THE CONTRIBUTION OF ENDOGENOUS GROWTH THEORY TO THE ANALYSIS OFDEVELOPMENT PROBLEMS: AN ASSESSMENT
Presented By:Sandeep kumar BaranwalMA (Economics)Gokhale institute of politics and economics
Development economics is an evolutionary sphere of study. Much prior to its formalrecognition as a specialized field of study in 1970s, it was firmly established in the minds of visionary economists. Various models for development have been developed since then.Attempts are made to develop models that would catch up with the complexities of problem of development faced by the less developed and poor countries. There is an urge to establish agiven factor as a dominant factor that would play the lead role in ushering developmentprocess in the developing and poor economies. The factors which were in the race to berecognized to play the lead role includes level and rate of savings, the use of savings , the easeof technological progress , human capital accumulation , technological innovations , importsubstitution strategy and outward-orientation of the economy etc.The concern of all such models were to break up the rigid structural features of less developedcountries which includes widespread unemployment , underemployment, urban-rural divide,primitive technology , low human capital accumulation, low productive base, low infrastructuralset-up, low saving rate and investment rate , lack of entrepreneurship etc.Most of the models were formulated, given the inspirations derived from developmentproblems facing the less developed countries.Gradually as, such economies got integrated with the international economic framework; a newwing got added to its development channel. The very thought that there exists availability of same technological opportunities in all the countries and that there exists a possibility of convergence in the per-capita income growth rate across the countries was given up.Development models were re-invented , but on the realistic ground, searching for the factorsthat determines the crucial international differences in the factor productivity growth andfocusing on the trade and technological diffusion in an international economy. Thus,endogenous growth theory was born.