Endogenous Growth Theory Principles

Very Hard Economic Growth And Development Growth Theories

In the context of economic growth theories, the Solow-Swan model emphasizes the roles of savings, population growth, and technological innovation in driving long-term economic growth. However, there are other growth theories that propose different mechanisms or factors essential for economic development. Consider the following options based on alternative growth theories.

Which of the following statements most accurately reflects a core principle of endogenous growth theory?

Long-term economic growth is primarily determined by external factors, such as international trade and foreign investment.

Investment in human capital and innovation leads to sustainable growth due to increasing returns to scale.

Economic growth is only fueled by physical capital accumulation and natural resource exploitation.

Hint

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