Economic growth and development are closely related categories

Economic growth and development are closely related categories
Economic growth and development are closely related categories

Economic growth and development are two categories that closely interact with each other. Economic growth, for example, is a boom.

economic growth and development

In the process of the movement of social production, there are periods during which the overall economic growth and development are quite fast or, on the contrary, slow down somewhat, and sometimes they even decline. With a certain regularity of repetition in changes in social production of such fluctuations over a certain period of time, development occurs with a cyclical characteristic. The interval of a certain cycle (known as a single one) reflects the fluctuations in the state's economy from one crisis to another.

Economic growth and development cycles show constant fluctuations in the market economy, in which production volumes rise and fall. BUTbusiness activity associated with this indicator of the economy also tends to increase, then to decrease. Cyclicity itself implies periodic ups and downs in the market. At the same time, the period of increased activity characterizes predominantly extensive economic growth and development, while a decrease in business activity is the beginning of intensive development. Thus, the cycle reflects the constant dynamism of the market economy.

economic growth and cyclical development

The relationship between economic growth and economic development is very clearly illustrated in Kondratiev's "big waves". The specified academician proved that any economy is experiencing certain fluctuations that entail ups and downs. Their length lasts up to 50 years. The theory of economic cycles also does not deny the presence of "small waves", which refers to the consideration of recessions and growth in business activity, but only in specific industries. The frequency of such cycles is only five years.

Economic growth and development are closely interconnected due to the objectivity of cyclical economic fluctuations. Understanding their development will make it possible to adapt to recessions in the economy, which will significantly reduce the negative impact of factors arising from the economic development of the state.

relationship between economic growth and economic development

And one such factor that has a significant impact on the stability of the economy is population growth. So,an increase in the proportion of the population with the simultaneous presence of the effect of capital outflow due to a decrease in the capital-labor ratio of production can act only in one direction. As inventories decrease, the amount of capital decreases, and with population growth, capital also has a negative trend among the increased number of workers.

To maintain stability in the economy, it is necessary to compensate for the negative impact of capital outflows and a sharp population growth with the necessary amount of investment. It is this economic condition, with a gradual population growth, that contributes to the stability of both capital and output per worker.

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