Economic growth. Extensive and intensive ways

Economic growth. Extensive and intensive ways.

Plan:

Introduction……………………………………………………………………………………………...……2

Main body

1 Chapter: Essence of economic growth and ways of its increasing

1.1-Extensive development. Advantages and Disadvantages………………….………...4

1.2-Intensive development. Advantages and Disadvantages……………………………..7

1.3- Comparative analysis of two countries’ economies…………………………………..10

2 Chapter: Extensive and intensive ways of economic growth in practice

2.1- Historical implications for the US and USSR choices of development way…12

2.2- Examples of the resembling economic systems on the basis of Japan and China…………………………………………………………………………………………………………………14

2.3- Example of economic development of Kazakhstan……………………………………17

Conclusion………………………………………………………………………………..…………………..19

Bibliography…………………………………………………………………………………….…………..21

 

 

 

 

 

 

 

 

                                        Introduction

 

In its theme of "Growth. Extensive and intensive way "I want to review the following.

 
First, theoretically, an examination of ways of economic development. We know that there are a number of ways, but must distinguish two main ones. This extensive and intensive development path. These paths of development can show how well-developed economy of any country. But nevertheless, it is necessary to parse each of the paths individually.

 
We need to take, for example, intensive development, and thoroughly consider the advantages and disadvantages of this way, its appearance, the reasons for its use and then how this path is applicable to practice.

 
The same should be done with the extensive way of development. Just highlight the main advantages and disadvantages, the cause of, use, and so on. 
Through analysis of the two countries with two different paths of development, we can show how effectively, extensive and intensive way to economic development. It should be noted that one country will be purely theoretical, but will not be taken from living examples.

 
Secondly, in practice, consider how much the effective extensive and intensive path of development in the economy of the world powers that are keeping, tech or other ways, were able to achieve some success. That is, thereby proving in practice, the existence of the advantages and disadvantages of intensive and extensive.

 
And the most prominent and typical examples of ways in practice, is to develop the economy in the U.S. and the Soviet Union. These two countries, with absolutely retailers ideologies and economies, are indicative of the tool as an extensive way by the Soviet Union leads the competition with an intense way by the United States. The result is one of the ways shown the effectiveness of himself, in a given period of time, while the other has passed the position and lost the race developments.

 
Or you can take as an example of the modern economy of Asian countries such as China and Japan.

 
In Japan, I want to show how this country is due to major reforms and changes in the economy, has become one of the leading powers in the world of high technology.

 
But in China it may be noted that, as a socialist country that tends to communism, a balanced combination of different paths of economic development, and achieves some success in this.

 
And finally, most important, I think, should be followed up with the pace of economic development of modern Kazakhstan. Since Kazakhstan is one of the post-Soviet states, here the main issues for analysis, it will transition economy of Kazakhstan with a planned to a market economy, and the use of a market economy, intensive and extensive ways.

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                 Main body

1 Chapter: Essence of economic growth and ways of its increasing

1.1-Extensive development. Advantages and Disadvantages

Extensive growth is due to the simple building used factors: the means of production and labor. Extensive economic growth is historically the original way of expanded reproduction. Therefore, it has some negative characteristics that are a consequence of the imperfections of this type.

Figure 1. The rate of change in economic indicators in the extensive growth

 

It’s known that the production function shows the quantitative relationship (F) output (Y) from the capital (C), labor (L) and "land" (natural, material resources - N).¹

 
It is very important to consider the problems associated with the extensive economic growth since Being the first model of expanded reproduction of this type, there is also a basis for further economic development. Therefore it is necessary to highlight these issues in order to avoid mistakes in the future. 
Extensive way, by engaging in the production of more labor, helps to reduce unemployment, provide the greatest employment workforce. Program to restore and maintain a reasonable scale of full employment is an undisputed means of accelerating growth.

 

Considering such factors as labor, it should be noted that education and worker training to increase workforce productivity, and hence accelerate the pace of economic growth. Investment in human capital - an important means of improving productivity. Estimated Denison, improving the quality of the labor force has identified 14% growth in real national income in the U.S.A.

 

Another problem with extensive type that should be considered - a stagnation in which the quantitative increase in output is not accompanied by technical and economic progress. But technological progress is an important engine of economic growth, it determines the 28% growth in real national income in the period 1929 -1982 years. in the U.S.A. By definition, technical progress involves not only completely new methods of production, but also new forms of management and organization of production.²

In extensive economic growth of output increases to the same extent that increases the value of fixed assets used in production, material resources and the number of employees, therefore, remain unchanged at the value of such economic indicators as return on assets ratio, and others, in other words, the overall efficiency of production remains at best unchanged. Consequently, not enough money to upgrade fixed assets (buildings, equipment)

 

Extensive type of growth can quickly develop natural resources. But because the use of these resources under extensive type is irrational, there is a rapid depletion of the mines, the arable layer of earth and minerals. In extensive economic growth such as material consumption rate remains virtually unchanged, as well as production grows, it inevitably runs out an irreplaceable resource base. Consequently, we have to expend more labor and capital goods for production of each ton of fuel and raw materials. The problem of natural resource development merges with the problem of improvement of technology for more efficient use of resources, reduce consumption of materials and products with the problem of providing equipment and tools for use and detection of these resources.³

In reality, in its pure form extensive way of development is rare. 
He, as a rule, more or less intertwined with the intensification of production. In the initial period of socialist development of production in the USSR has developed largely on an extensive basis, focused on levels of involvement in the production of additional human and material resources. The scope and quality to decide today the society of economic, social, scientific and industrial problems are such that dictate the need to make fuller use of the accumulated potential, all kinds of resources to rely on new techniques and technology, develop-conscious economic mechanism. This dictates the transition to intensive way.

 
However, it must take into account the fact that in modern conditions drastically reduce the chances of extensive development by slowing the flow of labor resources in social production, cost of raw materials and fuel, increased spending on environmental protection and other reasons.

From the foregoing, the following conclusions:

1) Economic growth can be defined as real GDP growth or growth 
real GNP per capita. It provides a gain in production that is used for. 
decisions of domestic and international socio-economic problems.

 
2) Economic growth is determined by the following factors: natural resources, human resources, capital and technology.

 
3) The extensive economic growth reaches the reduction 
unemployment, full employment, which can increase growth rates. But this is a temporary phenomenon, because state of full employment can not be replenished annually, and inherits year growth rate is the same.

 
4) In extensive type of development, many workers are not 
qualified.

 
5) The extensive path of development is stagnant, there is virtually no 
technological progress, morally and physically worn out industrial fixed assets, reduced capital-labor ratio of workers.

 
6) The State can play a significant role in economic growth in 
good tax policy and investment policies.

 

 

 

 

 

    1.2-Intensive development. Advantages and Disadvantages

 

Intensive economic growth - economic growth through more efficient use of the same resources. It is believed that intensive economic growth requires economic development. In contrast, consuming extensive production capacity provides comprehensive intensification of anti-costly path of economic growth.

Figure. 2. Qualitative features of the all-round intensification

 

We see that the most rapidly growing volume of national income (NI), slightly slower increases production of means of production (MP) and the labor force (L). As a result, reduces the cost per unit (CU), gets an expanded reproduction of a qualitatively new features.⁴

A new quality of economic development is expressed primarily in the increasing cost of public production: reduced labor costs and the means of production per unit of national income. Significantly improving all the economic development, steadily increasing scientific and technological level and product quality. This is a direct consequence of the transition to higher technology production method 
 
New evident in the modern structure of the national economy. In the total production increased proportion of high-tech industries. These include instrumentation, production of computers, electrical industry, nuclear energy, the production of synthetic resins, plastics, advanced structural materials, and other industries that use to achieve scientific and technological revolution. 
 
The progress we see that the fraction of the intermediate product and a corresponding increase in the proportion of the final product going into consumption. This structural change - the result of economical expenditure of raw materials and energy in creating each item. 
 
Improving of expanded reproduction is achieved when the composition of national income increases the share of food consumption compared with the means of production going to accumulate. As a result, increases the level and quality of life, increases the efficiency of social economic development. 
 
Under the new quality of economic development vary significantly proportion of the reproduction process. Relatively slow growing means of production and, conversely, a tendency to accelerate the production of consumer goods.

 

As you know, the industrial and postindustrial stages of the production economy is progressing at a revolutionary technical changing basis. As science and technology are developing unevenly, it affects a significant difference in growth rates of national economies.  
 
In the second half of XX century. First were the leaders of the country, first to implement the achievements of scientific-technical revolution (USA, Britain, France and others). Then, ahead of steel developing countries that most rapidly used in the production of already mastered new technologies. These include, for example Japan and the so-called "newly industrialized countries' first generation (Republic of Korea, Taiwan, Singapore, Hong Kong).  
⁵ 
In the 1990's began a new stage in economic growth in many countries. This stage has the following distinctive features.  
 
1. For the main part of the world economy characterized by uninterrupted economic growth. The average growth rate of all countries increased from about 1% to steady 3% per year.  
 
The main contribution to this growth have made the developed countries, which account for 1 / 2 of the world gross product, and 2 / 3 of world trade. However, these countries have relatively lower growth rates (2.5%) compared to the global total.  
 
2. Greatly increased the rate of increase of production in developing countries, with 2,4% in 1980 to 5-6% in 1990. An increasing number of developing countries, whose GDP per capita tends to rise. ⁶ 
Particularly highlighted the newly industrialized countries "second generation": Indonesia, Philippines, Malaysia and Thailand. They compete with developed countries, not only for the production of traditional textiles, other relatively simple consumer products, but also in the market complex products, including the means of production.  
 
3. As a result of marked differences in the pace of economic development has been a trend of slow and steady decline in relative economic power of Western countries. Do not accidentally share of the European Community in world trade from 1991 to 1997 declined from 43-44% to 36-40%, while the share of Asia-Pacific region increased from 38-39% to 42-44%. The share of Asia (excluding Japan) in world trade surpassed that of North America and continues to grow.  
 
4. According to forecasts, in the long run especially prominent in world trade will be part of such rapidly developing countries such as. China, India, Republic of Korea, the countries of southern Africa, Poland, Turkey, Mexico, Brazil, Argentina and Russia. These countries are united in the notion of "big emerging markets, have considerable territory, population and economic potential.⁷

And at the conclusion of this part, I would say, intensive economy, it is the same way that the most acceptable in our modern world. This suggests that new technologies and new methods of work organization, will form the basis for the future development of the economy.

 

 

 

 

 

 

 

 

         1.3- Comparative analysis of two countries’ economies

 

In contrast, intensive - characterized by a relatively low cost of labor and capital per unit area, the value of the natural factors of production (nature) appears in them is especially prominent. The notion of extensiveness of: form of farming, which in some circumstances may be considered extensive, in others already recognized as intense. Extensive forms of economy is dominated by countries with sparse populations, distant from markets, where land is cheap, and the capitals of the road. In countries with predominantly intensive farming is often conducted extensive facilities at sites other than the natural properties of the adverse and costly to reclaim (radical improvement). Since in the extensive forms of farming people is widely enjoyed by the gifts of nature, labor and capital in these economies are well paid. It is generally accepted that increased application of labor and capital on the same plot of land does not cause a proportional increase in the product (law of diminishing returns). This explains the inhibitory effect of extensive American and Russian agriculture to intensive agriculture in Western Europe. In general in the history of mankind seen the transition from Extensive. to intensive forms of agriculture posed by the gradual thickening of the world population. Increasing population less can be contented with what he is given the natural forces, and compelled to make this area more and more labor and capital in order to extract from it a number of products it needs. This is a general movement from Extensive. to intensive forms of farming may be delayed or even getting the opposite direction due to a variety of reasons. These are historic disasters, reducing the population or reduction of its culture, the expropriation of the peasantry and the development of large-scale farming at the expense of the flock. In Western Europe, noticed the delay in the development of intensive agriculture and even reverse the movement because of improved transportation technology and the emergence of markets for its cheap products of Extensive. economy, as well as due care of the rural population to urban areas, to serve the developing industry. In general, however, the retarding moments have only a temporary and local significance and can not completely stop the transfer from Extensive. to intensive forms of farming, with iron necessity caused by the multiplication of human race on a constant area of the globe. Since the population density and position relative to the market in different countries is very different, and we currently find on Earth all the transitional stages of most Extensive. to the most intensive forms of farming. Pastoral farming is the most Extensive form of economy, previous farming. The population is satisfied with all the natural productivity of the land, exploiting it with cattle. Thickening of the population already requires the transition to agriculture, which gives an opportunity to significantly increase the productivity of land. Arable land initially much lower than pasture.⁸ Since the lifting area of virgin land - a difficult task, it plows up until give any tolerable harvests, and then he starts, and a culture takes a fresh plot. On the old site back only when his natural fertility was restored. This is called a shifting economy and to the north, where farmland has to convert forest areas - Slash (firing, lyadnym). With further increase in the intensity of the sown area is increasing at the expense of pasture and meadow. Arable land is less resting under deposit, and to restore its fertility impact of natural factors is no longer sufficient. Have to resort to artificial methods to steam treatment, to fertilizer.

But an intensive form of farming helps to avoid all the disadvantages that accompany an extensive way. That would avoid a lot of economic problems as a consequence of lack of resources, because this way helps to save more natural resources.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2 Chapter: Extensive and intensive ways of economic growth in practice

2.1- Historical implications for the US and USSR choices of development way

The U.S. economy - world's largest economy by GDP at PPP (in 2009).

The structure of the U.S. economy differs pronounced post-industrial. Most of the U.S. GDP (79,4% - 2004) created in the service industries, which include, above all, education, health, science, finance, trade, and various professional and personal services, transport and communications, service to government agencies.  
The share of material production (agriculture, forestry and fishing industry, mining and quarrying, construction), so it remains 20.6% of GDP. In agriculture creates about 0,9% of GDP, while industry provides less than 20% of GDP.

 
Among developed countries the United States have virtually no competitors in its industrial development. The share of services in the production structure of U.S. GDP overtook the Netherlands and Israel, which, because of certain existing competitive advantages specialize in services, second only to Hong Kong (the share of services - 86%). However, Hong Kong is not an independent state, remaining only a special economic area of China where the share of services is less than 40%. Thus, the United States are currently the most post-industrial state. ⁹

The overall pattern of sectoral shifts occurring is a marked decline in the economy share of primary industries and agriculture. Among the industries of material sphere of industry remains important, it still provides a high level of technological development in other areas of the economy. It is in it today is primarily

accumulated the latest achievements of scientific and technological revolution. The U.S. has one of the most highly efficient farms in the world. A distinctive feature of their economies is to focus on STR and advanced technology. She is a leader in application of scientific and technological revolution in the production of export licenses for their discoveries, inventions and know-how. All this often leads to addiction of other countries on the United States in science and technology.

Economy of the USSR - 2nd in terms of GDP in the world (after the U.S. economy) economy in the former Union of Soviet Socialist Republics, as of 1 / 5 of world industrial output.

After the Civil War: 
First, after the Civil War, the main project of the state is (1920) electrification plan. Soon, to overcome the effects politki War Communism, the Soviet government adopted and began to pursue a so-called. New Economic Policy (NEP, from 1921), allowing for private initiative and the existence of the market. But, after several years of success and development, it began phasing out the government of the USSR, and by the early 30-ies of its action was effectively terminated.¹⁰ 
In what follows the basic method of planning the country's economy began to Five-Year Plans Unfold the national economy (so-called. "Five")

The postwar years 
The greatest efforts of the people to the Soviet Union failed in less than 10 years after a devastating war to recover its position in the global economy and subsequently take a leadership position in many respects. Already by 1960, the year the economy of the USSR occupied a place in the world: coal, iron ore, coke and cement manufacturing locomotives, lumber, woolen textiles, sugar and butter, etc. and 2-nd place in the world in terms of production of all industrial products, electricity, oil and gas, manufacturing of steel and iron, chemical products, fertilizers, engineering products, cotton textiles, etc. 
Later the Soviet Union has overtaken its global competitors in the manufacture of steel, cast iron, oil, fertilizer, concrete products, shoes, etc. In the 70's, that is, 25 years after the war, Soviet standard of living (HDI ) is in the top ten most developed countries.

60-70-ies 
After coming to power of the new leadership headed by Leonid Brezhnev, attempts were made to give the economy a second wind. Since 1965 she has introduced reforms to transfer companies and organizations in the new business environment, expand economic impact tools, instead of administrative methods. However, further progress of the reform was impossible for political reasons (because of the events in Czechoslovakia and Poland), so that from the late 60's there has been a clear trend toward conservatism.¹¹ 

All of the above suggests that, in the 20th century in the struggle between the efficiency of the two economic systems, intensive development has shown its advantage over the extensive way only in the 90th years. This suggests that both ways were best, but won only the best.

 

 

2.2- Examples of the resembling economic systems on the basis of Japan and China

The economy of China - 2-th economy in the world in terms of GDP at PPP (in 2009).

 

The economy of China in the past 30 years, growing steadily and in 2009 took place 3 in the world in terms of nominal GDP (after USA and Japan). GDP in 2009 was $ 5.02 trillion. According to the 2010 April-June, China surpassed Japan for this indicator. GDP, taking into account the parity China on the 2 nd place in the world (according to IMF 10100000000000 international dollars in 2010, the forecast for 2011 -11.2 trillion), trailing only the United States.  
 
China at the beginning of the XXI century is the space and nuclear power. Building a market economy in China is carried out under the leadership of the Communist Party's five-year plans. The economy maintained its stratification. With a high proportion of foreign investment, almost 80% of all foreign investors in China's economy - are ethnic Chinese (huaqiaos) living abroad. In 2020, China has to catch up on plans PDAs U.S. aggregate income of GDP.  
Trends in GDP per capita in the BRIC countries in the years 1998-2009, in U.S. dollars ¹²