A positive growing economy is characterized by GNP growth, used by the state to satisfy all needs. Based on this, economic growth is characterized by an increase in both GNP and NNP over a certain period of time.
To achieve the maximum economic effect in any state, two such paths are used: extensive and intensive economic growth, which are closely interconnected.
Intensive economic growth provides for an increase in output through the modernization of production factors (qualitative improvement). In other words, this is the use of other, more advanced means of production, economical natural resources, improving the use of existing production potential and improving the skills of workers. This principle of economic growth is a qualitative indicator, since it uses new technologies to improve the production process.
Intensive economic growth is achieved by increasing the capital productivity of the enterprise. For example, in order to achieve a significant increase in output when using intensification of production, there is no need to build another factory. Intensive growth can be obtained through technical re-equipment or reconstruction of existing production, as well as improved use of owned resources.
The term "factor" is used as a source, the driving force of development. Factors of economic growth are processes and phenomena that determine the pace, scale and qualitative characteristics of an increase in the actual volume of production. Intensive factors of economic growth include improving the quality of human resources, technological progress and improving the management system. But the extensive factors include the increase in capital and labor.
Economic growth can result from environmental impacts of both economic and non-economic factors. So, the first include improving the quality of resources used in production, and increasing their quantity. Non-economic include geographical, military-political, climatic, etc.
Factors of economic growth can be classified by the method of influence directly on its process. It is direct and indirect. So, the direct factors include improving the quality of capital, labor and natural resources involved in production. In other words, this type of factor determines the positive dynamics of the national economy. The second type, indirect, includes prices for various resources, taxation systems and the financial sector, as well as solvency.
Intensive economic growth is characterized by the corresponding type of production, the main characteristic features of which are the following: capital intensity and capital saving. With a capital-intensive form of production, it is inherent to ensure economic growth by increasing the volume of production at constant planned costs. With a fund-saving form, a growth rate of output is achieved above the rate of increase of those resources that were used to obtain this growth.
Important features of the intensive expansion of production are:
- progressiveness, which consists in the constant application of the achievements of science and technology, which favorably affects the development and improvement of the means of production;
- improving the cultural and technical level of workers through the modernization of the main "tools" of production;
- resource saving, contributing to overcoming the limitations of natural resources.