Courses : Intermediate Macroeconomics Lecturer : Frischa Adellia Semester : 4th Semester, 2022/2023 Sesion Endogenous Economic Growth Theory The theory of endogenous economic growth is a theory which states that economic growth can be explained by internal factors, not only external factors such as capital, technology, and labor. This theory assumes that factors such as knowledge, creativity, and innovation have a very important role in long-term economic growth. Some of the characteristics and characteristics of the theory of endogenous economic growth include: 1. The role of innovation and knowledge This theory emphasizes that innovation and knowledge are key factors in driving economic growth. Innovation can create new products and services that expand markets and create new business opportunities. Whereas knowledge increases productivity and helps create new technologies. 2. Improvement of human resources This theory assumes that human resources are an important factor in long-term economic growth. Improving the quality of human resources can increase productivity, reduce production costs, and create new business opportunities. 3. Economies of Scale Economies of scale are also an important factor in the theory of endogenous economic growth. In a rapidly growing economy, the more goods and services produced, the more cost efficient they are to produce. Therefore, the larger the scale of production, the higher the rate of economic growth. 4. Human capital This theory also emphasizes the importance of human capital. Human capital refers to the skills, knowledge and abilities of employees in carrying out their duties. In the theory of endogenous economic growth, the development of human capital is considered as an important factor in increasing productivity and economic growth. Examples of the application of endogenous economic growth theory include government policies to increase investment in research and development, training and education to improve the quality of human resources, and provide incentives for innovation and the creation of new technologies. The theory of endogenous economic growth is a theoretical concept which suggests that internal factors such as investment, innovation, and human resources have a significant role in spurring long-term economic growth. This theory differs from the neoclassical economic growth theory which focuses on the role of external factors such as technology and capital. Some of the characteristics or characteristics of endogenous economic growth theory include: 1. Invest in people The theory of endogenous economic growth emphasizes the importance of investment in people in producing long-term economic growth. Investment in education, training and skills can increase labor productivity which has an impact on increasing economic growth. 2. Technological innovation This theory suggests that technological innovation can be a source of economic growth. In this case, the resulting innovations will result in higher productivity thereby increasing output and economic growth. 3. Increase competitiveness Endogenous economic growth encourages to increase competitiveness in international markets. One way to improve competitiveness is to improve product quality and production processes through innovation. 4. Public policy impact This theory assumes that public policy can affect economic growth through investment in human resources, technological innovation, and infrastructure. 5. Internal factors The theory of endogenous economic growth suggests that internal factors such as human resources, capital, technological innovation and development of the domestic market play an important role in economic growth. Examples of public policies taken by several countries such as China, India and Japan that implement skills education and training for the workforce, technology and research development, as well as investment in infrastructure in order to accelerate economic growth are one implementation of the theory of endogenous economic growth. One example of applying the theory of endogenous economic growth is by providing incentives to the public to invest in research and development (R&D) and education. By providing incentives, people will be more motivated to invest in R&D and education which will ultimately increase productivity and innovation in the economy. Examples of this application can be seen from government policies in developed countries such as the United States and Japan. In the United States, there are various incentive programs aimed at companies doing R&D and innovation research. In addition, the government also provides financial support and facilities to universities to conduct research. In Japan, education is also an important focus in creating sustainable economic growth. Education in Japan is very focused on developing skilled and educated human resources, so as to increase productivity and innovation in the economy. Thus, the application of endogenous economic growth theory can provide significant benefits in increasing economic growth and social welfare in a sustainable manner.