Endogenous Growth Theory
Endogenous growth theory is an economic theory which argues that economic growth is generated from within a system as a direct result of internal processes. More specifically, the theory notes that the enhancement of a nation's human capital will lead to economic growth by means of the development of new forms of technology and efficient and effective means of production.
Definition: Endogenous growth theory is an economic theory that posits economic growth is primarily influenced by internal factors within the economic system, such as the enhancement of human capital, technological innovation, and improvements in production efficiency. The theory emphasizes enhancing a nation's human capital and technological innovation capabilities through education and R&D investments to achieve sustained economic growth.
Origin: Endogenous growth theory originated in the 1980s, proposed by economists Paul Romer and Robert Lucas. They argued that traditional exogenous growth theories (like the Solow model) could not explain the sources of long-term economic growth, thus introducing endogenous growth theory to highlight the role of internal factors in economic growth.
Categories and Characteristics: Endogenous growth theory mainly divides into two categories: human capital-based growth models and technology innovation-based growth models. Human capital-based models emphasize the role of education and training in improving labor productivity, while technology innovation-based models focus on the impact of R&D investments and technological advancements on economic growth. Both stress the importance of internal factors and suggest that policy interventions can achieve long-term economic growth.
Specific Cases: 1. South Korea's economic miracle: South Korea rapidly developed from a poor country to a global economic power through massive investments in education and R&D. 2. Silicon Valley in the USA: Silicon Valley has become a global center for technological innovation through continuous technological advancements and high levels of human capital accumulation.
Common Questions: 1. Is endogenous growth theory applicable to all countries? Answer: Not necessarily; endogenous growth theory is more applicable to countries with a certain level of infrastructure and education. 2. How to measure the contributions of human capital and technological innovation? Answer: Contributions can be measured through indicators such as productivity growth rates and the number of patents.
