Any economic environment cannot be at rest. She has the ability to actively influence any changes in the company. Moreover, such an influence can be both positive and negative. A guarantee of the effective functioning of a business entity is its ability not only to analyze, but also to predict any changes in the economic environment and be able to adapt to them.
Economic growth is one of the goals of the state, implying an increase in the economic potential of the economy, an increase in the national product, calculated per capita, and the achievement of a high living standard of citizens.
Concrete benefits to the business sector are economic growth. This is the discovery of new market alternatives in a developing economy.
The general state of the economy can have a significant impact on the ability of consumers to form solvency and demand, as a result of which a certain cost appears on the resources consumed. In an economic downturn, a business entity significantly reduces the volume of finished products in warehouses, reduces production while reducing the number of employees.
Both at the level of individual companies and in the state as a whole, economic growth is an increase in financial results and indicators using tools such as intensification and intensification.
Thus, extensive economic growth is an increase in indicators in the economy due to the additional involvement in the production of means of labor, an additional work resource, and even the construction of new production facilities.
Intensive economic growth is a process in which growth is achieved through the qualitative updating of production capacities using new advanced technologies.
Extensive methods of growth in the economic sphere have a number of negative properties that affect future production. This is, firstly, the economical use of resources due to the increasing amount of their consumption. Secondly, in connection with the additional construction of new production facilities, the likelihood of increased environmental pollution increases. The only positive point when using this tool to achieve positive dynamics of economic indicators is new jobs due to an increase in the staff, which contributes to a significant reduction in unemployment.
The positive properties of the intensive method of economic growth include:
- capital intensity at which production growth is achieved by increasing output at constant costs;
- capital saving characterizes the excess of the growth rate of production over the growth rate of all resources that provide it.
The growth of production volumes only through the modernization (improvement) of production factors provides only intensive economic growth. This is the necessary tool that promotes the introduction of new technologies in the production process, which allows the use of natural resources to be made more economical, rational, and also monitors the continuous development of employees. Improving economic performance is achieved by increasing the return on assets of the business entity. In other words, in order to achieve an increase in the output of finished products, there is no need to build another plant. A positive result can be obtained using the usual reconstruction of existing production.