or in the social and cultural value systems. The basic tool of measuring the economic growth includes the real GDP. It provides some quantitative measures in terms of the production volume.

Economic growth refers to the output of goods and services produced per capita in a nation over time. It is measured as the percent rate of increase in Real Gross Domestic Product(GDP) which is the value of total productions produced by an economy in

First of all, economic growth is one of the macroeconomic objectives that the government wants to achieve as a primary goal and it happens when there is a rise in the enlarged product of population and per capita consumption. According to Hoover (2011), economic growth is the total material output of good values and service values in the market, measured by Gross Domestic Product (GDP) in a specific period of time. The growth of GDP is measured by excluding intermediate consumptions (production and resale), purely financial transactions and second-hand sales, which prevents double counting. To obtain an accurate value of economic growth, GDP needs to include the total output of expenditures and incomes.

Not all aspects of economic growth are positive, for example when an economy is at, or near its full capacity of productivity prices can be driven up causing inflation and the devaluing of their currency, where each unit of currency buys fewer goods and services that it previously could have. It can increase the

Economic growth refers to an increase in an economy’s productive capacity, as measured by changes in its real GDP (adjusted for inflation), over a period of time. Growth may be measured quarterly, annually, or year on year (changes from one quarter to the corresponding quarter the following year). Annual growth is used to identify trends in the business cycle, while quarterly growth provides an indication of the economy’s short-term direction, and year on year growth to show annual progress.

When a nation experiences a long-term economic growth, people have a positive attitude. There are opportunities for new jobs, new technology, and open doors for more capital for investment. The result of growth increases demand, supply, aiding the production of goods and services boosting consumers’ confidence. Economists believe the right type of growth that is stable and controllable is the best.

Economic growth, put simply, is “an increase in the amount of goods and services produced per head of the population over a period of time”; development is inextricably linked with this economic growth. By utilising theories of economic growth and development we can see how the Chinese and Sub-Saharan African economies have emerged, but, more notably, we can use these to look at patterns from past and present to show their experience and the implications of this growth for the future.

In macroeconomics, a large portion of discussion is devoted to economic growth. The output of the national economy as a whole represents our average access to goods and services. The long-run growth of the recent past represents everything from increase in access to running water and electricity to development of personal computers and the Internet. In short, it describes the heightened standard of living we enjoy today. Endogenous growth theory postulates that human capital and technology are central to enabling this growth. Human capital describes the stock of knowledge, habits, and social and personality attributes, including creativity and innovative ability. Paul Romer has made significant contributions to developing endogenous growth

The Solow Model, also known as the neoclassical growth model or exogenous growth model is a neoclassical attempt created in the mid twentieth century, to explain long run economic growth by examining productivity, technological progress, capital accumulation and population growth. This model was contributed to by the works of Robert Solow, in his essay ‘A Contribution to the Theory of Economic Growth’ and by Trevor Swan in his work, ‘Economic Growth and Capital Accumulation’, both published in 1956. The model is perceived to be an extension of the 1946 Harrod-Domar model, which Solow (1956) describes as a ‘model of long-run growth which

Adelman, I. (1961). Theories of economic growth and development (1st ed.). Stanford, Calif.: Stanford University Press.

Eyeballing any cross sectional data on growth across countries shows that countries grow at different rates. Many theories try to explain this phenomenon with emphasis with capital accumulation being one of them. I will start by developing the standard neoclassical growth model as developed by Solow(1956)[1]. I will then proceed to discuss the extensions that have been made to this basic model in an attempt to better understand actual growth figures, for e.g. the standard neoclassical model cannot explain the magnitude of international differences in growth rates. Mankiw[2] points out that “the model can explain

Economic growth refers to the rate of increase in the total production of goods and services within an economy. Economic growth increases the productivity capacity of an economy, thereby allowing more wants to be satisfied. A growing economy increases employment opportunities, stimulates business enterprise and innovation. A sustained economic growth is fundamental to any nation wishing to raise its standard of living and provide a greater well being for all. Gross domestic product (GDP) is the monetary value of all final goods and services produced over a year. It is the total value of production within the economy. The total value of production is the total value of the final goods or services less the cost of