Introduction:

Asian countries are one of the highest growing countries around the world that has been facing rapid growth since last three decades. This spectacular growth of the Asian courtiers has attracted lot of attention of the researches, which caused rigorous research to trace the hidden cause of this rapid growth. According to latest statistics, Per Capita Gross Domestic (GDP) has grown during this last three decade by more than 4% annually in the case of China and the figure is as high as 3 to 4% for the other Asian economies like Singapore, Indonesia, Malaysia, Thailand, Korea and  Philippines (Gereffi et al. 2014). With a sharp contrast to the economic performance of the East Asian countries, it has been observed that developed economies have grown only by 2.6% during the last three decades (Diao et al. 2017). In this context, this essay is aimed to review the changing economies of Asia with special focus to trace the salient features of the phenomenon growth of south Asian economies. Besides this, the essay will try to portray the economic growth of these countries under the light of endogenous growth theory and reinforce the argument by summering them at the conclusion.

Long run growth model of the economy till 1980 was based on the exogenous factors, where the factors of change were mainly sourced from outside the organism (Vasilev 2018). For instance, researchers were focused to trace the importance of technology change and change in savings rate as one of the key factors of growth. Neo classical model of economic growth used to consider savings rate and the rate of technical development as the exogenous determinant of the economic growth (McCombie and Anthony 2016). Model proposed by the Solow model and Harrod-Domar model, argues that using the technological development and the interest rate, macroeconomic performance of an economy can be explained (Bertola et al. 2014). However rate of technological development and savings rate failed to determine the growth theory and they remained unexplained. In the backdrop of this precarious situation various economists turned to argue against the present exogenous model of growth. Over the year work of Kenneth Arrow, Robert Lucas brought another explicit model of growth known as the endogenous growth theory in order to counter the present belief of growth model (Spear and Young 2016). This new model of growth is more focused on the factors like innovation, emphasis on human capital and knowledge as the main contributors of the economic growth. The new proposed model tried to overcome the drawbacks of the present neo classical model through developing macroeconomic model on the microeconomic foundations. According to the new theory of growth, households are aimed to maximise their utility subject to their budget constraint and the firms are targeted to maximize their profit subject to the factor endowment (Laeven, Levine and Michalopoulos 2015). Most of the focus according to this model was provided to the human capital and in the case of innovations. Policy measure is acknowledged as another key instrument that provides endogenous growth model ability to deal with the explanation of long run growth model (Romer 2015). For instance, new growth model believes in subsidies in the case of education and R&D to enhance the growth rate of the economies through providing incentive for the innovation. According to AK model, endogenous model is as simple as the Constant Returns to Scale (Choi 2016). It can easily be determined through the increase in number of goods and service produces, enhancement in service quality, innovative development and various other endogenous factors. On the other hand in a more complex scenario, endogenous growth theory believes in spill over effect and positive externalities, where knowledge based economy can lead itself to higher growth through diminishing return in the capital accumulation. Besides this, endogenous growth model makes it possible to construct a framework in the case of perfect competition considering marginal product of capital is diminishing in nature and it does not tends to zero. Additionally ability to holding patent allows the firms to enjoy some amount of monopoly in the market with the endogenous framework. R&D is one of the key factors that allow the endogenous growth sculpt to describe the monopoly market, making it one of a stable model that determined both the extreme market condition (Janoski et al. 2014).