ECONOMY GROWING

AND ECONOMIC
CYCLES
1. Concept, aims, basic descriptions of the
economy growing.
2. Factors and types of the economy growing.
3. Recurrence of economic development.
4. Phases of cycle.
5. Long waves are in an economic dynamics.
6. Structural crises and their scales.
Concept, aims, basic descriptions
of the economy growing
 In a modern economic theory under the economy
growing brief not flights and falling of the real
production volume in relation to a natural value,
but of long duration changes of natural level of
the real volume are usually understood
productions, related to development of
productive forces on a long-term temporal
interval. In this case the article of study is growth
of potential production volume which is
interpreted as motion from one long-term state
of equilibrium to other.
 In an economic theory there were two basic going near
interpretation of forms of display of the economy growing. Most
widespread is understanding of the economy growing as final
description of development of national economy for certain
period, measureable either the rates of growth of the real
volume VNP (ND) or rates of increase of these indexes
calculating on the soul of population. The necessity of
application of one or another method of measuring of the
economy growing contacts usually with the tasks of research.
The first method of measuring of the economy growing is used, as a
rule, at the estimation of rates of expansion of economic potential of
country, second - at the analysis of dynamics of welfare of population
or comparison of standard of life in different countries and regions.
Presently the second method of measuring predominates in the
theories of growth. Under the economy growing such
development of national economy, at which the rates of
increase of the real national income exceed the rates of growth
of population, is implied. It allows to examine the problems of
growth from position of habitant of country, but not strange
observer.
 It is possible to select two basic features of analysis of the economy
growing in a сверхдлинном period:
 1. The economy growing is examined as a component element of
development of economy. He, from one side, induces cyclic
character of development, from other - is the result of changes,
prepared in periods of slump and depressions. Therefore basic
attention is spared to the not rates of the economy growing, but
global changes in an economy, to the steady tendencies and
conformities to law of its transformation to new quality.
 2. Along with macroeconomic variables микроэкономические of
a particular branch and industrial bases of economic development
are investigated, problem of enterprise, contradictory conflict of
interests of producers, users and institutes of state power, forming
of new economic patterns, allowing to promote efficiency of
functioning of economy, its stability in the conditions of changing
external environment. Examining the economy growing from
point of interests of all society, it is possible to select the ultimate
goals of the economy growing increase of financial welfare of
population and maintenance of national safety. Increase of
financial welfare as a primary objective of the economy growing is
specified in the followings basic constituents:
 1. Increase of среднедушевых profits of population. Achievement of this
purpose gets the reflection in the rates of growth of national income (ND)
per capita.
 2. Increase of spare time. Leisure is to one of the vital blessings, but does not
find a reflection in the indexes of real VNP or ND of country. It is therefore
necessary to take into account at the estimation of degree of achievement of
this purpose, took place or not during the examined period reduction of
workweek and working year, to general duration of labour activity of
workers and office workers.
 3. Improvement of distributing of ND among the different layers of population. If
the simple increase of real ND was accompanied by the considerable
worsening of his distributing, then greater part of population in general
did not consider the economy growing an improvement, because their
welfare would remain former or even to diminish. It is therefore important,
that in the process of economic development principles of social protected
were supported in relation to disabled by an unemployed person.
 4. Improvement of quality and growth of variety of the produced commodities and
services. Eta a constituent does not find a direct reflection in the index of
real ND. At the same time it is fully possible to suppose that more high
quality and differentiation of commodities is instrumental in the increase of
consumer satisfaction and, consequently, get the reflection in the increase
of charges on the purchase of commodities and services the combined size
of which characterizes the volume of produced ND.
 Under efficiency of the economy growing the improvement of all
constituents of many-sided concept «Efficiency of production is
understood». Belong here:
 improvement of quality of commodities and services, increase of
their competitiveness on domestic and world markets;
 mastering of production of new commodities, allowing to satisfy
the before not satisfied necessities or create possibility for their
удовлетво­рения by the best appearance;
 deepening of specialization and co-operation of production taking
into account territorial advantages of country is in the system of
international division of labor;
 overcoming Х - uneffectiveness due to the increase of
administrative trade and use of effective motivations for
stimulation of growth of the labour productivity into firms;
 improvement of аллокации of production resources on industries
and regions of country; I
 •mastering of new technologies, allowing to minimize the
expenses of the limited production resources for the issue of this
production volume.
 A concept «Quality of the economy growing» in an economic
theory contacts with strengthening of his social
orientation. The basic constituents of quality of the
economy growing it is been:
 improvement of financial welfare of population;
 increase of spare time as bases of harmonious
development of personality;
 increase of level of development of industries of social
infrastructure;
 growth of investments in a human capital;
 providing of safety of terms of labour and life of people;
 social protected unemployed and disabled;
 Factors and types of the
economy growing.
 On the method of affecting economy growing distinguish direct and indirect
factors. Lines are name those which directly determine a physical
capacity for the economy growing. Indirect factors influence on
possibility of transformation of this ability in reality. They can be
instrumental in achieving, stopped up in direct factors, or to limit
him. Five basic factors, directly determining the dynamics of the
combined production and suggestion, enter in the complement of lines:
 increase of quantity and upgrading of labour resources;
 growth of volume and improvement of high-quality composition of
the fixed assets;
 perfection of technology and organization of production;
 increase of amount and quality, engaged in an economic turn at
native resources;
 growth of enterprise capabilities is in society.
 In the complement of indirect such factors of suggestion, as decline of
degree of monopolization of markets, diminishing of prices on
production resources, decline of income taxes, expansion of
possibility of receipt of credits etc., enter In case that the change of
indirect factors takes place in retrograde, the economy growing will
restrain temper other things being equal. So, a sharp rise in prices
of production resources after price liberalization in our country was
to one of reasons, stimulant industrial enterprises to the decline of
employment and production volumes. To indirect the factors of
demand and distributing belong also. The factors of demand
determine marketability of growing production volume. In a
number major it is possible to select such factors of demand, as
growth of consumer, investment and state charges, expansion of
export because of mastering of new markets of sale or increase of
competitiveness of products of country in the world market.
 A betweenness by the rates of growth of
product and change of volumes of factors of
production can be разным depending on the
type of the economy growing. Two basic types of
the economy growing can be selected in a
theoretical plan: extensive and intensive.
 At the extensive type of the economy growing
expansion of volume of material welfares and
services is arrived at due to the use of greater
amount of direct factors of suggestion:
workers, facilities of labour, earth, raw
material, fuel and energy resources et cetera At
extensive growth permanent proportions are
saved between the rates of growth of the real
production and combined costs volume on his
creation.
 The intensive type of the economy growing, opposite,
is characterized by that expansion of production is
provided due to high-quality perfection of direct
factors of growth: applications of progressive
technologies, uses of labour force, having large
qualification and more high yield of labour, et cetera
In this case the rates of growth of the real production
volumes will exceed the rates of change of the real
combined costs. In accordance with the selection of
types of the economy growing the direct factors of
growth are divided into two basic groups: extensive
and intensive.
 In the real reality extensive or the intensive types of the
economy growing do not exist in a clean kind.
Quantitative perfection of factors of growth, carried
out on the basis of introduction of achievements
NTP, always requires the investments of investments
in capital goods or labour force. In same queue
growth of labour force and capital goods is
accompanied by the change of their high-quality
descriptions. Therefore at the analysis of the real
economy growing, but not his theoretical models,
select mainly extensive and mainly intensive types of
growth.
 Recurrence of economic
development
 From times of global economic crises of the first half of the XIX
century scientists-economists try to find reason because of
which an economic «pendulum» hatches from an equilibrium,
and to explain why it takes place at stated intervals with
persistent constancy.
 In economic literature we will find no less, what half-dozen
different determinations of economic cycle. But there are
generals in all determinations: an economic cycle (business cycle) of
-это is periodic fluctuations of level of business activity, presented by
the real GDP. Word a cycle (from Greek kyklos ) implies
returning of the economic system to the same position.
Therefore, specifying determination of cycle, we must underline
that an economic cycle is the repetitive at stated intervals state
of economy, characterized by the same macroeconomic parameters.
 Theories, explaining cyclic vibrations by external
reasons, it is accepted to name external theories.
Unlike them, internal theories examine reasons of
origin of vibrations of business activity into the
most economic system.
 Theories, in a center attention of which there is an action of effects of
cartoonist and accelerator, originative the recurrence of vibrations of the
real GDP.
 Theories of political business cycle, seeing reasons of macroeconomic
vibrations in the actions of government in area of credit and monetary
and tax policy. It is assumed that a government owns these two
instruments of macroeconomic policy fully. The actions of politicians
are directed on the conquest of likings of electorate: they wish to appear
переизбранными. Thus, a government aims to pursue a hard credit
and monetary and tax policy in a period after elections. It can result in a
slump and demand a «soft», populist macroeconomic policy (increase
of the government spending, decline of taxes) just before next elections.
Thus, in opinion of supporters of this theory, periodicity of cycles
coincides with periodicity of elections (about 5 years).
 3. Theories of равновесного economic cycle, in obedience to which a
recurrence is explained by the not vibrations of issue of products round
the trend of potential GDP, but vibrations, or changes of trend (lines of
Т on a fig. ) in the short-term (!) period of time.
 4. Theory of the real business cycle, which it is assumed in obedience to,
that reason of macroeconomic vibrations can be shock changes to the
productivity in one or a few sectors of economy, and in more wide
sense are shock changes in technology of production.
 Phases of cycle
 Crisis. Crises XIX and beginnings of the XX centuries passed on a single
dramatic scenario. Market, absorbing all producible commodities without
difficulty, in some time appeared overcrowded, but commodities continued
to act. Demand began gradually to diminish, he fallen behind from
suggestion, and, finally, almost halted. Demand fallen, and meantime great
number of enterprises still continued to work by virtue of inertia and threw
out all new and new parties of commodities to the market. Prices fallen
swiftly. Liquidations and крахи began, thus, foremost, financial and credit
institutions, banks, perished. In the conditions of shortage of liquidity for
atonement on debts banks promoted a loan percent, a credit became
inaccessible to the bulk of businessmen. Began to be beggared already major
concerns, factories, factories, were stopped. So, or in any event, almost so
crises passed in 1825 in England, in 1836 in England and USA, in 1841 in the
USA. A crisis overcame 1847 years already the USA, England, France and
Germany. Following after him crisis 1858 years was, in fact, by the first world
cyclic crisis. After it economic crises shook a world economy in 1873 1882,
1890 years.
 Depression. Production volumes continue to go down, unemployment is
increased. Investment processes go out slowly practically, interest rates are
low although, as in the conditions of pessimistic expectations investors do
not have stimuli to carry out capital investments even at the low values of
rate of percent.
 Revival. Gradually production volumes begin to be increased,
unemployment grows short, investment processes come alive, a cyclic price
and rate of percent increase begins.
 I UP. The economic system approaches the potential level. Industrial
production and GDP volumes grow high rates, unemployment disappears
practically, production capacities work with the high loading, a price and
interest rates advance proceeds. The courses of securities grow and activity
of players is high on financial markets. Investments grow, as the expected
norm of profit from investments exceeds the rate of percent. Getting up is
completed by a «boom», when an economy appears «overheated», and
with inevitability rolled in a new crisis.
Long waves are in an economic
dynamics
 N.D. Kondrat'ev in the theory not limited to
establishment of «water-waves», but developed
the methods of prognostication of development
of the world economic state of affairs. His
theory of large cycles got world confession and
development. Many known scientists in the
works developed the ideas of N.D.
Kondrat'eva.
 Structural crises and their
scales
 Some bind possibility of global crisis to the crash world, most widespread currency –
American dollar. History of the most destructive in world history economic crisis is
remembered here. In fact and then all began latently, from the vibrations of courses of
securities on the exchange of the USA.
 We will remember Entona Sinklera : «Panic happened on an exchange; then more and
more - through long and short intervals. Business life of America stopped beating. Then it
began to wither and, finally, died. A sale fallen, commercial agents had rescinded orders.
Fear crept from retail dealers to the wholesalers, after to transport offices and industrialists,
after to the original sources of raw material and energy. Incomes dried up, actions had fallen.
A bottom failed at a market – businessmen talked. This was the end of epoch of prosperity».
 Many this economic apocalypse reminds 1929 years that takes place in the economy of
the USA today. In fact exactly this country determines a world economic order. If its
economy will collapse, consequences for a world economy will be catastrophic. Money is
blood of economy, their appeal is the circulatory system of market. A crisis of money
circulation is a crisis of economy.
 Meantime in the world in once or twice more dollars, what in the USA. In how many –
 Nobody knows, but much more than all national property of the USA.
 In Japan $ 300 milliards, in China $ 100 milliards, in Hong Kong $ 90 milliards, in Russia