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A Suggested Model of Economic Transformation

In: Equilibrium Models in an Applied Framework

Author

Listed:
  • Ronny Norén

    (Mid Sweden University)

Abstract

In this chapter a model of an open economy to illustrate the principles of the industrial transformation process, i.e., investment and disinvestment, is discussed. However, the model is focused on medium run. In the medium time period the time is too short for all things to be reallocated, because of the sluggishness of the market. More precisely, we approach the equilibrium but we cannot reestablish it in full. To counteract the rigidity of the market, and establish equilibrium, the entrepreneur will become important as an economic actor. The key concept of the economic transformation process is the domestic profit rate, or as we here will call it, rate of return, because it is related to investment. Economic transformation will be specified as endogenous, and it will become an integral part of a steady-state equilibrium mechanism.

Suggested Citation

  • Ronny Norén, 2013. "A Suggested Model of Economic Transformation," Lecture Notes in Economics and Mathematical Systems, in: Equilibrium Models in an Applied Framework, edition 127, chapter 0, pages 99-107, Springer.
    • Handle: RePEc:spr:lnechp:978-3-642-34994-2_6
    DOI: 10.1007/978-3-642-34994-2_6
    as

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