Neoclassical growth model

The Neoclassical growth model explains how an economy grows over time by combining factors like capital (machines, infrastructure), labor (workforce), and technological progress. It suggests that growth slows down as resources become scarcer, but advancements in technology can sustain long-term growth. The model emphasizes the importance of saving and investing, which increases capital and boosts productivity. However, due to diminishing returns, growth tends to stabilize unless there are continuous improvements in technology. Overall, it helps understand how different factors contribute to economic development and why some economies grow faster than others.