In the history of the formation of economic reproduction, there were two types: intensive and extensive development. Both of them are integral components of increasing the economic potential of individual enterprises and entire states. The first is based on technology, the second is on increasing the factors involved in production.
The way economic development in the modern world
The welfare of the people of each country is calculated depending on the economic development of this state. Some have huge deposits of minerals and fertile land, while others do not. As a result of the difference in the amount of natural and human resources, countries choose an intensive, extensive path of development or a mixed one.
The developed countries They have long chosen the intensification of their economy and put emphasis on the development of technologies and their application in the economy. Those countries that do not do this become more dependent on external factors, including raw material prices, the cost of oil, gas and other export products is of great importance.
A more successful development of the economy is observed in those countries that combine both types of reproduction, i.e. their economy has a mixed type of development. These countries include Germany, USA, China. Recently, technology has begun to penetrate into various sectors of the Russian economy.
Extensive housekeeping
The very first and easiest way to build economic potential is an extensive development path. Its hallmark was the increase in production due to an increase in the factors involved. Those. to increase the number of finished products, either the working day will be increased, or the number of workers, or both.
A typical example of extensive management is the "virgin saga". In the second half of the 20th century, the USSR, for the rapid increase in agricultural production in a short time, plows and sows millions of untouched lands of Kazakhstan and Siberia. This allowed to increase the number of products received, but in fact no technical development has occurred. In addition, great damage was done to nature.
Extensive Development Factors
It was said above that extensive development is characterized by an increase in efforts, etc. From here we can determine the factors that influence this type of reproduction:
- Labor. The number of employees to increase profits must constantly grow, otherwise development will stop and regression will begin. Thus, the amount of labor performed is growing at the expense of new workers, and not because of an increase in productivity.
- Capital. As in the first factor, there is an increase in the amount of capital involved. Those. enterprises increase production capacity, the amount of equipment increases without improving quality.
- Natural resources. An extensive development path to produce more agricultural product increases the area sown or livestock, while new quarries or mines are being developed in industry. All this happens without the introduction of new technologies and increased productivity.
Advantages and disadvantages
The extensive path of economic development has both positive and negative sides. The first include a rapid increase in the amount of product produced, new areas are being developed. Due to the increase in production capacity, new workers are attracted, which leads to a reduction in unemployment.
At the same time, with the long development of an extensive economy, the economy is stagnant. New technologies are not being introduced, labor productivity is not increasing, which leads either to a rise in the cost of production or a decrease in workers' wages. In the conditions of the market and competition, raising the price of a product is a suicidal enterprise for a manufacturer, therefore, more often ordinary people suffer from it if the salary decreases or its invariability is constant, which in the conditions of constant inflation is equivalent to its periodic decrease.
Thus, the extensive path of development has done a lot for humanity and its evolution: it was he who made the person develop new lands, attract all members of society to work, use everything that was at the disposal of people. But after several thousand years of its existence, civilization begins to move away from it, proceeding to intensify production.
