ON ENDOGENIZING LONG-RUN GROWTH

This assessment of recent theoretical work on endogenous growth identi fies three different engines of long-run growth: (i) the asymptotic av erage product of capital is positive; (ii) labor productivity increase s as an external effect of capital accumulation; (iii) there are feedb ack effects on the cost of accumulating knowledge or innovating. A gen eral model encompassing all three is considered, and then used to revi ew different proposed determinants of long-run growth rates. The contr ibution of endogenous growth theory has been to create a framework in which to explain why economic institutions and policies can have long- run effects on growth rates.