How Does Growth Theory Affect Economic Growth

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AN EMPIRICAL ANALYSIS OF THE IMPACT OF TRADE ON ECONOMIC GROWTH IN NIGERIA

AN EMPIRICAL ANALYSIS OF THE IMPACT OF TRADE ON ECONOMIC GROWTH IN NIGERIA MIKE I. OBADAN
DEPARTMENT OF ECONOMICS AND STATISTICS UNIVERSITY OF BENIN BENIN CITY
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Endogenous growth theory means economic growth from within a system – usually a nation state. Problems identified in this model are that growth in per capita output converges to zero in the steady state and that there is a positive correlation across countries between investment rates and growth. But in the Solow model, this will affect the long – run level of output but not growth rate. This theory offers hope to the newly industrialized countries (NICs) and alternative ways to develop without being dependent on trade. Traditional theories of trade focus on trade as an engine of growth. The endogenous theory focuses on education, on – the – job training and development of new technologies for the world market and this accounts for its increasing relevance. In the traditional neoclassical models, growth originates from trade. What endogenous theory does is to show how countries can work with the process of globalization to find complementary activities (like education and retraining) and regulatory frameworks which help them survive, and collect rent from multinational corporations within their political and economic boundaries. However, Romer (1990) stressed that endogenous growth does not just happen. He identified four basic pre – conditions for growth which are; i. Capital – measured in units of consumption goods. ii. Labour – skills available from a healthy human body. iii. Human capital – activities such as formal education and on the job training which is …show more content…
(1997), Reflections on the concept of Balance of Payments Constrained Growth, Journal of Post Keynesian Economics, Spring, 19(3):377-85. Tupy, M. L. (2005), “Trade Liberalization and Poverty Reduction in Sub – Saharan Africa”, Policy Analysis, No. 557, December. Uwatt, B. U. (2003), “Globalization and Economic Growth: The African Experience, Proceedings of the Annual Conference of the Nigerian Economic Society. Uzama, H. (1965), “Optimum Technical Change in an Aggregative Model of Economic Growth, International Economic Review, 6, 18 – 31. World Bank (2002), Globalizers, Growth and Poverty, A World Bank Policy Research Report, Washington D. C. The World Bank / Oxford University

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