Economic growth can be illustrated by a shift to the right. Parameters of economic growth

Economic growth can be illustrated by an increase in the market value of goods and services produced in the country. And an amendment to inflation is being made to remove the issue of depreciation of money. Most often, the economic forecast takes into account the change in the real gross domestic product per capita.

Of course, this method of statistical estimation of growth has both advantages and disadvantages. For example, measuring economic growth with GDP does not take into account fluctuations that occur within the period of calculating gross domestic product.

Typology

If the development of the national economy is due to more efficient use of resources, it is called intensive. It is to such growth that countries strive. If GDP has increased due to a wider use of factors of production, it is called extensive. This development can not continue for a long time, as resources are depleted quickly enough.

GDP as a determinant

Economic growth can be illustrated by an increase in gross domestic product. It can be associated with both extensive and intensive development. The indicator per capita is more accurate . GDP is considered a reflection of the aggregate market value of all final goods and services produced in a country for a certain period of time. It is nominal and real. More accurately reflects the reality of the second.

Economic growth can be illustrated by a change in real GDP per capita, since this indicator takes into account inflation and the standard of living of people. National statistical agencies of most states of the world, as well as some international organizations, are assessing this indicator. The main drawback of GDP as a determinant of economic growth is the fact that it reflects flows, not reserves. Also, he does not take into account environmental pollution due to technical progress, the distribution of income within society, "gray" and "black" markets, subjective satisfaction with people's lives.

Factors of increase in gross product

The growth of the economy may be due to an increase in the productivity of labor, the intensity of work of people, the percentage of the able-bodied population and the reduction of unemployed. The increase in gross product reflects the combined effect of these factors on the national economy. Productivity is an increase in the value of goods and services produced, all other things being equal. According to Robert Solow, technological progress is responsible for 80% of per capita income growth in the US in the long term.

Investment is much less influenced by it. As for the intensity of labor, it is measured in terms of hours of work. The remaining factors of GDP growth are associated with demographic changes in the structure of the population.

Parameters of economic growth

The growth of the economy can be seen by an increase in the following indicators:

• Real gross domestic product per capita. About this indicator, we have already talked in detail in the last section, so immediately move on to the rest. It is equal to the amount of consumption of public expenditure, investment and net exports divided by the number of citizens of the country.
• The volume of money supply of various liquidity in the economy.
• Consumer price index. Each country itself defines a representative set of goods and services, so the results of calculations are not always comparable. However, it shows well what percentage of growth is due not to the improvement of the economic situation, but to inflation.
• The index of production prices. It is similar to the previous indicator, but it reflects the costs of business.

• Index of inflation expectations. This indicator reflects the expectations of consumers about tomorrow. It should be noted that the expected inflation is much better than the one to which no one had time to prepare.
• Employment. During the recession, it declines, so this figure clearly reflects the stage of the economic cycle that the economy is undergoing.
• Volumes of retail sales. This indicator is related to the index of inflationary expectations of consumers. However, it better reflects what sectors are developing worse, and which are better.
• Level of construction. The rapid expansion of the housing and industrial complexes of buildings indicates a period of prosperity in the economy.
• The volume of production stocks in warehouses. Its increase is typical for the period of slowing economic growth and approaching the recession.
• The value of shares of leading companies in the market.

Regional dimension

Since economic growth can be illustrated by shifting the production opportunities to the right and upwards , it is important to understand why this can happen. And here the regional economy comes to the rescue. She studies how placing factors affects the volume of output and sales markets.

The regional economy is that branch on the basis of which the policy of development of administrative-territorial units of the country and all state as a whole is formed.

Theories and models

The economic forecast of future changes in the volume and structure of national income is perhaps the most important aspect of the study. After all, it gives a real practical result that can be implemented to improve the current economic situation. Each school has developed its own approach to studying growth. Among them are the following:

• Classical growth theories. They take into account only two factors. Therefore, growth in them is caused by a change in labor or capital. Technological innovations are not considered. Not considered and economies of scale.
• The Solow-Swan model was developed by scientists in the 1950s. The model considers the diminishing return from the use of labor and capital as factors of production.
• The theory of endogenous growth was developed by Romer and Lucas in the 80s. It takes into account the mathematical explanation of technology improvement and the concept of human capital.

• The unified theory of growth. Its author is Oded Galor. She explains the empirical patterns of growth of individual economies, which the previous theory does not consider.
• The concept of a "big push". This theory was especially popular in the 40s. According to her, each country needs a push in order to move from one stage of development to another.

Innovations and Institutions

Practically all modern theories take into account these two factors. Most of them also put in the center of any human development. As we know, economic growth can be illustrated by shifting the aggregate supply curve to the right. One of the factors of this change is technical progress, the other is the organization of labor, that is, the institution.