The sources of growth, is exogenous usually "technology" in the neoclassical growth models. Such theoretical models hence are able to discuss how an economy grows, but not why it grows. Several growth models have been developed that make growth an endogenous variable to overcome this shortcoming. The endogenous growth theory argues that policy measures (such as subsidies on R&D and education) can have an increase long-run growth rate of an economy in contrast to neoclassical growth theory.
1. Write an essay on developing a brief summary of exogenous and endogenous growth theories.
2. Write down an essay on analyzing the impact of government policy on the long-term growth rate of an economy.