Extensive economic growth

The concepts of economics lie in the organizational foundations of the economic activity of the whole society, the aggregate of relations that are formed in the system of production, distribution, exchange and consumption.

The economic environment is in constant flux and actively influences both the state as a whole and the economic entities separately. The guarantee of the effective functioning of the company is the implementation of a full analysis and accurate forecasting of trends in the economic environment. Any successful organization must be able to adapt to such changes in time.

The term "economic growth" provides for an increase in the gross national product in a certain period of time. This indicator is measured by the average annual growth rate and is expressed as a percentage.

Economic growth can bring some benefits to entrepreneurs by opening up with it new market alternatives in an ever-expanding economy. With an economic downturn, the firm reduces its product inventories, reduces production and the number of employees. The performance indicator characterizes the economic growth of any company.

Many outstanding economists are pondering the question of what causes economic growth, and find answers in the following factors:

"The availability of rich natural resources that have a beneficial effect on economic growth, but this is not enough, and the economies of Japan, Taiwan, Singapore, Hong Kong and Korea serve as evidence. These are the countries in which natural resources are almost completely lacking.

- The human factor, expressed in the presence of human resources, which should have the basic properties - education and diligence.

- Due to a favorable geographical position the state has the opportunity to receive additional revenues through the transportation of goods through its territory. A good example is the countries located on the seaside.

- Volumes of investment and capital.

- Scientific and technological progress also significantly increases the influence of science and technology on the production process.

Every society has two main ways of economic growth: it is intensive and extensive. In this article we will pay more attention to the second type.

Extensive economic growth can be achieved through a quantitative increase in production factors while maintaining the same level of technical base. For example, in order to double the output of the enterprise, it is necessary to put in operation additional equipment, increase the number of employees and invested capital.

Extensive economic growth has been observed over long periods in the history of some states. Its duration can be determined by the number of investment, human and natural resources. However, regardless of their volume, they still have the ability to gradually deplete. That is why it is advisable to achieve economic growth not only through an extensive method.

Extensive economic growth is the initial path to expanded reproduction. That is why he can note several negative properties, which also show the imperfection of this term (as already mentioned above - natural resources are being depleted with time, people need to train more than one year, etc.).

Despite all its shortcomings, extensive economic growth is the basis for economic development in the future. For example, this type of economy contributes to the employment of the population and the reduction of unemployment.