The new growth theory holds that growth can persist indefinitely based on the major assumption that

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The new growth theory posits that growth can persist indefinitely if knowledge capital does not experience diminishing returns. This means that an economy's ability to generate economic growth is not limited by the scarcity of physical resources or traditional factors of production, but rather by the rate at which it can innovate and accumulate knowledge capital. This assumption is supported by empirical evidence showing that investment in research and development and human capital leads to sustained economic growth in the long run.

The New Growth Theory Holds That Growth Can Persist Indefinitely