Induced investment: indicator of the country's development

There are two main types of investment in an enterprise: autonomous and induced investments. Each of them has its global impact on the economic state of a single enterprise in the market. We will understand each of these species.

Autonomous investments are those that are backed up only by the investor's personal capital and do not depend on external factors. They give the initial main impulse to the development of the whole enterprise and its economic growth. The most striking examples of autonomous investment are the contributions of various public and state organizations for the construction of socially significant objects: roads, schools, communal houses, etc. The most important source of autonomous investment has been and remains the state budget. On the second place investments of foreign and domestic large capitals have reliably settled. There is always a demand for investments of an autonomous nature, but it is not the best way to develop production.

In any rapidly developing country, there is a very rapid transition from autonomous investment to the induced one, which is an indicator of the stability and qualitative growth of the economy. In addition, this is an indicator of a qualitatively new level of national reproduction. The liberal nature of national reproduction becomes possible only with the overwhelming number of induced investments.

In terms of content, the above-mentioned transition from autonomous to induced investments is a critical period in the development of national reproduction. Now we need to understand what the induced investments are.

Investments can become induced only if the main reason for their implementation is a steady increase in the demand for economic goods. To understand the general essence of the work of investments of this kind, it is necessary to disassemble everything in stages.

The full utilization of production capacities allows to fully meet the demand for the goods, as well as fill the warehouses. With the further increase in demand, there comes a time when the goods are beginning to be sold from warehouses, as it is simply not enough. With long-term high demand, warehouses are completely empty. Therefore, to ensure a further high level of supply in the market, it is necessary to increase production capacity so that it becomes possible to produce the required quantity of goods at the lowest possible cost.

For this, it is necessary to determine several quantities. The main one is the amount of investments that can provide the necessary qualitative and quantitative leap. With proper use, induced investments can significantly improve the material base of the enterprise, while greatly increasing its profitability. This is, as a rule, the goal of the activity of firms. In addition, induced investments will help you always keep your hand on the pulse of market changes. You can always clearly respond to the increase in demand, moreover, by any quantitative amount.