Exogenous Growth

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DEFINITION of 'Exogenous Growth'

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.

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