ORIGIN OF ENDOGENOUS GROWTH THEORIES
Abstract
The article is devoted to the origin of endogenous growth theory by examining the evolution of fundamental concepts and paradigms. Given a wide range of fundamental views, there is an attempt to present the consecutive steps of the formation of endogenous theory. The front positions of the research are the evolution of endogenous perspective, the implicit relations between various concepts, and the authorizing experts’ study on the decided topic. Considering a rapid advancement in creating new ideas since the 15th century, the generation of economic growth fundamentals goes hand-by-hand with socio-economic transformation directed to a balanced evolution. Given a contradiction between the supporters of the exogenous and endogenous points of view, the critical issue of the endogenous theory is the multi-level nature of the diffusion of technical progress in the various fields of economic society through heterogeneous or two-stage production and materialization of technological ideas. On created to eliminate the disparities between fundamental and empirical study, endogenous growth theory continues to develop, passing transitory approbation at three consecutive generations of evolution. Proceeding within the next fourth generation, the Schumpeterian concept of «creative destruction» has given a possibility to outline the further progression towards the incentives of sustainable growth. Such an incentive provides a dynamic competitive environment that encourages firms to generate conceptually new (radical) ideas and quickly translate innovations into the most efficient way within an existing technological order. The Government acts as a supervisor to establish such a competitive environment and regulate the market of innovations at the legislative and institutional levels. Therefore, to maintain sustainable growth, it is important to manage the balance between the generation and implementation of radical innovations under an active partnership of the Government and the effective implementation of derived technologies under the pressure of a competitive environment.
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