Endogenous Growth Theory is an economic theory that emphasizes the role of internal factors in driving economic growth, rather than external influences. It posits that economic growth is primarily the result of innovation, human capital accumulation, and knowledge spillovers, which are all influenced by policies and decisions made within an economy. Unlike traditional growth models, which often assume diminishing returns to capital, endogenous growth theory suggests that investments in research and development (R&D) and education can lead to sustained growth due to increasing returns to scale.
Key aspects of this theory include:
This framework helps explain how policies aimed at education and innovation can have long-lasting effects on an economy's growth trajectory.
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