Endogenous Economic Growth Model

An Endogenous Economic Growth Model is an economic growth model that explains economic growth as primarily the result of endogenous factors such as human capital, innovation, and knowledge.

• Context:
  • It can emphasize Domestic Investment (human capital investments, innovation investments, knowledge investments) as key drivers of Economic Growth.
  • It can focus on Positive Externalities and Spillover Effects in a Knowledge-Based Economy.
  • It can assert that long-run Growth depends on policies like Subsidies for R&D and Education.
  • It can highlight the role of Government in fostering Innovation and long-term Growth.
  • It can emphasize the importance of Knowledge Spillovers for overall Economic Advancement.
  • It can argue that increasing Returns to Scale from Human Capital and Technology Investments sustain Long-Term Economic Growth.
  • It can consider how policies affect Long-Term Economic Growth and the need for an Innovation-Friendly Environment.
  • ...
• Example(s):
  • Romer models that showcases how investment in R&D leads to technological progress and sustained economic growth.
  • AK models that demonstrates how capital accumulation can drive long-term growth without diminishing returns.
  • Schumpeterian growth models that illustrates the impact of entrepreneurial innovation and creative destruction on economic development.
  • Product variety models that link innovation to expanding product diversity and economic growth.
  • Quality ladder models where innovation leads to improving product quality, driving growth.
  • ...
• Counter-Example(s):
  • Exogenous growth models, which treat key determinants of long-run growth like technological progress as determined outside the model, such as:
    • Solow-Swan model, which explains growth through exogenous technological progress, capital accumulation, and population growth, assuming diminishing returns to capital.
• See: Human Capital, Innovation, Research and Development, Positive Externalities, Knowledge Spillovers, Technological Change, Increasing Returns to Scale, Economic Policy.

---

---

References

2024

• (Wikipedia, 2024) ⇒ https://en.wikipedia.org/wiki/Endogenous_growth_theory Retrieved:2024-6-5.
  • Endogenous growth theory holds that economic growth is primarily the result of endogenous and not external forces. Endogenous growth theory holds that investment in human capital, innovation, and knowledge are significant contributors to economic growth. The theory also focuses on positive externalities and spillover effects of a knowledge-based economy which will lead to economic development. The endogenous growth theory primarily holds that the long run growth rate of an economy depends on policy measures. For example, subsidies for research and development or education increase the growth rate in some endogenous growth models by increasing the incentive for innovation.

2020

• (Aschenbrenner, 2020) ⇒ Leopold Aschenbrenner. (2020). “Existential Risk and Growth.” In: Global Priorities Institute Working Paper.
  • NOTES:
    • The paper develops an endogenous growth model to analyze the relationship between economic growth and existential risk, featuring a consumption sector that increases risk and a safety sector that mitigates risk.

2017

• (Wikipedia, 2017) ⇒ https://en.wikipedia.org/wiki/Endogenous_growth_theory Retrieved:2017-8-14.
  • Endogenous growth theory holds that economic growth is primarily the result of endogenous and not external forces. Endogenous growth theory holds that investment in human capital, innovation, and knowledge are significant contributors to economic growth. The theory also focuses on positive externalities and spillover effects of a knowledge-based economy which will lead to economic development. The endogenous growth theory primarily holds that the long run growth rate of an economy depends on policy measures. For example, subsidies for research and development or education increase the growth rate in some endogenous growth models by increasing the incentive for innovation.

---