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 constantmovement and actively influences both the state as a whole and the business 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" itself provides forincrease in 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 somebenefits entrepreneurs by opening up with it new market alternatives in an ever-expanding economy. With the economic downturn, the company reduces its production reserves, 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 thathave a beneficial effect on economic growth, but this is not enough, and the economies of Japan, Taiwan, Singapore, Hong Kong and Korea serve as a vivid proof. These are the countries in which there is almost no natural resources.
- The human factor, expressed in the presence of human resources, which should have the basic properties - education and diligence.
- Due to favorable geographical locationthe state has the opportunity to receive additional revenues through the transportation of goods through its territory. Countries that are located on the shores of the seas can serve as a good example.
- Volumes of investment and capital.
- Scientific and technological progress also significantly increases the impact 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 achieveddue to 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 additional equipment into operation, increase the number of employees and invested capital.
Extensive economic growth was observed inlong 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 - the initialway to expanded reproduction. That is why he can note several negative properties, which both 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, extensiveeconomic growth is the basis of economic development in the future. For example, this type in the economy contributes to the employment of the population and the reduction of unemployment.
