Endogeneous economic theory suggests that it is possible for economic growth to occur without the need for more factors of production as suggested in the classical model (i.e.: add more capital, labour, land and/or enterprise). Instead, technical and tacit knowledge allows workers to create goods and services more productively, or of better quality, by deriving greater utility from a static quantity of resources. It also refers to the development of new products. Indeed some economists account for technology to be responsible for 70% of economic growth in the 1990s.

Advances in agronomy, for example, might lead to more crops being yielded per acre. Or quite simply, work smarter, not harder. Endogeneous growth models are seen as a possible solution for developed countries who are trying to work out how to sustain economic growth. Having an educated, diverse population helps.