Endogenous Growth Theory
Endogenous growth theory suggests that economic growth is driven by internal factors within an economy, rather than external influences. It emphasizes the role of knowledge, innovation, and human capital as key contributors to growth. Unlike traditional theories that focus on resources and capital, endogenous growth highlights how investment in education, research, and technology can lead to sustained growth. In this view, policies that foster innovation and skills development are crucial, as they create a cycle of increasing productivity and economic expansion. This theory helps explain why some countries grow faster than others over the long term.
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Endogenous growth theory suggests that economic growth is driven by internal factors within the economy, rather than external ones. It emphasizes the role of knowledge, innovation, and human capital—like education and skills—as key contributors to long-term growth. Unlike earlier theories that viewed technology as an external influence, endogenous growth theory posits that investment in research, development, and training can lead to sustainable growth. In essence, the more a society values and invests in knowledge, the more it can boost productivity and economic growth over time.