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The Theory of Transformation Pressure - a New Perspective on Growth and Economic Policy

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  • Erixon, Lennart

    ()
    (Dept. of Economics, Stockholm University)

Abstract

The theory of transformation pressure offers a uniquely Swedish perspective on the "productivity slowdown" of the 1970s and 1980s. One example of this theory can be found in an influential argument from the early 1990s which states that devaluations of the Swedish currency lessened the external pressure on manufacturing and led to a delay in structural change and rationalisations. The theory generalises the idea that productivity growth in firms is stimulated by intense competition, cost pressures and low or qualified demand. The main challenge faced by such a theory is to explain why it seems that an immediate threat is needed to get a productive response from firms. The theory presented here assumes either genuine uncertainty, irrational behaviour or that firms become more creative when they are put under real pressure. Productivity growth is not always promoted by tight external circumstances. Growth may be maximised if pressure in each period is moderate or if periods with strong pressure are followed by periods of financial and technical consolidation.

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Bibliographic Info

Paper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number 1998:3.

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Length: 44 pages
Date of creation: 15 Dec 1998
Date of revision:
Handle: RePEc:hhs:sunrpe:1998_0003

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Postal: Department of Economics, Stockholm, S-106 91 Stockholm, Sweden
Phone: +46 8 16 20 00
Fax: +46 8 16 14 25
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Web page: http://www.ne.su.se/
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Related research

Keywords: Transformation Pressure; Competition; X-inefficiencies; Innovations; Productivity; Growth; Rationality; Uncertainty; R&D Investments;

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References

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Cited by:
  1. Erixon, Lennart, 2001. "Transformation Pressure and Growth - a Missing Link in Macroeconomics," Research Papers in Economics 2001:3, Stockholm University, Department of Economics.

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