What is meant by endogenous growth? What are its implications? Describe in brief a simple endogenous growth model.

Endogenous growth theory is a concept in macroeconomics that explains economic growth as primarily driven by internal factors within an economy, rather than external forces. Unlike traditional exogenous growth models, which attribute growth to outside factors like technological advances or population growth, endogenous growth models suggest that economic growth is the result of factors that are internal to the economy, such as investments in human capital, innovation, and knowledge accumulation. These factors are influenced by the decisions and actions of economic agents like businesses, government, and individuals.

### Endogenous Growth Theory

Endogenous growth theory emerged as a response to the limitations of earlier economic growth models, particularly the Solow-Swan exogenous growth model. The Solow model posited that long-term growth could only be explained by technological progress, which was treated as an exogenous variable—meaning it came from outside the model and was not explained within the framework itself. In contrast, endogenous growth theory argues that technological progress and innovation can be explained by the decisions and behaviors of individuals and firms within the economy.

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