Endogenous growth theory: a critical assessment

A critical assessment is made of endogenous growth theory from the perspective of recent developments within economics as a discipline. These include its increasing mathematical formalisation, its focus upon microfoundations, the casual use of econometrics to test models, and the incorporation of factors that have traditionally been outside mainstream economics. It is found that the theory focuses upon market imperfections and technological progress in a variety of ways, and reconstructs their impact upon the macroeconomy as a growth rather than as a level effect. Whilst the growth rate is endogenised, this leads to the problem of multiple equilibria and extremely complex dynamics. The generalisation from exogenous growth theory is, however, associated with even more extreme assumptions and analytical distance from the socioeconomic processes of growth itself.