The economy of any state in the modern world must necessarily take into account the intensive and extensive factors of economic growth.
In this article we will try to analyze the influence of these factors on the development of the country as a whole.
The main thing
Economic growth is the main goal of state macroeconomics. It is achieved by exceeding the growth of the national product over the quantitative indicators of constantly growing needs of the population.
Economic growth provides for several points that affect its dynamics. But the most important of them are: extensive and intensive factors. They are characteristic of two types of states - developing and developed. There are also intermediate states.
History has shown that during the transition to the market, the influence of extensive and intensive factors on competitiveness is very great.
Obviously, the economy of any country solves the same problems. They include meeting the growing needs of the population in goods and services, solving emerging problems (social, economic, environmental), optimizing the use of natural resources, and many others.
Extensive factor
It is also called "breadth development". Such an economy implies such housekeeping in a country in which the resources available are increasingly used. The concept of such "reserves" includes both a variety of minerals and natural resources (plant and animal). Also human (labor) are not excluded.
With the extensive growth of the economy, the value of gross domestic product (GDP) increases due to an increase in the use of the above goods, as well as the development of new territories. An increasing amount of natural resources is being involved in production.
Key Extensive Factors
Such development is progressive only at first glance. This is due to the fact that natural resources themselves are a temporary phenomenon (many of them are exhaustible). The possibility of renewing some of them (soil, natural gas, oil, coal) is very conditional, since it is too long in time as a geological factor.
The principle "Get more, sow, plow" is characteristic of countries with a low level of economic development. Increasing the scale of the use of natural resources is the path to a possible economic crisis in the future.
We list the main signs of extensive growth:
- increase in financial investments without changing the way of production activity;
- recruiting more and more labor;
- a constant increase in the volume of raw materials used, construction materials, as well as natural fuels.
Intensive factor
Extensive and intensive factors have one goal - economic growth, but the paths to achieving are very different. It is the opposite of the previous in its principled approach to housekeeping in the country. In simple terms, it sounds like this: "Sow less, but collect more." This statement generally characterizes the style of economic development.
With the intensive method of farming in the state, the resources of science are used: the latest production technologies, discoveries in the field of chemistry, physics and related sciences. That is, the phenomenon of scientific and technological progress should occur in parallel with the economic recovery.
Major Intensive Factors
When the goal is growth, the use of outdated methods of management significantly inhibits the development of the state. The growing needs of the population cannot be satisfied only by increasing the volume of exploitation of natural raw materials and labor.
Thus, extensive and intense factors contradict each other. We list the main factors of the "improved" way of housekeeping:
- introducing the latest technologies and devices into production, updating the existing fund;
- training to improve the qualifications of employees;
- rational use and optimization of funds (both fixed and circulating);
- improving the organization of work, increasing its effectiveness.
An intensive economy is distinguished by improving the quality of management (systems), as well as improving technological processes, using innovative methods. Thus, by modernizing production cycles, it is possible to achieve an increase in the level of gross product.
Human factor
The most important thing in any economy, no doubt, is the standard of living of the population. Be that as it may, if it is low, then there can be no talk of any economic growth in the country.
It should be noted that the intensive and extensive factors of economic growth envisage human capital. But the approach is fundamentally different in both cases.
An increase in the number of workers in an enterprise may lead to a decrease in the level of production due to an oversupply of labor resources. In this way, the "profitability" of this "resource investment" is reduced. Moreover, the average indicator of labor efficiency does not fundamentally change. This is indicative of the extensive form of economic development.
Standard of living
"Quality of the population" has always been one of the basic parameters of the state economy. It includes life expectancy, its level, as well as an indicator of GDP per capita. But this is not enough, they also include the level of education, medical and social services.
The concept of "quality of human capital" is introduced by an intensive way of managing. It includes all kinds of actions aimed at training: training of narrow specialists, creation of new technological training courses, advanced training of employees.
These measures can reduce the amount of labor, and the effect of production, on the contrary, to increase. This simplifies the implementation of the latest technologies and their development. Increases production efficiency in general and in each case.
Extensive and intensive factors of labor productivity are also determined by the appropriateness of the activities of control systems. In the first case, an example may be centralized economic management (in the USSR), planning and dividing into stages.
In the second case, the creation of centers and institutions, the training of managerial personnel are at the forefront of economic growth and progress in general. This is a guarantee of progress and long-term prospects for the growth of industrial production in the country.
Mixed type
In the modern world, there are not only extensive and intensive development factors. In some countries of the world there is another type of economy - a mixed one.
This option combines the two above types, being intermediate or "transitional". An example is the agricultural production of a typically “agrarian” state. When the speed of development of new lands and the attraction of labor stops or significantly decreases.
The technical base is being replaced, fertilizers are being used, the latest land cultivation methods are being applied (irrigation, land reclamation), transportation losses are reduced, agricultural production and food industry are non-waste.
Extensive and intensive factors of enterprise development can also be combined, this can be observed during the transition to a market type of economy. Appliances, technologies are being introduced, planning style and logistics are changing. The quality indicator of the workforce is also increasing (the qualifications of the working staff are increasing).
Conclusion
It is important to note that economic growth can be sustainable and unsustainable. Specialists constantly analyze the impact of intensive, extensive factors on the development of states.
Scientists have derived a coefficient that is calculated by a special formula and includes many parameters. These include: profitability of production, capital turnover with average revenue, liquidity ratio, financial dependence and more.
It is clear that it is necessary to strive for sustainable growth of the state economy. Only in this case, many issues can be resolved regarding the needs of the population, as well as social and economic issues (within the country and at the interstate level).