Economic Growth Theories Analysis

In the context of economic growth theories, the role of technological advancement is often debated among economists. Two primary perspectives dominate this discourse: the endogenous growth theory and the exogenous growth theory. Endogenous growth theory emphasizes the importance of innovation and knowledge creation within the economic system itself, suggesting that investments in human capital, innovation, and knowledge can foster long-term growth. On the other hand, exogenous growth theory posits that technological change is primarily the result of external factors, beyond the control of the economic actors within a country, and does not fundamentally depend on the decisions or behaviors of economic participants.

Consider the following statements regarding these theories:

1. Endogenous growth theory asserts that increased government investment in education will lead to sustainable economic growth through innovation.

2. Exogenous growth theory suggests that economic growth is primarily driven by factors outside the economic system, such as random technological shocks.

3. Both theories agree that human capital is a crucial determinant of economic growth.

Which of the following statements is correct based on the descriptions of these growth theories?