Endogenous Model of Economic Growth

Courses : Intermediate Macroeconomics Lecturer : Frischa Adellia Semester : 4th Semester, 2022/2023 Sesion Endogenous Model of Economic Growth The Endogenous Model is an economic model that explains long-term economic growth as a result of investment decisions in human resources, research and development (R&D), and technological innovations made by companies, individuals and governments. In the endogenous model, economic growth is considered as an endogenous phenomenon or originating within the economic system itself, and not as the result of external factors such as changes in the amount of capital or population. The endogenous model considers the role of human resources and R&D in creating technological progress, which in turn increases productivity and long-term economic growth. In the endogenous model, public policy is also considered as a very important factor in encouraging investment in human capital and R&D, as well as in creating an enabling environment for technological innovation and long-term economic growth. Therefore, endogenous models are very useful in designing public policies to promote long-term economic growth. The endogenous model is an economic growth model that recognizes the important role of innovation, research and development, and public policy in driving long-term economic growth. This model is different from the Solow-Swan model which assumes the technology and factors of production are fixed, and does not include innovation as a factor that can drive economic growth. Some of the characteristics and characteristics of the endogenous model are as follows: 1. The endogenous model includes endogenous factors such as innovation and research and development (R&D) as factors that drive long-term economic growth. In this model, innovation and R&D can spur economic growth through increasing productivity and developing more efficient technologies. 2. This model also includes human capital as a factor that influences economic growth. In another sense, investment in education and training can improve the capabilities and skills of the workforce, which can increase productivity and long-term economic growth. 3. The endogenous model also recognizes the important role of public policy in promoting economic growth. Public policies, such as investments in infrastructure, support for R&D, and policies that support investment in human capital, can provide incentives for the private sector to increase capital investment and innovation. 4. The endogenous model assumes that the factors of production can change and develop in the long run, and are not fixed as in the Solow-Swan model. Therefore, the endogenous model can accommodate innovation, research and development, and changes in human resources and technology in the analysis of long-term economic growth. 5. The endogenous model includes environmental and sustainability variables as factors that affect long-term economic growth. In another sense, this model recognizes that economic growth must go hand in hand with sustainability and environmental protection. 6. The endogenous model also assumes positive externalities in investment in R&D and education. In another sense, investment in R&D and education not only benefits the companies or individuals making the investment, but also benefits society as a whole. 7. The endogenous model also considers the existence of competition among companies in producing new and innovative products. This competition can encourage companies to be more active in innovating and developing new technologies, which in turn can spur longterm economic growth. 8. The endogenous model also assumes that monetary and fiscal policies can affect the level of investment and long-term economic growth. Therefore, appropriate monetary and fiscal policies can be important factors in promoting long-term economic growth. 9. Endogenous models can provide more accurate results in predicting long-term economic growth, because they accommodate changes in production factors and innovation that occur over a longer period of time. Therefore, endogenous models can provide a more comprehensive view of the factors that influence long-term economic growth. 10. In the endogenous model, economic growth is considered as an endogenous phenomenon, which occurs as a result of investments in R&D, human resources, and public policies that support long-term economic growth. Therefore, endogenous models can provide a more complete conceptual framework in explaining long-term economic growth, which can assist in planning economic and development strategies. In its use, endogenous models can assist in the analysis of public policy and long-term business strategy by considering factors of innovation, public policy, human resources, and the environment in the analysis of long-term economic growth. This model can provide more accurate and realistic information about the factors that can affect long-term economic growth, and can help policy makers and decision makers to plan strategies that are more holistic and sustainable.