ABSTRACT
Transformational growth describes the changes in both institutions and in the working of markets, as growth and innovation take place. Here we will explore the move from ‘Replicative growth’, governed by the price mechanism, where growth proceeds by new firms replicating old, to ‘Innovative growth’, regulated by the multiplier-accelerator, where firms invest in expanding and improving their own facilities, and the role of prices is chiefly found in long-term capital planning.
