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Discontinuity, Nonlinearity, and Complexity

Dimitry Volchenkov (editor), Dumitru Baleanu (editor)

Dimitry Volchenkov(editor)

Mathematics & Statistics, Texas Tech University, 1108 Memorial Circle, Lubbock, TX 79409, USA


Dumitru Baleanu (editor)

Cankaya University, Ankara, Turkey; Institute of Space Sciences, Magurele-Bucharest, Romania


Introducing Increasing Returns to Scale and Endogenous Technological Progress in the Structural Dynamic Economic Model SDEM-2

Discontinuity, Nonlinearity, and Complexity 5(1) (2016) 1--8 | DOI:10.5890/DNC.2016.03.001

Dmitry V. Kovalevsky

Nansen International Environmental and Remote Sensing Centre, 14th Line 7, office 49, Vasilievsky Island, 199034 St. Petersburg, Russia

Saint Petersburg State University, Ulyanovskaya 3, 198504 St. Petersburg, Russia

Nansen Environmental and Remote Sensing Center, Thormøhlens gate 47, N-5006 Bergen, Norway

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Two nonlinear modifications of the Structural Dynamic Economic Model SDEM-2 are developed and studied analytically and numerically. In the first model version described in the present paper the production function is assumed to be nonlinear that leads to increasing returns to scale, while the second model version proposed describes endogenous technological progress by treating the technology parameter of the production function as an additional state variable. Dependent on the values of model parameters and on initial conditions, both modifications of SDEM considered demonstrate two different dynamic regimes: either an explosive economic growth or the collapse of the economy.


The author is indebted to Klaus Hasselmann for helpful comments. This study was supported by the Russian Foundation for Basic Research (Project No. 12-06-00381-a).


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