Exogenous Growth

What is 'Exogenous Growth'

Exogenous growth is the belief that economic growth arises due to influences outside the economy or company of interest. Exogenous growth assumes that economic prosperity is primarily determined by external rather than internal factors. According to this belief, given a fixed amount of labor and static technology, economic growth will cease at some point, as ongoing production reaches a state of equilibrium based on internal demand factors.

BREAKING DOWN 'Exogenous Growth'

The concept of exogenous growth grew out of the neoclassical growth model and the works contributed by Robert Solow. The exogenous growth model factors in production, diminishing returns of capital and technological variables to determine economic growth.

RELATED TERMS
  1. Endogenous Growth

    The notion that policies, internal processes and investment capital, ...
  2. Economic Equilibrium

    A condition or state in which economic forces are balanced. These ...
  3. Neoclassical Growth Theory

    An economic theory that outlines how a steady economic growth ...
  4. Endogenous Variable

    A classification of a variable generated by a statistical model ...
  5. Growth Accounting

    A method whereby a set of economic techniques or theories are ...
  6. Robert M. Solow

    Robert M. Solow is an American economist and recipient of the ...
Related Articles
  1. Markets

    Economic Growth

    Economic growth happens when the market value of the goods and services in an economy increase in one time period as compared to a prior time period.
  2. Markets

    Is Infinite Economic Growth on a Finite Planet Possible?

    While the finite nature of Earth's resources limits the direction of economic growth, it does not mean that infinite economic growth is impossible.
  3. Markets

    Explaining Growth Rates

    Growth rate refers to the amount a specific variable or measure has grown over a specified time, whether related to one company or an entire economy.
  4. Markets

    5 Characteristics of Good Growth Stocks

    Growth stocks can give investors good returns, but not all growth stocks are the same. From leadership to growth, there are traits good growth stocks share.
  5. Investing

    Growth Investing: 3 Tips to Consider

    Learn the basics of growth investing, and discover three tips for avoiding the risk of losing money while employing a growth investment strategy.
  6. Managing Wealth

    Is Growth Always A Good Thing?

    Getting big quickly looks good, but companies can get into trouble when they do it too fast. Find out how to spot this trouble.
  7. Trading

    Stock Analysis Basics: How To Forecast Revenue and Growth

    Forecasted revenue and growth projections are important components of security analysis, leading to a stock’s future worth.
  8. Markets

    Does a Shorter Work Week Lead to Greater Productivity?

    While technology has significantly increased labor productivity, institutional changes, such as a shorter work week, could also be very productive.
  9. Markets

    Macroeconomics: Economic Performance and Growth

    By Stephen Simpson Income is one of the most significant factors in measuring economic performance, and gross domestic product (GDP) is the most commonly used measure of a country's economic ...
  10. Investing

    Benefits and Risk of Growth Stock

    A growth stock is a share in a company whose earnings and sales are growing faster than those of most other companies.
RELATED FAQS
  1. According to the neoclassical growth theory, what factors influence the growth of ...

    Read about neoclassical growth theory in economics, a model developed by Robert Solow in the 1950s that pointed to technology ... Read Answer >>
  2. Why are the factors of production important to economic growth?

    Find out why the factors of production are critical for real economic growth, where wages rise and consumer goods costs fall ... Read Answer >>
  3. How does the neoclassical growth theory predict real GDP?

    Understand what neoclassical growth theory is and how the ideology come about. Learn how the neoclassical growth theory predict ... Read Answer >>
  4. How can companies reduce internal and external business risk?

    Understand the difference between internal business risk and external business risk. Learn how a company can reduce each ... Read Answer >>
  5. Is there a difference between financial ratio analysis and accounting ratio analysis?

    Discover the economic factors that most influence corporate bond yields. Corporate bond yields reflect the market's assessment ... Read Answer >>
  6. What level of annual growth is common for companies in the Internet sector?

    Learn what level of annual growth is common for companies in the Internet sector in terms of revenue growth and earnings ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center