Abstract:

The neoclassical growth model predicts that as soon as technologic improvements and innovations are not provided the growth in per capita income would stop in long term. However, the long-run data for many countries indicate that positive rates of per capita income growth can persist over the long term. Growth theorists of the 1950s and 1960s recognized this modeling deficiency and usually patched it up by assuming that technological progress occurs in an exogenous manner. The endogenous growth theory has sought to supply the missing explanation of long-run growth. The endogenous growth approach provides a theory of technical progress, one of the central missing elements of the neoclassical model. Therefore, from the perspective of economic growth modeling this new approach is the theory of integrating technologic progress into endegonous growth models what is endogenous in endogenous growth models is the theory of technical progress incorporated into the models

Keywords: