Analysis of regional endogenous growth

Neoclassical ‘exogenous’ growth models predict that, under certain conditions (complete markets, free entry and exit, negligible transaction costs and convex technology relative to market size), economies navigate a sea of economic opportunities that reward productive efforts and savings (Solow, 1956; Swan, 1956; Borts, 1960; Borts and Stein, 1964; Barro and Sala-i-Martin, 1995). Thus initially low-income economies typically do not entrap and tend to catch up; only those economies that do not make investments will not escape the low-income status quo.