Capital accumulation → positive externalities → self-sustaining growth
★ Must-know
📌 Product innovation creates or improves products, whereas process innovation creates or improves production techniques.
Further detail
Product innovation changes what is produced; process innovation changes how it is produced
1. What distinguishes endogenous growth from growth attributed to an external factor?
2. How do endogenous growth theorists explain the continuation of economic growth?
3. When does an invention become an innovation?
What is endogenous growth in economic theory?
A theoretical model of self-sustaining economic growth.
How do economic agents sustain growth in endogenous growth theory?
By accumulating capital that generates positive externalities allowing indefinite growth.
What does innovation consist of?
Industrial or commercial applications of an invention.
What distinguishes product innovation from process innovation?
Product innovation improves products; process innovation improves production techniques.
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