According to the exogenous growth theory economic growth is determined by external factors
rather than internal ones. Exogenous growth theory says that if given a fixed amount of labor and
technology which is static, the economic growth will therefore stop at a economic growth will
stop at a point after some time, as the production level will reach a state of internal equilibrium.
This growth model is based on the belief that external factors affect the growth of the economy,
whether it be shifts in the labor supply or government spending or technological growth. Tax
cuts, shifts in the labor supply will only impact the growth of the economy in the short run.
Whereas a change in the technology will lead to a longer impact on the economic growth of the