Editing Endogenous growth theory (section)

{{Short description|Economic theory}}
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'''Endogenous growth theory''' holds that [[economic growth]] is primarily the result of [[Endogeneity (econometrics)|endogenous]] and not external forces.<ref>{{cite journal |journal = [[The Journal of Economic Perspectives]] |volume= 8 |issue= 1 |year= 1994 |first= P. M. |last= Romer |title= The Origins of Endogenous Growth |author-link= Paul Romer |pages =3–22 |jstor=2138148 |doi=10.1257/jep.8.1.3|doi-access=  }}</ref> Endogenous growth theory holds that investment in [[human capital]], [[innovation]], and knowledge are significant contributors to economic growth. The theory also focuses on [[positive externalities]] and [[spillover effects]] of a knowledge-based economy which will lead to economic development. The endogenous growth theory primarily holds that the long run growth rate of an economy depends on policy measures. For example, [[subsidies]] for [[research and development]] or [[education]] increase the growth rate in some endogenous growth models by increasing the incentive for innovation.