What is economic growth and its types

Economic growth is an important goal of modern society. It is expressed in a quantitative increase and qualitative improvement of social production.

Types of Economic Growth

Of course, economic growth has its pros and cons. The advantages include the growth of production volume and its automation. In addition, this is an improvement in working conditions, an increase in the employment of the population, an increase in the international prestige of the country and an increase in the well-being of society.

Speaking about the shortcomings of economic growth, it is worth mentioning the deterioration of the human environment, the growth of labor intensity, overpopulation of cities and the acute issue of retraining. It is also necessary to note the exhaustion of irreplaceable resources.

There are two ways of economic growth. The first is called extensive, and the second is intense. Extensive is based on increasing production volumes. This is achieved through the use of quantitative expansion of production factors: the establishment of a large amount of equipment, increasing the area of ​​cultivated land. But the production technology remains unchanged.

The intensive path of economic growth is based on increasing production volumes. This is possible through the use of a qualitative improvement in production factors. These include: the use of the achievements of scientific and technological progress, the redistribution of resources, as well as improving the qualifications of the workforce. At the same time, capital and labor are moving from low-skilled industries to highly skilled, there is an increase in the return on capital. Other factors include economies of scale, because with high volumes of production, advertising and sales costs are reduced.