Hello,
Here is the background info:
Here is the question and options:
Baroque’s comment regarding foreign direct investment (FDI) is most consistent with which economic growth model?
A. Classical
B. Neoclassical
C. Endogenous
The answer is (C). I understand the explanation, which is “The possibility for permanent higher growth in per capita output exists within endogenous growth theories, but not in neoclassical growth theory or classical growth theory.”
But doesn’t the sentence “More rapid capital accumulation by itself cannot result in a permanently higher rate of per capita growth” contradict the Endogenous model which says that increase in savings results in a permanently higher growth rate?