Q. Characteristics of endogenous growth theory?
There are many different explanations for technological progress. Most of them, though, have many common characteristics:
- They are based on constant return to scale for capital. So MPK isn't a decreasing function of K in these models.
- They consider technological development as a public good.
- They focus more on human capital.
- It is possible for government to affect the growth rate. Higher savings also results in higher growth, not just higher GDP per capita.
- They predict convergence of GDP per capita between countries in the long run. This is a consequence of public good property of the technological developments.