Economic Growth Theories: Comparative Analysis of Classical, Neoclassical, and Endogenous Models

Abstract

Economic growth is one of the most important topics in the economic area, which has been considered by politicians and experts of countries. Due to its importance, various models have been proposed for its study and analysis. The EG models are theories that are used for interpretation and explaining the existing realities of economic growth at the global level. This paper aims to compare these models, including classical, neoclassical, and endogenous, from different aspects. For this purpose, using the method of systematic study, the models, pioneers, and their characteristics are introduced. Then, their structure and theoretical foundations are briefly presented. Finally, these models and the components are analyzed and discussed in a comparative way to provide a strong argument for their use or rejection. The results of this research show that the EG models have characteristics that cause economists to justify their use or criticize them. the factors like capital accumulation and expansion of the employment force play special roles in the classical growth model. It postulates that a country’s economic growth decreases with population increase and resources limitation. This model, despite its emphasis on technology, does not consider its important role in economic growth. On the other hand, neoclassical growth theory can explain most of the observed differences in income levels among countries by considering human capital inputs in the model. However, the explanation of income levels, which is emphasized by this model, is not considered the main function of growth theory. Finally, proponents of the endogenous growth model have tried to explain the growth of production per capita in a unified state and then express the differences in growth rates among countries. According to this model, sustainable growth can be realized endogenously, that is, without the intervention of any exogenous technological progress.