The Growth Model And Economic Growth

1072 Words Dec 20th, 2015 5 Pages
Talking about the Endogenous growth model, it clarifies long-run economic growth as radiating from economic activities that make new technological knowledge. Endogenous growth can be explained as long-run economic growth at a rate dictated by factors that are internal to the economic framework, especially those factors administering the opportunities and motivators to create technological knowl-edge. Over the long run, the pace of economic growth, as determined by the output per individual growth rate, relies upon the growth rate of (TFP), which is concluded thus by the rate of technological advancement. The neoclassical growth by Swan (1956) Solow (1956) expects the rate of innovative advancement to be decided by a scientific process that is isolated from independent economic forces Neoclassical theory in this way infers economists can take the long-run development rate as provided bu exogenously from outside the economic framework. Endogenous growth theory does challenge this neoclassical perspective by introducing channels by which the rate of technological advancement, and consequently the long-run rate of economic growth, can be impacted by economic factors. It begins from the perception that technological advancement happens through innovations, as new items, procedures and markets, a hefty portion of which are the consequence of economic activities. For instance, as a result that businesses learn from their previous ecperiences how to manufacture all…
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