A positive growing economy is characterized bygrowth of GNP, used by the state to meet all needs. On this basis, economic growth is characterized by an increase in both GNP and NNP for a certain period of time.
To achieve maximum economic benefit in any state, two such paths are used: extensive and intensive economic growth, which are closely interrelated.
Intensive economic growth provides forincrease in output through the modernization of production factors (qualitative improvement). In other words, this is the use of other, more sophisticated 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 achievedan increase in the return on assets of the enterprise. For example, to achieve a significant increase in output with the use of intensification of production, there is no need to build another factory. Intensive growth can be obtained through the technical re-equipment or reconstruction of existing production, as well as improved use of the resources in the ownership.
The term "factor" is used as thesource, 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 be the result ofenvironmental impact of both economic and non-economic factors. So, the first include improving the quality of resources used in production, and increasing their number. Non-economic include geographical, military-political, climatic, etc.
Factors of economic growth may beare classified and by the way of influence directly on its process. These are direct and indirect. So, to direct factors it is possible to carry improvement of quality of capital, labor and natural resources involved in manufacture. In other words, this type of factors determines the positive dynamics of the national economy. The second type, indirect, includes prices for various resources, taxation and credit and financial systems, as well as solvency.
Intensive economic growth is characterized bythe corresponding type of production, the main characteristics of which are the following: capital intensity and fund-saving. With the asset-intensive form, production is characterized by the provision of economic growth due to an increase in the volume of output, with constant planned expenditures. With a savings-saving form, the rate of increase in output is achieved above the rate of increase in the resources that were used to obtain this increase.
Important features of 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;
- Improvement of the cultural and technical level of employees through the modernization of the main "tools" of production;
- Resource saving, which helps to overcome the limitations of natural resources.