Factors and types of economic growth are the most pressing issues for all business entities. Among them are not only the enterprises themselves, but also the state as a whole. 
Relevance of the topic
In any case, development is accompanied by the emergence of certain problems, many of which require immediate solutions. This applies not only to advanced countries, such as, for example, Japan, which is most fully trying to realize its large-scale economic projects and achieve its goals. Of particular relevance are these problems in those states in which the economic sphere is at the stage of formation and constant change. Including Russia. RF seeks to implement the IMF program in order to obtain the necessary investments. In this regard, the factors of economic growth of the country is a very relevant topic not only for entities directly related to the economic sector. Close attention was also paid to it by lawyers and politicians. Let us further consider what factors and types of economic growth exist.
General information
Economic growth is inherently considered quite a multifaceted and complex phenomenon. The ways of expressing it are, in principle, simple. However, behind such concepts as an increase in GDP, ND, GNP, there is a multi-level system of interaction between various sectors of the economy. When considering the concept, it is necessary to clearly establish the differences between economic growth and development. The latter, in particular, can take place in the absence of the first, but in the presence of prerequisites for it. Development can also be expressed in structural changes, probable innovations that do not directly lead to economic growth. It can, in addition, go down the line. In this case, there are factors of extensive economic growth. Among them, for example, a decrease in the quality of services or products, deterioration of their properties.
Main tasks
The primary goal is the achievement of sustainable and continuous economic growth. To identify ways to implement this task, it is necessary to understand the features of the functioning of the internal mechanism for increasing the volume of output of goods on a national scale. It can be identified directly in the structure of the national economy. It is able to provide balanced expansion of production.
The value of the indicators used
Types and growth factors, their dynamics are widely used in characterizing the development of national economies. They are of great importance in the process of state regulation of this sphere. The population gives an assessment of the activities of higher political and economic institutions (for example, the government, the president, and so on), primarily by considering indicators of the dynamics of the quality of life and economic growth. The pace, level and other parameters will depend not only on the potential of the industrial sector. Foreign policy and foreign trade factors of economic growth will have a significant impact on them.
Edward Denison Model
Factors of economic growth include various indicators. However, among them there are three categories that are of particular importance. The main factors of economic growth are indicators of distribution, supply and demand. Considering this topic, we should mention the classic model of E. Denison.For the first time, the researcher attempted to quantify the part of the annual growth that corresponds to each production factor for 1929-1982. In total, Denison identified 23 indicators: four of them related to labor, the same to capital, and one to land. Other factors of economic growth characterized the contribution of scientific and technical progress. Subsequently, Denison formed a slightly different scheme. He determined that the most important is increase in labor productivity. This indicator will increase real income and expand production. By increasing labor costs, 1/3 of revenue growth over a certain period is achieved. At the same time, 2/3 is provided by increased productivity. The latter is due to NTP.
Factors (resources) of economic growth
Supply indicators characterize the physical ability of the economy to increase. Factors of economic growth include:
- the presence of capital;
- quality and quantity of labor reserves;
- level of technology development;
- quality and volume of natural resources.
These indicators have a direct impact on the growth of the economy. These growth factors make expansion possible in the physical sense. The availability of a large volume of funds of the best quality allows to increase the output of real products.
Labor reserves
Increasing productivity is directly affected by training and education. The higher their level, the greater the opportunity to have high earnings. The quality and quantity of labor reserves are determined primarily by the size of the population. At the same time, some people are not included in the category of able-bodied people and therefore do not enter the market. Among them, in particular, students, military personnel, pensioners and so on. Those who wish to work form the labor force. In this group, in turn, the unemployed stand out. They want to find a job, but they cannot.
Quantitative and qualitative measurements
An estimate of the number of employees will not fully reflect the real situation. In this case, the number of man-hours will be considered the most accurate meter. This value allows you to take into account the total cost of time. Their increase depends on various circumstances: the desire to work, the unemployment rate, pensions and so on. Growth factors vary by state and space. They form differences in the levels and pace of economic development. The quality of labor reserves and, accordingly, the cost of them in the process of production, is also of great importance. With increasing qualifications and improved staff education, productivity also increases.
Labor costs can expand without changing working hours and the number of employees in a large direction. They can only increase by improving the quality of work reserves. One of the most important means of increasing productivity is investment in human resources. Improving the quality of labor reserves, according to some sources, has allowed to increase national income in America by 14%. A simple indicator of the quality of work resources is considered the level of education. Today, 4/5 of workers in America, he is rated as average. Among them, about 22% are people with higher and incomplete higher education. Less than 6% of American workers have an entry level.
Capital
Key assets include housing. This is due to the fact that citizens who live in houses benefit from the provided utility services. The latter circumstance may seem somewhat unusual. But in this case, it is necessary to remember that modern theory interprets factors of production (economic growth) as providing operational services.Offices and factory buildings with equipment influence the manufacturing process. This is because workers with a large number of machines will produce more products. Factors of economic growth include inventory. Capital expenditures are dependent on accumulated assets. Their volume, in turn, is influenced by the rate of accumulation.
Technical progress
It involves not only the introduction of completely new production methods, but also the forms of management and organization of this process, as well as innovative information tools. Technical progress is considered as the discovery of new knowledge, with the use of which the available reserves can be combined in different versions to increase the final volume of the goods. This process is usually accompanied by the emergence of more efficient new industries.
An increase in the rationality of production becomes, in turn, one of the main factors of growth. However, his contribution may be negative. Extensive economic growth factors are represented, for example, by legislative measures such as taxes and penalties for polluting enterprises. The imposition of sanctions led to a decrease in the output of relevant products. This, in turn, holds back economic growth. In this regard, the question arises of the quality of the process. In the activities of enterprises, investments (investments) and technological progress are closely related. The latter often entails an infusion of funds into new equipment and machines.
Natural reserves
To quantify them is rather difficult. Natural reserves have a significant impact on economic growth. There is no doubt that the vast reserves of various natural resources make a significant contribution to the development of management. Russia has huge land reserves, territories with a favorable climate. Economic growth factors are both minerals and energy reserves. It is worth saying here that, despite the fact that natural reserves act as a powerful positive prerequisite for an increase in the economy, this does not mean that states with insufficient reserves will be doomed to lag.
For example, in Japan, resources are very limited, however, economic growth in the post-war period is characterized by high rates. At the same time, many states with large reserves are in the last positions in world rankings. Global today is the problem of resource development. It, in turn, combines with another large-scale task of improving technology for the most efficient use of reserves. Along with this, the world community faces the problems of reducing the material consumption of products, providing tools and equipment for their detection and subsequent use.
Demand and distribution
Factors of economic growth are those that contribute to increasing the total needs of society in manufactured goods. Among them, in particular, tax policy, salary, the tendency of citizens to save, and so on. Terms of distribution of financial, labor, natural resources are also perceived as growth factors. They should be organized so that when they are used, the economy receives the maximum income at the lowest possible cost.
Restraint
Considering the factors of state profit growth and expansion of the economic sphere, it should be noted those that slow down progress. Among them, in particular, legislative activity relating to labor protection, nature and others. As world experience over the past twenty years shows, soft financial policies inhibit economic growth, and hard ones have beneficial effects. The higher the rate of money emission, the slower the progress.In many countries, a greater volume of national product is produced at state-owned enterprises.
Comparison of the share of their output in GDP with the growth rate of real GDP indicates the negative impact of such entrepreneurship. With the minimum size of the public sector (7%), the growth rate reaches a maximum of 1.5% per year. With the increase in the scale of such entrepreneurship, they decrease even more and become negative. At the same time, the volume of production at state enterprises may exceed 20% of GDP. It is also noted that a high level of state. Consumption also impedes sustained and rapid progress.
Calculations
Economic growth can be measured and determined by two interrelated methods:
- as an increase in real national gross domestic product over a specific period;
- as an increase over time for this GNP per capita.
You can apply both methods. But in the process of comparing the quality of life in different countries and regions, preference should be given to the second option. So, GNP in India is almost 70% higher than in Switzerland. But in terms of living standards, the population of the first state lags significantly behind the citizens of the second — more than 60 times. As a rule, in accordance with any given method, economic growth is estimated at annual rates as a percentage. For example, real GNP - 200 billion dollars in the previous year and 210 billion in the present. The pace can be calculated by subtracting the indicator for the past period from the value for the current one, and then correlating the difference with the size of GNP for the past year:
(210 - 200 billion dollars) / 200 = 5%.
Evaluation of the pace can also be done using a system of interrelated indicators, through which factors of growth in the manufacturing process of a product and a change in the result of its release are reflected. To ensure entrepreneurial activity, three conditions are necessary: capital, labor and land. The total product, therefore, acts as a function of the cost of funds, natural resources and labor.
Performance assessment
When characterizing, indicators are used that determine how effectively individual growth factors were used. Among them are the following.
- The ratio of the volume of the product to the labor costs that were carried out in the manufacture of the product / service. The inverse proportion is called the complexity of the products.
- The ratio of volumes to the amount of capital used in the manufacture of goods. It is called capital return. The inverse proportion, respectively, is called capital intensity.
- The ratio of volume to the cost of natural reserves (energy, land, etc.). The inverse proportion is called resource intensity.
In addition to the relationships between volumes of production and specific factors, the relationships between the latter are used. This allows us to characterize the relationship between them. One of such indicators is the ratio of capital and labor costs — capital-labor ratio of labor.
Marginal profitability
Considering the factors of profit growth and the expansion of the sphere of activity of enterprises, attention should be paid to indicators by which the level of increase in product output is established, depending on the enhancement of the effect of each individual condition, while the others remain unchanged. First of all, this is the ratio of additional products to additional labor. The marginal productivity of investments is also taken into account.
In addition, the ratio of the additive product to the additional use of natural reserves is used. The marginal productivity values reflect a certain contribution from each production factor to the increase in the total output of the product. The indicators of the latter, therefore, are presented as the sum of the products of the value of each condition for marginal profitability. One of the main tools for assessing economic growth is production function. It reflects the relationship between the maximum possible output of goods and the costs necessary for this process, as well as the relationship between the costs themselves.
