Extensive growth in the economy

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:43

In modern economic science, intensive and extensive types of economic growth are strictly distinguished. Let's try to understand the features of these options.

Intensive production growth

Intensive growth is usually characterized by a significant increase in the scale of output. At the same time, it is important that this increase is based on the widespread introduction in production of qualitatively new, more efficient production factors. An increase in the scale of production is usually ensured through the use of various advanced technologies, the achievements of science, more modern technology, a reduction in the expenditure side of production, a planned improvement in the skills of workers, and so on. Actually, thanks to these factors, labor productivity, resource saving and product quality are expected and objectively increased.

Extensive production growth

This type is historically older than the previous one. In particular, extensive growth is characteristic of primitive man. It is associated primarily with

expansion of production, increase in volumesresources used in material production: attraction of additional labor force, natural resources, expansion of arable land. However, what is important, not with the optimization of work, unlike the previous one. In addition, this type should include an increase in investment. The technological base does not change significantly. Extensive growth at certain stages of development is very progressive. For example, in pastoral societies. However, sooner or later it leads to severe economic crises.

Today's societies and extensive growth

In the modern world, many societies, despite a fairly developed technological base, follow an extensive path. For example, an extensive path often allows you to quickly solve certain problems. For example, attracting more labor to production leads to a decrease in the level of

unemployment and employment. However, this is by no means always accompanied by an increase in real volumes of output, which leads to a decrease in the income of the population and an increase in social tension. The extensive type allows you to quickly master natural resources. However, due to the fact that such use of resources is irrational, there is a very rapid depletion of sources: mines, minerals, arable land, and so on. Ultimately, the problem of developing raw materials leads to the question of improving technology and production approaches inusing irreplaceable raw materials. An important problem of extensive growth is also stagnation, in which even a significant quantitative increase in output is in no way accompanied by technical and economic progress. This factor led to the Great Depression in the USA in 1929-1932, and also contributed to the "stagnant" tendencies in the Soviet state.