Endogenous Growth Theory
Categories: Financial Theory
Growth is what keeps the wheels of the economy turning. So where does it stem from?
Endogenous growth theory proponents believe that growth is more inside-out than outside-in. Which means investing in education to build up human capital and encouraging innovation are important for fueling economic growth.
Government programs that make it easy for people to start their own businesses and encourage innovation and education are all betting on the endogenous growth theory. Besides investing in human capital, policies like patents and maintaining market competition are essential for innovation and economic growth.
What's the evidence for this theory? Well, if we tried to find it, it'd kind of look like circular logic...which is often the problem when we try to pin down what's-causing-what in economics. Bummer, man.