Endogenous growth theory posits that economic growth is primarily driven by internal factors rather than external influences. This approach emphasizes the role of technological innovation, human capital, and knowledge accumulation as central components of growth. Unlike traditional growth models, which often treat technological progress as an exogenous factor, endogenous growth theories suggest that policy decisions, investments in education, and research and development can significantly impact the overall growth rate.
Key features of endogenous growth include:
Mathematically, the growth rate can be expressed as a function of human capital and technology :
This indicates that growth is influenced by the levels of human capital and technological advancement within the economy.
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