Economic growth is an important goal of modern society. It is expressed in the quantitative increase and qualitative improvement of social production.
Types of economic growth
Of course, economic growth has its pros and cons. The advantages include an increase in the volume of production and its automation. In addition, this is an improvement in working conditions, an increase in the employment of the population, an increase in the country's international prestige and an increase in the welfare of society.
Speaking about the shortcomings of economic growth, it is worth mentioning the deterioration of the human environment, the growth of labor intensity, overpopulation of cities and the acute issue of retraining of personnel. It is also necessary to note the depletion of irreplaceable resources.
There are two paths to economic growth. The first is called extensive, and the second is called intensive. Extensive is based on increasing production volumes. This is achieved through the use of a quantitative expansion of production factors: the installation of a large number of equipment, an increase in the area of cultivated land. But the production technology remains unchanged.
An intensive path of economic growth is based on an increase in production volumes. This is possible through the use of a qualitative improvement in the factors of production. These include: the use of the achievements of scientific and technological progress, the redistribution of resources, as well as raising the level of qualifications of the workforce. At the same time, capital and labor are moving from low-skilled industries to highly skilled, an increase in the return on capital occurs. Also, economies of scale of production can be attributed to factors, because with high production volumes, advertising and sales costs are reduced.
Factors of economic growth
How fast the rate of economic growth will be determined by a number of factors. They also influence the nature of economic growth. There are eight main factors of paramount importance.
The first factor is natural resources. The rapid development of the country's economy is facilitated by the availability of land, water and other types of resources. The second factor is labor resources. They influence economic growth by increasing the level of labor productivity, the availability of vocational training, and an increase in the level of employment.
The third factor is scientific and technical knowledge. This includes innovation, the use of new technologies. The fourth factor is fixed assets. This is the accumulation of funds, a systematic increase in investment.
To increase economic growth, the structure of the economy must be progressive, responsive to the needs of society. This is the fifth factor. The sixth is the aggregate demand. It is understood as the total demand for goods and services from the population, enterprises and the state.
The seventh factor is the type of economic system. Experience has shown that market systems provide higher economic growth.
The eighth factor includes socio-economic factors that have a significant impact on economic growth through the promotion of laws that promote business development. The prosecution of corruption is also important.
