RECENT CONTRIBUTIONS TO THE THEORY OF ECONOMIC GROWTH: AN ESSAY

With the development of endogenous growth theories in the mid-1980s, the economics profession renewed its interest in the study of long-run economic growth. In one group of endogenous growth models, long-run growth is induced by externalities, while in the other
group it is motivated by technological changes that are result of research and development activities undertaken by profit-maximizing economic agents. Within the third group of endogenous growth models, focus is devoted to constant returns on capital accumulation.
In this case capital includes both physical and human capital. The main characteristic of endogenous growth models is that permanent changes in economic policy variables have permanent effects on rates of long-run economic growth.