The Impact of Endogenous Investment on Economic Growth: An Analysis on Advance-Retreat Course Theory

By Dai, Feng; Liu, Jing Xu et al. | International Journal of Management, August 2010 | Go to article overview

The Impact of Endogenous Investment on Economic Growth: An Analysis on Advance-Retreat Course Theory


Dai, Feng, Liu, Jing Xu, Wu, Song Tao, International Journal of Management


Advance-Retreat Course (ARC) is a theory that explains how socio-economic growth takes place. The main argument of ARC is that economies progress though a natural process of initiative followed by retreat in response to environmental pressures. Based on the conclusions of an analysis of ARC in the economic arena (F. Dai, et al., 2007, 2008 and 2009), this paper analyzes the impact of changes in interest rates and endogenous investments on long-term economic growth in terms of the principles of ARC theory. Based on the application of ARC theory, it develops a number of solutions to the problem of economic growth and provides an analytic technique for using ARC theory to suggest optimum endogenous investment strategies for stimulating economic growth. The empirical analysis, whose results are consistent with predictions from ARC theory, offers a number of suggestions for improving economic growth in the United States

(ProQuest: ... denotes formulae omitted.)

Introduction

Unlike the participants decribed in traditional traditional game theory, participants in the 'game' that is economics frequently choose their strategies positively, as a result of their own initiatives, or negatively, without such initiatives, in the face of environmental pressures. This causes problems for academic analysis because human actors or participants are free to choose and implement economic strategies with regard to their environments which do not give them optimum returns, frequently being based on choices that involve them responding passively to changes or alterations in their environment. The economic environment often 'forces' people to act passively under pressure or, in the opposite direction, makes them resist the forces for alteration or change. Relatively speaking, the faster and greater is economic growth, the greater these environmental pressure will be. This means that the process of economic growth should have periods of advance-when participants go along with the changes or alterations~and periods of retreat, when participants resist these alterations or changes. The procceses involved are much like boating with the current followed inevitably by boating against the current. Such processes have the following two basic characteristics:

* Humans as the subjects can implement initiative strategies to further their interests.

* Environments, as objects, can only passively 'accept' subjects actions, but it can will produce resistance or pressure to modify their actions in the opposite direction to that they want or desire.

These two - opposite- characterisitics give rise to problems that serve to Advance-Retreat Course theory (Dai, et ai, 2007). ARC theory has been used to analyse economic growth and development, along with a number of other theories, such as the cycle theory (Lucas, 1981) M, the real business cycle theory (Prescott, et al, 1982; Plosser, et al, 1988,1989) [2,3, 4], the new growth theory (Romer, 1986, 1990)I56], and. economic growth theory based on innovation and change (Solow, 1956, 1957 ; Jones, 1995,1998)[7,8,9, 1011I

In recent years, economists have made a lot of progress in studying economic growth and development, using dynamics methods from genetics and ecology perspectives to study ecomocic growth (Croix and Michel, 2002)I12], non-linear theory of economic growth (Fiaschi and Lavezzi, 2007)ll3], the invariance-in-growth theory and sustainable development (Martinet and Rotillon, 2007)[14], evolutionary process theory involving geographical clusters of firms and innovation (Pouder and John, 2003)[15], macroeconomic theory with respect to output dynamics and structural evolution (Ulrich and Thomas, 2008) |16]. However, a theory that integrates dynamics with ecology has not been suggested as a possible explanation for economic growth. The present paper argues that ARC theory as applied to economics deserves to be looked as a theory that provides a 'special way' of studying economic development. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

The Impact of Endogenous Investment on Economic Growth: An Analysis on Advance-Retreat Course Theory
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.