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 …show more content…
In actuality it combined together the human capital and also the physical whose accumilation is considered by neoclassical theory with the intelectual capital that is aggregated when innovations happen. An early form of AK hypothesis was created by Frankel (1962), who contended that the total production capacity can show a steady or even expanding marginal product of capital. This is on the grounds that, when firms aggregate more capital, some of that expanded capital will talk the role of intellectual capital thatsupports technological progress, and this advancement will counterbalance the inclination for the marginal product of money to diminish.

AK theory was trailed by a second influx of endogenous growth model for the most part known as 'Innovationbased growth theory. It recognized the fact that intellectual capital, the origin of techologicalgrowth, is unmistakable from both human and physical capital.

Exogenous Growth Theory

Exogenous growth model is a kind of theory or conviction that development happening inside of an economy is impacted by what is going on outside of that economy. Simmilar general idea can be connected to an individualfirm, with the notion that variables outside the immediate control of that firm will have some impact on the economic development that is experienced by that firm. The general thought behind exogenous growth was conceded amid the
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