INTRODUCTION

GENERAL CHARACTERISTICS OF ECONOMIC GROWTH

2 Factors of economic growth

MODELS OF ECONOMIC GROWTH J. M. KEYNE AND HARROD-DOMAR

KEYNESIAN MODELS OF ECONOMIC GROWTH-

2 The Big Push Theory

4 The theory of transition to self-sustaining growth

R. SOLOW'S NEOCLASSICAL GROWTH MODEL

ZERO ECONOMIC GROWTH THEORY

CONCLUSION

INTRODUCTION

Increasing the rate of economic growth, or at least maintaining it at the same level, is the most difficult and most important task that any state faces. The level of economic growth reflects the state of the state economy, the standard of living of the population, and so on. The policy of each state is aimed at stimulating economic growth in the country, improving the welfare of the nation. The state is faced with the question of what methods to use in an attempt to increase this indicator.

There are many approaches to the definition of the concept of economic growth. A lot of indicators are compared, a lot of formulas, factors are given, which shows how complex and contradictory the concept is and how difficult it is to predict and stimulate it.

The relevance of this topic is beyond doubt, because economic growth in the country has been a priority since the creation of the first state and will be relevant as long as at least one state continues to function.

In this course work, the following goal was set: an in-depth study of the concept of economic growth, its factors and modern theories, as well as identifying the current challenges facing the government of the Republic of Belarus, the purpose of which is to increase the rate of economic growth.

In connection with the given goal, the following tasks were set:

.Study of the concept of economic growth and its factors;

.Analysis of existing modern concepts of economic growth;

To solve the tasks set, many sources of information were used, including Internet resources.

1. General characteristics of economic growth

1 Concept of economic growth

Economic growth refers to the development of the national economy, which increases the real volume of production (GDP<#"justify">Factors of economic growth are often grouped according to types of economic growth.

Distinguish between intensive and extensive factors of economic growth:

· An extensive factor is growth due to an increase in the amount of a resource (an increase in the number of employees, buildings, resources, equipment). At the same time, labor productivity, the quality of equipment, and the quality of manufactured products do not change significantly. Extensive growth factors are characterized by the law of decreasing returns with an excessively large increase in the resource. For example, an unjustified increase in the number of machines will lead to the fact that some of them will be idle and cause a loss. The same will happen with the increase in labor force, land, capital expenditures. Such resources, however, do not include innovations, new production technologies, management technologies and the growth of the quality of human capital.

· Intensive factors do not imply a quantitative, but a qualitative change. Growth is achieved by improving such indicators as labor productivity, equipment quality, innovation, modernization. High-quality human capital is recognized as the main intensive factor.

Stable growth is mainly achieved by increasing labor productivity, stable investment, cost reduction compared to competitors and the economy as a whole. In the long run, economic growth is fueled by factors such as technological progress, capital accumulation, the creation of infrastructure and economic institutions. All this contributes to increasing labor productivity, upgrading physical capital and reducing costs.

Summarizing the above, we can say that the main factors affecting economic growth are:

1.Quantity and quality of labor resources;

.Efficiency of fixed capital;

.Quantity and quality of natural resources;

.Management efficiency;

.Technology efficiency;

.institutional factors.

Now about all the factors in more detail.

The most important factor is labor costs. It is determined primarily by the population of the country. It should be borne in mind that not the entire population of the country can be considered able-bodied.

However, this method of calculating labor costs by the number of employees does not fully reflect the state of affairs. More accurate is the indicator of man-hours worked, which allows you to calculate the total cost of working time. The cost of working time takes into account many factors, such as the rate of population growth, the desire to work, the level of pensions and unemployment benefits. All factors together differ from country to country, which creates the initial conditions for differences in the pace and levels of economic development.

Of great importance for economic development are not only quantitative factors, but also the quality of the labor force. The better the education and the higher the qualifications, the more productive the work and the higher the economic growth. In other words, labor costs can rise not only due to an increase in the number of workers, but also as a result of an increase in the quality of the labor force.

The most important growth factor, along with labor costs, is capital. Capital includes: equipment, buildings, inventory. The cost of capital depends on the amount of accumulated capital. The accumulation of capital depends on the rate of accumulation: the higher the rate, the greater the amount of capital investment. The increase in capital also depends on the scope of the accumulated assets of the company - the larger they are, the slower the rate of capital increase.

It must not be overlooked that the amount of capital per worker, ie, the capital-labor ratio, is the decisive factor determining the dynamics of labor productivity. Those. with a uniform increase in capital investment, but a rapid growth rate of the labor force, the capital-labor ratio will fall, and labor productivity will decrease accordingly.

The third factor that has a decisive influence on economic growth is land, as well as the quantity and quality of natural resources. The more resources, the better their quality and diversity, the higher the economic potential of the country. Of great importance is also the presence of fertile land and favorable climatic conditions.

However, all of the above conditions in themselves are not a self-sufficient factor in economic growth. Many backward countries have a large resource base and a good climate, but their use is not efficient and therefore does not lead to economic growth.

Scientific and technological progress is an important engine of economic growth. It includes not only the modernization of equipment, but also innovations, new methods and forms of management of the organization of production. Scientific and technological progress makes it possible to combine these resources in a new way in order to increase the final output. The consequence of this is the creation of new, more efficient industries. And an increase in efficient production leads to economic growth.

In addition to all of the above factors, there are a number of indicators that are of great importance in the economy. These indicators include institutional factors. Without them, it is impossible to rationally distribute Institutional factors include:

.Efficiently functioning government bodies;

.rational legislation;

.Features of the social, cultural, religious situation in the country.

Models of economic growth by J. M. Keynes and Harrod-Domar

Let's consider the main theories of economic growth. Before proceeding to the consideration of models, it should be noted that any economic model is a simplified perception of the real state of affairs in the economy, represented by graphs and formulas, as well as having many assumptions that make the final result far from reality in advance. However, without these simplifications, it is not possible to analyze such a complex phenomenon as economic growth.

First of all, it is necessary to consider the model of J. M. Keynes, since many subsequent ones were built on the basis of the premises and conclusions of this particular model.

The Keynesian model reflects the state of equilibrium growth of the entire national economy as a whole. The main problem at the center of the whole theory is effective demand.

The two main indicators considered by Keynes are investment and savings. All total income is divided into investments I and savings S, i.e. Y=I+S. The problem of large savings (“thrift paradox”) is considered, when households prefer to spend less and save more, which leads to a decrease in demand and an outflow of money from the economy. The result is a slowdown in economic growth.

It is worth considering the fact that an increase in income does not necessarily lead to an increase in investment, but causes an increase in savings. This is due to the fact that different business entities are responsible for the savings of investments. Keynes was the first to see saving as a negative effect on the economy. Before him, it was believed that savings have positive effects, are the basis of growth and progress.

Investment and saving are closely related. Keynes believes that it is the equality of investment and savings that ensures the sustainable economic development of the country. If savings exceed investments, the goods are not sold and idle in warehouses, there is a drop in production, an increase in unemployment and, as a result, economic oppression. The situation, when investments exceed savings, causes unsatisfied demand, higher prices, and an increase in production.

One of the key concepts in Keynes's model is the multiplier effect and acceleration. Consider the multiplier effect.

The investment multiplier shows the impact of investment growth on output and income growth. The multiplier and the increase in consumption are directly related, while the relationship between the multiplier and the increase in savings is inverse. The essence of the investment multiplier is that an increase in investment causes a multiplier effect of growth in output, net domestic product. It is assumed that investments are autonomous, that is, not dependent on changes in production volumes.

where Mi - investment multiplier; ?Y - increase in real income; ?Ia - growth of autonomous investments.

1/ (1 - MPC), Mi = 1/ MPS.

Thus, the autonomous investment multiplier is the reciprocal of the marginal propensity to save.

Y = Mi * ?Ia = 1/ MPS * ?Ia.

In accordance with the value of the multiplier, income increases, which leads to an increase in demand, and as a result, production volumes. And the increase in production volumes contributes to the growth of induced investments. An increase in investment provoked by an increase in income is called the acceleration effect.

To a decisive extent, the effect of acceleration contributes to 2 factors:

.A long period of production of equipment, during which unsatisfied demand causes an expansion of production.

.A long period of operation of the equipment, as a result of which the percentage increase in new investments to restoration (investments that compensate for the wear and tear of equipment) is greater than the percentage increase in production. Demand for these products stimulates further investment.

Acceleration coefficient - the ratio of investment growth to the increase in income, consumer demand or the volume of finished products that caused them in the previous period: V = ?I / ?Y.

The multiplier effect can only occur under certain conditions. It is also important to take into account in which industries investments are received, and an increase in taxes leads to a decrease in the real multiplier. With high imports, part of the income will flow abroad, increasing the likelihood of a national balance deficit.

Keynes believed that maintaining high investment in the economy is impossible without government intervention, and therefore proclaimed the best policy to stimulate effective demand. In turn, this caused an increase in government spending, which had to be supported by monetary policy, which led to an increase in money in circulation. This could not but affect the level of inflation in the country. However, Keynes's theories were widely put into practice after the Second World War. Special attention was paid to Keynes's opinion about the need for government intervention in the economy to manage demand through taxes and reduce unemployment. However, the model had a number of shortcomings due to its assumptions. First, the model was short-term and did not predict long-term changes in the economy caused by this policy. The next weak link in his theory, as noted above, was the ignoring of inflation, which is absolutely impossible in real conditions. However, we must not forget that at the time of the creation of the theory, the Great Depression “raged” in the economy and the low unemployment rate at that time worried Keynes to a lesser extent than the rising inflation rate.

The static nature of the model, its short duration and problems with inflation were the stimulus for the creation of new ideas based on the Keynesian model, taking into account all of the above disadvantages. One of the models of great importance for the economy was the Harrod-Domar model.

In this model, the theoretical and methodological foundations of Keynes's concept were used, but a number of own assumptions were introduced. First of all, the static model was corrected. The Harrod-Domar concept was long-term and dynamic. Secondly, this model was one-factor, taking into account capital as the main factor of economic growth. A few more assumptions: the full involvement of all factors, the equality of supply and demand and their incremental values. The source of the increase in supply and demand, as in the Keynesian model, is investment.

The initial equation of the R. Harrod model (the equation of the actual growth rate):

where g means the real increase in total output for some period, for example, for a year; or otherwise: g = ? Y / Y, that is, the actual growth rate - the ratio of the increment in income to the amount of income in the base period; c - capital ratio or capital intensity ratio; it shows the "investment price" of one unit of income or production increase, in other words: c = I / ?Y; finally, s is the share of savings in the national income, or propensity to save: s = S /Y.

By reducing the common terms, the equation reduces to a simple equality, namely the Keynesian equality: investment equals saving. However, Harrod and Domar were able to put this model in dynamics: the left side of the equation (g c) is the accumulated part of the increase in output that goes to production purposes, and this part must be provided with a certain share of savings (s). Since both parts of the actual growth rate equation refer to the past period, this equality does not need special conditions for its implementation.

The next equation in Harrod's model is the guaranteed growth rate equation:

where gw is the guaranteed growth rate and cr is the required capital ratio.

The required capital ratio cr is the amount of new capital required to provide a unit of output increment (normative capital intensity).

All indicators except s are predictive. They make the estimated amount of savings equal to the existing savings. This equation equates future investment and actual savings.

According to Harrod, the guaranteed growth rate is a constant. He explains it this way: the share of savings in the national income is constant, since the motives that make people save are constant. The required capital ratio is also constant due to the existing neutral nature of scientific and technological progress: over time, labor-saving technologies and technologies are balanced by capital-saving technologies. Two indicators of the equation are constant, therefore, the third is also constant. If the actual growth rate (g) coincided with the predicted, guaranteed (gw) within the framework of the capitalist market economy, sustainable continuous development would take place.

But within the framework of the capitalist economy, there is no stability, not only in the static (short-term), but also in the dynamic sense. To explain this fact, Harrod compares both equations of his model:

and notes that the actual and guaranteed growth rates coincide exceptionally. Most often, there is a deviation of the actual growth rate from the guaranteed one. What characterizes such situations?

If the actual growth rate g starts to rise and exceeds gw, then s, due to its relative constancy, does not immediately increase to the same extent, then the actual capital intensity ratio c will necessarily decrease and become less than the required (forecast) capital intensity ratio that entrepreneurs have tuned in to. In other words, if g > gw, then (due to the constancy of s) c< cr. Но если с ниже cr, это означает, что в итоге предприниматели будут оценивать фактическую капиталоемкость как слишком низкую, и сочтут располагаемое количество товаров в каналах обращения или оборудования недостаточными для поддержания оборота. Предприниматели, следовательно, станут увеличивать свои товарно-материальные запасы, закупать новое оборудование. Другими словами, будут еще более способствовать превышению фактического темпа роста над гарантированным (равновесным).

Conversely, if the actual growth rate turns out to be less than the guaranteed one (g< gw), тогда в силу приведенных выше соображений требуемый (прогнозируемый) коэффициент капитала будет обязательно ниже фактического (с >cr), i.e., entrepreneurs will consider the stocks of raw materials, equipment, materials excessive, reduce purchases, which will further reduce the actual growth rate compared to the guaranteed one.

These considerations lead Harrod to two conclusions. First, he believes that, in principle, there is a growth rate at which producers will remain satisfied with the results and their activities, and which will guarantee the maintenance of equilibrium in a growing economy. Secondly, however, “if the cumulative result of trial and error of multimillion-strong producers gives a value for g that differs from gw, then not only does there not appear to be any tendency to adjust the size of production to gw, but, on the contrary, there is an inverse tendency to increasingly remove production from this value either upwards or downwards.

This conclusion is the quintessence of Keynesianism in the field of dynamics theory. It means that dynamic instability is inherent in the market economy, and if there is a “flight of the actual growth rate from the guaranteed one”, then centrifugal forces work inside it, forcing the system to deviate further and further from the equilibrium line of development.

According to Harrod, deviations of the actual growth rate from the guaranteed one explain mainly short-term cyclical fluctuations. To interpret longer fluctuations in the economic environment, Harrod introduces a third equation, the natural growth rate:

where gn (from the word natural - natural) represents the maximum possible rate of movement of the economy for a given population growth and technical capabilities. Guaranteed pace - gw - meant the line of entrepreneurial equilibrium at full employment of cash capital and technical improvements. But gw, generally speaking, admitted the existence of "involuntary unemployment". The natural rate - gn - does not allow it, being in the long run the maximum rate for given resources. As Harrod notes, there may not be enough savings to support this rate, so the equation of natural growth provides for the absence of a mandatory equality between the left and right sides.

The full Harrod model considers the relationship between three quantities: natural (gn), guaranteed (gw) and actual (g) growth rates:

Let gw exceed gn (since guaranteed growth is a predictable, programmable value, such a combination is in principle possible). But if gw > gn, then gw > g (because the natural growth is maximum for given resources, the actual growth will be lower than the natural one, and therefore, when gw > gn, it will necessarily be lower than the guaranteed one). Then, taking into account the considerations given above, we have: cr< с, т. е. при чрезмерно завышенных прогнозах развития нормативная (требуемая) капиталоемкость будет обязательно ниже фактической, а это, как было показано ранее, есть условие длительной депрессии (чрезмерное перенапряжение сил порождает длительную фазу спада).

If gw< gn, тогда возможны по крайней мере два варианта. Первый (gw >g) we have already considered: it leads to long-term depression. But under these conditions, the second option is also possible: gw< g, тогда cr >c, and this, as we know, is the condition for a prolonged boom.

Hence, according to Harrod, "the ratio of gn and gw is of decisive importance for determining whether a revival or depression will prevail in economic life for a number of years."

In this regard, Harrod revises in a certain way Keynes' position on savings. Keynes, as we know, had a negative attitude towards savings, seeing it as an incentive to depression. Neoclassicists, on the contrary, treated savings unambiguously positively, believing that they automatically turn into savings. Harrod takes a more balanced position here. He believed that savings is useful as long as gw is lower than gn, that is, when there is an economic boom. The fact is that Harrod considered equally dangerous both the situation when gw exceeds g, which is characterized by economic recession, and the situation when gw turns out to be too low compared to gn. Although this latter situation signifies a trend towards rapid economic recovery and full employment, this high employment will be inflationary and therefore unhealthy. Under these conditions, saving is a virtue, since an increase in gw makes it possible to achieve high employment without inflation.

Thus, Harrod drew attention to the danger of an inflationary boom, while Keynes, in the conditions of an economic depression, did not consider inflation a possibility. However, among the problems of long-term growth for Harrod, as for Keynes, the problem of depression and unemployment still stood in the first place. Harrod clearly identifies two distinct sets of problems in theoretical analysis and economic policy:

) discrepancy between gw and gn - the problem of chronic unemployment;

2) the tendency of g to move away from gw is a problem of the industrial cycle.

Hence, Harrod's practical program includes two groups of activities.

· Short-term counter-cyclical policy (against the “flight of the actual growth rate from the guaranteed one”). It assumes both traditional Keynesian methods - public works, regulation of the interest rate, and a specific tool proposed by Harrod for "fighting the world crisis." This is the creation of so-called "buffer stocks" from non-perishable materials, raw materials, food. As a result, government agencies will be able to maintain prices for these types of goods at a relatively constant level, by bulk buying inventory during a recession and selling them during a boom.

· A policy of long-term stimulation of economic development rates against chronic unemployment and prolonged depression (in order to bring the guaranteed growth rate closer to the natural one and prevent mass unemployment). Such a policy involves the use of interest reduction - down to zero. This measure is not exhaustive, because it is impossible to achieve a convergence of the natural and guaranteed growth rate without government intervention. However, a decrease in the rate of interest should lead to an increase in capital intensity, an expansion in the demand for savings (by the value d) and further - to some reduction in the share of savings in national income and an increase in the required capital coefficient c r . According to Harrod, one should strive for such a progressive decrease in the interest rate at which g w c r = s - d = g n c r . The latter expression, according to Harrod, is the formula for "sustainable growth at full employment."

It is characteristic that, from the point of view of Harrod, the withering away of interest can also serve the social progress of society. If there is no interest, the rentier class will die out (Harrod here refers to Keynes's ideas about the prospects for "rentier euthanasia"). Along with interest, land rent will gradually disappear, and hence the class of landowners. However, in general, Harrod, like Keynes, was a supporter of the preservation of private property, considering it a guarantee of freedom, an incentive for entrepreneurship, etc.

3. Keynesian theories of economic growth

1 The “vicious cycle of poverty” theory

The concept of "vicious circle of poverty" was proposed for the first time in 1949-1950. G. Singer and R. Prebisch. The concept of the "vicious circle of poverty" was coined at a time when third world countries were being surveyed for economic balance. Scientists have tried to explain the underdevelopment of countries by demographic and economic factors. In the post-war years, various variants of the "vicious circle of poverty" appeared. They were based on the relationship between population and economic conditions. The general meaning of such concepts boiled down to the fact that the improvement in the quality of life quickly comes to naught with population growth due to a decrease in the average per capita national income. Let us take H. Leibenstein's theory of quasi-stable equilibrium as an example.

The "vicious circle" is as follows: an increase in yield leads to an improvement in nutrition. Improved nutrition, in turn, leads to a decrease in the mortality rate and an increase in life expectancy. All this leads to population growth. And an ever-increasing population divides the available resources among themselves. There is a fragmentation of land plots and, as a result, a drop in productivity.

In addition to the "vicious circles" based on the size of the population in the country, there are also options that explain the narrowness of the domestic market or lack of resources for modernization. An example of such theories are the views of Columbia University professor Ragnar Nurke. According to his theory, the lack of capital leads to low labor productivity, which leads to low incomes. As a consequence - weak purchasing power and insufficient incentive to invest. A typical feature of such a society is the limited savings and lack of interest in investment.

In addition, there were a number of researchers who linked backwardness with low-skilled labor and the lack of a normal education system.

Scientists believed that to overcome such circles, a powerful external injection of capital was needed, as a result of which self-sustaining growth would begin. But since it is unrealistic to invest these resources on a voluntary basis, forced savings were assumed, formed as a result of the state's monetary and tax policies. The inefficiency of the institutional system could be compensated by the import of capital. The amount of injection must be sufficient to start an irreversible movement; otherwise, there is a danger that it will be completely spent on meeting current needs, which have greatly increased due to demographic growth and (or) the demonstration effect. The "minimum critical effort", according to X. Leibenstein, should be such that the level of investment is at least 12-15% of the national income. Such a push, he believes, on the one hand, will increase the growth rate of per capita income (i.e., it will bring consumption out of stagnation), and on the other hand, it will expand the number of business entities - entrepreneurs, which will ensure further growth in per capita income.

According to the Keynesian interpretation of the "vicious circle of poverty", the economic underdevelopment of countries is closely related to low income levels. Low consumption and low savings are causing inefficient demand, which contributes to a narrow domestic market and low investment growth. They, in turn, lead to low production efficiency, low profitability and low incentives to increase production, which explains the low income.

All vicious circle theories had a number of shortcomings, the most obvious of which was the impossibility of achieving economic growth without huge capital injections. Therefore, these theories are almost impossible to apply in practice. The consequence of this was the development of the "big push" theory.

3.2The Big Push Theory

The ancestor of this theory is P. Rosenstein-Rodan, who formulated it back in 1943 for the underdeveloped countries of the European periphery. Later, the concept of the "big push" was used by Western scientists (R. Nurkse, X. Leibenstein, A. Hirschman, G. Singer, and others) to substantiate the conditions for the modernization of the newly-liberated countries. The problems of primary industrialization, which were interpreted in the spirit of neo-Keynesianism, turned out to be at the center of their research. Therefore, the main attention was paid to the role of autonomous investments due to the economic policy of the state aimed at increasing the national income.

Keynes's model could not help in solving such a problem, because it was, first of all, static and considered the economy in the short term. Harrod and Domar later expanded it for the long term.

A "big push" involves a major injection of capital into the economy to bring the country out of a backward state. However, in contrast to the "vicious circles of poverty", the "big push" theorists were highly critical of market self-regulation. Therefore, they focused on the distribution of investments in the necessary sectors to accelerate the growth of the national economy.

In contrast to the "vicious circles of poverty", the idea of ​​a "big push" has found its followers. It has found distribution in developing countries among the leaders, as well as among the general population. Since the implementation of the modernization program was entrusted to state officials, over time in these countries a social stratum was formed that was interested in its implementation - the state-bureaucratic bourgeoisie. Large corporations looking for the most profitable capital investments were also interested. All this contributed not only to a high theoretical interest, but also to attempts to implement it in practice in Asia, Africa and Latin America.

However, despite all the attractiveness of this concept, there was a significant drawback. The theory was designed to use limited capital in developing countries, and did not take into account such a clearly abundant resource as labor.

The Big Push concept has two different theories:

.Theory of balanced growth;

.Theory of unbalanced growth.

The first theory was developed by Ragnar Nurke. He believed that in order to modernize, a "balanced set of investments" should be made. Balance here is understood as the equality of supply and demand. At the initial stage, there is no such correspondence, but the simultaneous application of capital to a wide range of branches of material production will not only achieve self-sustaining growth, but also overcome the market narrowness typical of most developing countries. At the same time, it is necessary to take into account the intervention of the state, which ensures the creation of a market infrastructure, the preparation of prerequisites for the development of private entrepreneurship. Forced savings will gradually be replaced by voluntary ones, autonomous investments - by induced ones. All this will create conditions for the full-fledged operation of the market mechanism.

However, this approach had many disadvantages:

1.The implementation of the plan would lead to the superstructure of a new economic system over the old one;

2.It did not take into account the time lag, because in the absence of centralized management, investments would hardly have coincided in time and space;

3.An imbalance would lead to a slowdown in the overall growth rate.

Therefore, other authors also offered their ideas of this concept and Albert Hirschman's theory of unbalanced growth appeared. The scientist noted that in order to implement the “balanced growth theory” plan, it is necessary to have huge capital, just the resource that is not available in the countries of the “third world”. Therefore, he proposes to developing countries the concept of unbalanced growth. The first investment, he believes, will inevitably upset the balance. However, this violation also plays a positive role, as it will become an incentive for new investments. New investments, correcting the old disequilibrium, will cause disequilibrium in other industries and in the economy as a whole. And it, in turn, will become an incentive for further investment.

However, this theory is not very realistic. Hirschman adheres to idealistic views on politics and economic processes in the Third World countries. He assigns too much role to market mechanisms, which should respond to the slightest instability. In reality, instability causes even greater deficits in the economy.

In addition, Hirschman idealizes the policy of the state in the "third world". He believes that it prioritizes modernization and increasing prosperity, while in fact it is more selfish.

Criticism of the views of A. Hirschman contributed to the well-known rehabilitation and further development of the original concept. Hans Singer put forward the concept of modernization as "balanced growth through unbalanced investment". A "big push" in industry, he rightly believes, is impossible without a "big push" in the agrarian sector. Therefore, G. Singer pays special attention to the conditions of modernization - the preparation of a properly balanced path of development. He puts forward an increase in agricultural productivity, an increase in labor productivity in the agricultural sectors and the stimulation of the development of traditional export industries. In a number of cases, in the course of modernization, it is expedient to develop import substitution and, in any case, to increase the absorptive capacity of a developing society by developing its own production and social infrastructure. It is only under these conditions that the “big push” achieves its goal. We see that even this most developed concept is characterized by an orientation towards external resources. The topic of capital imports was further developed in the framework of the theory of growth with two deficits.

3 Growth model with two deficits

The model of economic growth with two deficits was developed in the 1960s and 1970s. a group of American researchers - X. Chenery, M. Bruno, A. Straut, P. Eckstein, N. Carter, and others.

It is a medium- and long-term regression models in which the growth rate is determined depending on the deficit of internal (savings deficit) or external (trade deficit) resources. The model includes three main elements: first, the calculation of the necessary resources obtained as the difference between savings (S) and investments (I); second, the calculation of the foreign trade deficit (exports (X) minus imports (M)); thirdly, the definition of absorptive (absorption) capacity, understood as the maximum amount of capital resources that a developing country is able to use productively at a given moment. Therefore, in statics, the model can be written as follows:

S-I - Savings deficit, X-M - trade deficit, where Y is income, Q is output, C is total consumption, S is gross savings, I is gross domestic investment, X is exports, M is imports.

The amount of foreign aid to meet the modernization policy's target growth rate is determined by the larger of the two deficits. Aid is provided not only in order to reduce internal and external deficits, but also in order to either abandon foreign aid altogether or significantly reduce its amount over time. The model assumes two periods. The second (long-term) includes two alternative stages.

In dynamics, the model considers 2 periods:

· medium-term (5-10 years);

· long-term (over 10 years).

In the medium term, the first stage stands out: the “big push”. In dynamics, the volume of foreign aid was calculated using the formula:

t - required amount of assistance in period t,

The maximum possible growth rate of investments,

k - incremental capital ratio;

a is the marginal savings rate or the marginal propensity to save. , where - potential domestic savings.

It is assumed that the first stage of modernization will end when the growth rate of investment equals the growth rate of GNP. Let's say that this happens at the time t=m. Then I m =k* *Y m , where - Target GNP growth rate.

After the first stage, depending on which deficit prevails, the next stage begins (stage 2 - savings deficit, stage 3 - trade deficit).

Let's take a closer look at the second stage. As noted above, it is characterized by a shortage of savings. To overcome this deficit, external sources are used, namely the import of foreign goods and services. However, the purpose of this stage is that this flow should be constantly reduced. This is achieved for a >k . Then S=I, and 0, where M is the required volume of imports of goods and services.

Now let's move on to the third stage. To eliminate the foreign trade deficit, it is necessary to redistribute domestic investment. If the third stage has begun, then Y t =Y n (1+r) 1-n . In this case, M t = M n + µ (Y t -Y n ), and X t = X n (1+?)t-n, where µ - marginal propensity to import. ? - export growth rate calculated exogenously (characterizes government measures to stimulate exports). In this case, the volume of foreign resources is calculated according to the formula: Ft= Mt- Xt= Mn + µ (Yt-Yn) - Xn(I + x)t-n, where x is the growth rate of imports calculated exogenously. Then the foreign trade deficit will be eliminated under the condition x>>r, and µ <<µWed , where µ Wed - average propensity to import; while S > I, where S - potential savings. The growth in potential savings will not only meet domestic investment needs, but will eventually allow foreign aid to be phased out entirely. Sufficient savings is calculated as follows: S t = I t -F t=k r Yt-F t.

The described modernization model was developed for Israel. Subsequently, it was significantly improved and was widely used to determine the amount of foreign aid in the countries of Asia and Latin America. The two-deficit model is a further specification of the big push idea. Its purpose is to trace the relationship between the development of internal accumulation and external sources of financing. At the same time, this modernization concept has a number of significant drawbacks. First of all, it clearly underestimates the internal resources of developing countries, which objectively leads to an overestimation of the need for foreign assistance and, ultimately, to a rapid growth in external debt. The considered concepts of modernization (theories of economic growth and the model with two deficits) were focused on the use of such a limited factor in developing countries as capital, and clearly did not take into account the possibility of using such a relatively abundant factor as labor. This determined the fair criticism of the neo-Keynesian direction by the neoclassicals.
Another notable shortcoming of this model is the factual justification for the intervention of donor countries in the internal affairs of debtor countries. A significant drawback turned out to be a very aggregated (approximate) nature of the model. In the context of limited and unreliable statistical information, many important indicators of the model (for example, determining the absorptive capacity of the economies of developing countries) are extremely conditional, which reduces the value of the forecasts and recommendations obtained with their help.

4 The theory of transition to "self-sustaining growth"

Within the framework of the section “Keynesian theories of growth”, it is also worth considering the model that was put forward in 1956 by W. Rostow. His theory was called "the concept of transition to self-sustaining growth."

Rostow proposed five stages of growth:

1.traditional society;

2.the period of creation of prerequisites for;

3.take off;

.movement towards maturity;

5.era of high mass consumption.

The criteria for distinguishing stages were mainly technical and economic characteristics: the level of development of technology, the sectoral structure of the economy, the share of production accumulation in national income, the structure of consumption, and so on.

It is typical for the first stage of a traditional society that over 75% of the able-bodied population is engaged in food production. The national income is used mainly unproductively. This society is structured hierarchically, with political power held by the landowners or the central government.

The second stage is transitional to takeoff. During this period, important changes are being made in three non-industrial sectors of the economy: agriculture, transport and foreign trade.

The third stage - "takeoff" - covers a relatively short period of time: 20-30 years. At this time, the rate of investment is growing, the output per capita is noticeably increasing, and the rapid introduction of new technology into industry and agriculture begins. Development initially covers a small group of industries (“leading link”) and only later spreads to the entire economy as a whole. In order for growth to become automatic, self-sustaining, several conditions must be met:

· a sharp increase in the share of productive investment in national income (from 5% to at least 10%);

· the rapid development of one or more sectors of the industry;

· a political victory for the supporters of economic modernization over the defenders of the traditional society.

The emergence of pockets of a new institutional structure should ensure, according to Rostow, the distribution of the initial impulse of growth throughout the entire economic system (by mobilizing capital from domestic sources, reinvesting profits, etc.).

The fourth stage - the period of "movement to maturity" - is characterized by W. Rostow as a long stage of technical progress. During this period, the process of urbanization develops, the share of skilled labor increases, and the management of industry is concentrated in the hands of qualified managers - managers.

During the fifth stage - the "epoch of high mass consumption" - there is a shift from supply to demand, from production to consumption. This period, for example, corresponded to the state of American society in the 1960s.

In his later work, Politics and the Stages of Growth (1971), Rostow adds a sixth stage, the "quality-seeking stage" of life, when a person's spiritual development comes to the fore. Thus, he tried to outline the perspective of the development of modern societies.

Development in this approach is understood, first of all, as a synonym for high growth rates. Profound social and institutional changes seem to be in the shadows, and the ratio of investment and growth rates of the gross national product comes to the fore.

Rostow's theory of self-sustaining growth was a big step up from other theories of the 20th century. However, it did not have a number of shortcomings, primarily due to the fact that the model claims to explain historical processes.

1.Social and legal moments are underestimated;

2.Absolutizes periods of modernization;

3.The industrial revolution is treated one-sidedly;

4.The abstract nature of the quantitative criteria by which the stages were distinguished. The theory that for self-sustaining growth it is necessary to double the share of productive investment does not correspond to the historical experience of the developed capitalist countries.

economic growth theory model

4.Neoclassical growth model R. Solow

Unlike Keynesian models, the Solow economic model is multifactorial. The following factors are distinguished: technical progress, capital accumulation, growth of labor resources.

R. Solow showed that the instability of dynamic equilibrium in Keynesian models was a consequence of the non-interchangeability of production factors. Instead of the Leontief function, he used the Cobb-Douglas production function in his model, in which labor and capital are substitutes. Other prerequisites for analysis in the Solow model are: diminishing marginal productivity of capital, constant returns to scale, constant retirement rate, and no investment lags.

The interchangeability of factors (changes in capital-labor ratio) is explained not only by technological conditions, but also by the neoclassical premise of perfect competition in factor markets.

A necessary condition for the equilibrium of the economic system is the equality of aggregate demand and supply. The supply is described by a production function with constant returns to scale: Y = F(K, L), and for any positive z, zF(K, L) = F(zK, zL) is true. Then if z = 1/L, then Y/L = F(K/L).

Denote Y/L by y, and K/L by k, and rewrite the original function in the form of the relationship between productivity and capital-labor ratio (capital-labor ratio): y = f(k). The tangent of the slope of this production function corresponds to the marginal product of capital (MRC), which decreases as the capital-labor ratio increases (k).

Aggregate demand in the Solow model is determined by investment and consumption: = i + c, where i and c are investment and consumption per employee.

Income is divided between consumption and savings in accordance with the savings rate, so that consumption can be represented as c = (l - s) y, where s is the savings (accumulation) rate, then y = c + i = (1 - s) y + i, whence i = sy. In equilibrium, investment is equal to saving and proportional to income.

The conditions for equality of supply and demand can be represented as f(k) = c + i or f(k) = (1 - s) y + i

The production function determines the supply in the market of goods, and the accumulation of capital determines the demand for the product produced.

The dynamics of output depends on the amount of capital (in our case, capital per employee, or capital-labor ratio). The volume of capital changes under the influence of investments and disposals: investments increase the stock of capital, disposals decrease it.

Investments depend on the capital-labor ratio and the rate of accumulation, which follows from the condition of equality of supply and demand in the economy: i = sf(k). The accumulation rate determines the division of the product into investment and consumption for any value of l (Figure 10).

Depreciation is taken into account as follows: if we assume that a fixed part d (retirement rate) is retired annually due to capital depreciation, then the amount of retirement will be proportional to the amount of capital and equal to dk. On the graph, this relationship is reflected by a straight line emerging from the point of origin, with a slope d.

The impact of investments and disposals on the dynamics of capital stocks can be represented by the equation Ak = i - dk, or, using the equality of investments and savings, Ak = sf(k) - dk. The capital stock (k) will increase (Аk > 0) to the level at which investments will be equal to the amount of disposal, i.e. sf(k) = dk. After that, the stock of capital per employee (capital-labor ratio) will not change over time, since the two forces acting on it will balance each other (Ak = 0). The level of capital stock at which investments are equal to retirement is called the equilibrium (sustainable) level of capital-labor ratio and is denoted by k*. When k* is reached, the economy is in a state of long-term equilibrium.

The equilibrium is stable, because, regardless of the initial value of k, the economy will tend to an equilibrium state, i.e. to k*. If initial k 1below k*, then gross investment (sf(k)) will be greater than disposal (dk) and the capital stock will increase by the amount of net investment. If k 2> k*, this means that the investment is less than depreciation, which means that the capital stock will decrease, approaching the level k*.

The rate of accumulation (savings) directly affects the sustainable level of capital-labor ratio. Savings rate growth with s 1to s 2shifts the investment curve upward from position s 1f(k) to s2 (j) (Fig. 12).

In the initial state, the economy had a stable stock of capital to 1*, at which investment equaled retirement. After the increase in the savings rate, investment increased by (i 1-i 1), while the capital stock (k 1*) and disposal (dk) remain the same. Under these conditions, investments begin to exceed retirement, which causes an increase in the capital stock to a new equilibrium level k 2*, which is characterized by higher values ​​of capital-labor ratio and labor productivity (output per employee, y).

Thus, the higher the rate of savings (accumulation), the higher the level of output and capital stock can be achieved in a state of stable equilibrium. However, an increase in the rate of accumulation leads to an acceleration of economic growth in the short run, until the economy reaches a new stable equilibrium point.

Obviously, neither the process of accumulation nor the increase in the savings rate can explain the mechanism of continuous economic growth. They show only the transition from one state of equilibrium to another.

For the further development of the Solow model, two prerequisites are alternately removed: the invariance of the population and its employed part (their dynamics are assumed to be the same) and the absence of technical progress.

Let us assume that the population grows at a constant rate n. This is a new factor which, together with investment and disposal, influences the capital-labor ratio. Now the equation showing the change in capital stock per worker will look like this:

K = i - dk - nk or?k = i - (d + n) k.

Population growth, like retirement, reduces the capital-labor ratio, although in a different way - not through a decrease in the available stock of capital, but by distributing it among the increased number of employees. Under these conditions, such a volume of investments is needed that would not only cover the outflow of capital, but would also make it possible to provide new workers with capital in the same volume. The product nk shows how much additional capital is required per worker to keep the capital-labor ratio of new workers at the same level as the old ones.

The condition of stable equilibrium in the economy with a constant capital-labor ratio k* can now be written as follows:

K = sf(k) - (d + n) k = 0 or sf(k) = (d + n) k.

This state is characterized by full employment of resources. In a steady state of the economy, capital and output per worker, i.e. capital-labor ratio (k) and labor productivity (y) remain unchanged. But in order for the capital-labor ratio to remain constant even with population growth, capital must increase at the same rate as the population:

Thus, population growth becomes one of the reasons for continuous economic growth in equilibrium.

Note that with an increase in the population growth rate, the slope of the curve (d + n) k increases, which leads to a decrease in the equilibrium level of capital-labor ratio (k "*), and, consequently, to a drop in y.

Accounting for technological progress in the Solow model modifies the original production function. A labor-saving form of technological progress is assumed. The production function will be presented as Y - F(K, LE), where E is labor efficiency, a (LE) is the number of conventional units of labor with constant efficiency E. The higher E, the more products can be produced by a given number of workers. It is assumed that technological progress is carried out by increasing the efficiency of labor E at a constant rate g. The growth of labor efficiency in this case is similar in terms of the results of the growth in the number of employees: if technological progress has a rate of g = 2%, then, for example, 100 workers can produce the same amount of output as 102 workers previously produced. If now the number of employed (L) grows at the rate of n, and grows at the rate of g, then (LE) will increase at the rate of (n + g).

The inclusion of technological progress somewhat changes the analysis of the state of stable equilibrium, although the line of reasoning remains the same. If k is defined as the amount of capital per unit of labor with constant efficiency, then the results of the growth of effective units of labor are similar to the growth in the number of employees (an increase in the number of units of labor with constant efficiency reduces the amount of capital per one such unit). In a state of stable equilibrium, the capital-labor ratio k "* balances, on the one hand, the impact of investments that increase the capital-labor ratio, and on the other hand, the impact of retirement, growth in the number of employees and technological progress, which reduce the level of capital per effective unit of labor:

(s?k") = (d + n + g)k".

In a steady state (k "*) in the presence of technological progress, the total amount of capital (K) and output (Y) will grow at a rate of (n + g). But unlike the case of population growth, the capital-labor ratio K / L and output Y/L per employed person, the latter can serve as the basis for improving the welfare of the population.Technological progress in the Solow model is, therefore, the only condition for a continuous increase in the standard of living, since only if it exists, there is a steady increase in output per capita ( y).

Thus, in the Solow model, an explanation was found for the mechanism of continuous economic growth in the equilibrium mode with full employment of resources.

As is known, in Keynesian models, the savings rate was set exogenously and determined the value of the equilibrium rate of income growth. In the neoclassical Solow model, at any rate of saving, the market economy tends to a corresponding stable level of capital-labor ratio (k *) and balanced growth, when income and capital grow at a rate (n + g). The value of the savings (accumulation) rate is an object of economic policy and is important in evaluating various programs of economic growth.

Since equilibrium economic growth is compatible with different savings rates (as we have seen, an increase in s accelerated the growth of the economy only for a short time, while in the long run the economy returned to a stable equilibrium and a constant growth rate depending on the value of n and g), the problem of choosing the optimal savings rates.

The optimal rate of accumulation, corresponding to the "golden rule" of E. Phelps, provides an equilibrium economic growth with a maximum level of consumption. A stable level of capital-labor ratio corresponding to this rate of accumulation will be denoted by k**, and consumption by c**.

The level of consumption per one employed person at any stable value of capital-labor ratio A* is determined by a series of transformations of the original identity: y = c + i. We express consumption c in terms of y and i and substitute the values ​​of these parameters that they take in a steady state:

Y - i, с* = f(k*) - dk*,

where c* is consumption in a state of sustainable growth, and i = sf(k) = dk by definition of a sustainable capital-labor ratio. Now, from various stable levels of capital-labor ratio (k*) corresponding to different values ​​of s, it is necessary to choose the one at which consumption reaches its maximum.

If k* is selected< к**, то объем выпуска увеличивается в большей степени, чем величина выбытия (линия f(k*) на графике круче, чем dk*), а значит, разница между ними, равная потреблению, растет. При к* >k** the increase in output is less than the increase in disposal, i.e. consumption is falling. An increase in consumption is possible only up to the point k**, where it reaches a maximum (the production function and the curve dk* have the same slope here). At this point, an increase in the capital stock by one unit will give an increase in output equal to the marginal product of capital (MRC) and increase the outflow by d (depreciation per unit of capital). There will be no growth in consumption if the entire increase in output is used to increase investment to cover retirement. Thus, at the level of capital-labor ratio corresponding to the “golden rule” (k**), the following condition must be satisfied: MRC = d (the marginal product of capital is equal to the rate of disposal), and taking into account population growth and technological progress: MRC = d + n + g .

If the economy in its initial state has a stock of capital greater than follows the "golden rule", a program is needed to reduce the rate of accumulation. This program causes an increase in consumption and a decrease in investment. At the same time, the economy leaves the state of equilibrium and again reaches it with proportions corresponding to the "golden rule".

If the economy in the initial state has a capital stock less than k**, a program is needed to increase the savings rate. This program initially leads to an increase in investment and a fall in consumption, but as capital accumulates, from a certain point on, consumption begins to rise again. As a result, the economy reaches a new equilibrium, but already in accordance with the "golden rule", where consumption exceeds the initial level.

This program is usually considered unpopular due to the presence of a "transitional period" characterized by a drop in consumption, so its adoption depends on the intertemporal preferences of politicians, their focus on short-term or long-term results.

The considered Solow model makes it possible to describe the mechanism of long-term economic growth, which maintains the equilibrium in the economy with full employment of factors. It highlights technological progress as the only basis for sustainable growth of welfare and allows you to find the optimal growth option that ensures maximum consumption.

5. Model of zero economic growth

In the early 70s of the XX century. some economists came up with the concept of the inevitability of a global catastrophe while maintaining the existing trends in the development of society. Thus, in the report of the Club of Rome "Limits to Growth", prepared by the research group of the Massachusetts Institute of Technology, USA, led by prof. D. Meadows noted that due to the aggravation of contradictions between the rapidly growing population of the Earth, the rapid development of the production of investment goods and the rapidly depleting natural resources of the planet, every day of continued growth brings the world system closer to the limits of this growth. Based on our current knowledge of the physical boundaries of the planet, it can be assumed that the growth phase should end within the next hundred years. Further, in the opinion of the author of the report, with the current trends, the achievement of the “limits to growth” will inevitably be accompanied by a spontaneous decline in population and industrial production as a result of hunger, environmental destruction, resource depletion, etc. In this situation, according to the authors of the report, the only way out is to maintain “zero growth”.

Supporters of "zero growth" argue that technological progress and economic growth lead to a number of negative phenomena of modern life: environmental pollution, industrial noise, the release of toxic substances, the deterioration of cities, and so on. Since the production process only transforms natural resources, but does not completely utilize them, over time they return to the environment in the form of waste. Because of this, supporters of "zero growth" believe that economic growth should be purposefully curtailed. Recognizing that economic growth provides an increase in the volume of goods and services, zero growth advocates conclude that economic growth cannot always create a high quality of life.

At the same time, opponents of D. Meadows and his like-minded people - supporters of economic growth - believe that this growth in itself softens the contradictions between unlimited needs and scarce resources, since in conditions of economic growth it is possible to maintain infrastructure at this level, to implement assistance programs the elderly, the sick and the poor, improve the education system and raise personal incomes.

As for the environment, the supporters of economic growth believe that its pollution is not a consequence of economic growth, but the result of incorrect pricing, distorted by externalities.

To solve this problem, it is necessary both to introduce legislative restrictions or special taxes, and to form a market for pollution rights.

CONCLUSION

Economic growth is one of the main goals of society, since on its basis it is possible to increase the welfare of the population and solve new socio-economic problems. The combination of economic growth factors is subject to the solution of the problem of maximizing marginal productivity. Today, the most promising is the use of long-term factors of economic growth associated with the use of scientific and technical progress and investments in human capital.

Economic growth depends on many factors, such as land, labor, capital, scientific and technical progress, and institutional factors. It is incredibly difficult to take into account all of the above, so it is incredibly difficult to predict how the economy will behave, much less correctly apply methods to stimulate economic growth. That is why when creating models, economists make many assumptions, which simplifies the model, but also moves the result away from reality.

The first considered in this course work was the Keynesian model, which had a huge impact on the economy, both past and present. Many omissions have been noted that prevent those concepts from being fully applied in modern practice.

Subsequent economists Harrod and Domar improved Keynes's model, making it dynamic, but the model still remains one-factor and works more in theory.

The concepts of the "vicious circle of poverty", "big push" and "model with two deficits" had a great influence on the development of the countries of the "third world". However, the "big push" model has achieved the greatest recognition among state leaders. It cannot be unequivocally said that this model is perfect and will solve the problems of the Third World countries. There are still many shortcomings, provisions that exist only in theory, but in practice everything is much more complicated.

Therefore, despite the enormous contribution that scientists have made to economic science, one cannot rely only on these theoretical positions; it is necessary, in addition, to take into account the real state of affairs, the characteristics of each state separately.

LIST OF USED SOURCES

1. Administrative and management portal [Electronic resource]: Economic growth. Keynesian models of economic growth. - Access mode:<#"justify">9.Porter M. D. Competition / M. D. Porter. - M.: Williams, 2005. - 608 p.

10. Center for distance education [Electronic resource]: Keynesian models of economic growth. - Access mode: . - Date of access: 05.05.2013.

Economics of Development: Models for the Formation of a Market Economy. Tutorial. / comp. R. M. Nureev. - M.: INFRA-M, 2001., - p. 7-13.

Economics of Development: Models for the Formation of a Market Economy. Tutorial. / comp. R. M. Nureev. - M.: INFRA-M, 2001., - p. 16-22.

. - Date of access: 05/01/2013.

Economy. Electronic textbook [Electronic resource]: Theories of economic growth. Keynesian and neo-Keynesian models. Principles of animation and acceleration. - Access mode: . - Date of access: 05/01/2013.

Economic and Legal Library [Economic resource]: The concept of "zero economic growth". - Access mode: . Access date: 05.05.2013.

Economic Dictionary [Electronic resource]: Economic growth. - Access mode: . - Date of access: 04/10/2013.

Expertly about the economy [Electronic resource]: Demand factors. - Access mode: . Access date: 04/10/2013.

Entelechy - a collection of scientific and lecture articles [Electronic resource]: Efficiency factors and institutional factors of economic growth.- Access mode: . Access date: 04/23/2013.

Encyclopedia of an Economist [Electronic resource]: Economic growth. - Access mode: . - Date of access: 04/10/2013.

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The concept of economic growth

Definition 1

Economic growth is the central object of study in modern macroeconomics, which is the basis for solving most social and economic problems in society.

Economic growth is the main factor of civilizational progress and the result of the development of technology and science in the state. The main parameters of economic growth, including its dynamics, are widely used in characterizing the development of the national economy and state regulation of the economy.

In general, economic growth is represented by the growth of gross domestic product per capita, and the growth rate leads to an increase in the level of income of the population, a decrease in unemployment, and an increase in budget revenues. For this reason, promoting growth is one of the main tasks of the economy of any country, which has been facilitated by various theories of economic growth applied in practice.

Economic growth is born at the stage of production and acquires sustainable development at other stages. Types of economic growth are represented by extensive and intensive types.

The essence of the extensive type is to increase the national product through the growth of quantitative factors of production, that is, the attraction of additional factors.

Remark 1

The intensive type is a more complex type, which is carried out through the qualitative improvement of technologies and the increase in the main production factors.

In order to characterize economic growth, a large number of indicators are used, which are divided into qualitative and quantitative, as well as dynamic and static.

Dynamic indicators characterize the macroeconomic development of the state economy. Static indicators are able to reflect the existing conditions of the equilibrium state for various processes.

The basis of the economic growth model

Modern economic growth models were formed on the basis of the classical and Keynesian approaches to the development of the economy and the economy. If we consider the Keynesian model of economic growth, then it was based on the study of the national economy as a whole.

Keynesians considered the main problem of macroeconomics to be the factors that determined the level and dynamics of national income, including its distribution. The theory considered these factors from the standpoint of the formation of effective demand, referring to the implementation of the study of the main parts of demand, as well as the factors on which the parts and demand as a whole depend.

The volume and dynamics of national incomes, in accordance with Keynes' studies, depended on the movement of consumption and accumulation.

Neo-Keynesianism explored the problem of the dynamics of effective demand, the concept of the multiplier and the use of investment. Other aspects of Keynes's theory were related to the monetary sphere and were recognized as irrelevant in models of economic growth.

The theoretical basis of neo-Keynesian concepts was based on the views of Keynes, especially on the position that the spontaneous mechanism of the market is not able to provide a balance of supply and demand, during which underemployment of citizens and material resources may occur.

To achieve market stability, there is a problem of effective demand and state regulation of the economy, which affect the factors that make up effective demand, which is able to ensure stability.

Based on these provisions, the American economists Domar and English Harrod came up with their theories of economic growth.

The central problem of neo-Keynesianism was the problem of implementation, that is, the movement that contributed to the full use of the resources of production. In this case, the economy will be in a state of dynamic equilibrium.

With the help of changes in effective demand, it was possible to determine the actual level of production, as well as its deviations in a certain direction from the potential level.

The theory considers the consideration of quantitative relationships between accumulation and consumption, as well as the principle of a multiplier-accelerator, as an important value for economic growth. The main driver of economic growth was investment, which is considered in connection with savings.

Subsequently, the Keynesian and neo-Keynesian models were brought closer to reality and somewhat more complicated, but as before, the increase in production growth was considered only as a function of new investment.

Neoclassical model of economic growth

The neoclassical model of economic growth considered the idea of ​​an optimal market system as a perfect and self-regulating mechanism that allowed the best use of all factors not only for each economic entity, but for the entire economy.

Through market prices, free competition could provide a general equilibrium or a state of optimality by creating conditions for obtaining utility. Depending on this, the optimal growth system was modeled under conditions of perfect competition, for which a number of prerequisites were subsequently introduced: the need for complete information about the conditions of supply and demand, as well as the technical and production capabilities of all markets.

Neoclassicists, when analyzing economic growth, paid attention to the following prerequisites:

• creation of the value of production of production factors,
• the contribution of each factor to the creation of the value of the product, depending on the marginal products and the receipt of income, which is equal to the marginal product,
• quantitative relationship between products and resources that are necessary for production, as well as the relationship between the resources themselves,
• independence of production factors and interchangeability.

Remark 2

This neoclassical model is a multifactorial model. While the neo-Keynesian and Keynesian model was one-factor. The scientific and technological revolution has given a powerful impetus to new research in the field of economic growth theory.

A model is a formal scheme for analyzing real life, which makes it possible to understand the economic relationships between phenomena in order to develop economic forecasts.

There are two-sector and multi-sector models of economic growth.

A two-sector model of economic growth is a model of economic growth built on the assumption that only two factors - capital and labor - are involved in the creation of the gross national product. The first to propose a two-sector model were the American economists C. Cobb and P. Douglas. According to this model, an increase in the means of production, capital, relative to a fixed amount of labor, in the absence of technological changes, will lead to a fall in the rate of return on capital, as well as a decrease in the real interest rate, while real wages and output rise at the same time. This model is simplified, as it does not take into account the impact of technological progress.

Later, the production function of R. Solow appeared. In it, the Cobb-Douglas production function is supplemented by another very important factor - technical progress. According to this function, in the absence of technical progress, the economic system reaches a stable state in which only simple reproduction is possible.

In modern conditions, it is impossible not to take into account the third - natural - factor of production. Therefore, a three-factor model of economic growth appears to be more accurate, which takes into account all three factors of production, as well as scientific and technological progress.

Multifactor model involves the impact on growth of all factors of economic growth.

12.4. Problems of economic growth in Russia

In Russia, some improvements are observed in a number of areas of development. Gross domestic product is growing, there are improvements in the development of industry. Investments have increased, there is a slight decrease in inflation. Some positive shifts are also noted in the social sphere: wages, pensions, and benefits have increased; in general, there is an increase in money incomes on average per capita. There are certain successes in the implementation of priority national projects.

Meanwhile, it is impossible not to notice that against the background of individual improvements in a number of areas, in general, fundamental and qualitative changes in the economy and the social sphere have not occurred recently.

Problems of Ensuring Economic Growth in Russia:

To increase the rate of economic growth in Russia, an effective state is needed that will provide:

– improving the investment climate and the emergence of a diversified economy in order to reduce overdependence on the oil and gas sectors;

– Reforming the financial sector to encourage effective intermediation between savers and investors and weakening the influence of state-owned banks and radically strengthening banking supervision, corporate governance and creditor rights;

– displacement of inefficient enterprises from all spheres under the influence of competition;

- further liberalization of foreign trade and elaboration of issues related to accession to the WTO and globalization of the world economy;

- public administration reform to eliminate corruption and improve state support for innovation and the competitiveness of the Russian economy: direct state intervention should not dominate in solving problems of increasing economic growth rates.

In the modern economy, it is necessary to increase economic growth by:

- development of manufacturing industries that have an impact on increasing the efficiency of production and the competitiveness of products;

– ensuring favorable legal, economic and financial conditions for the activation of innovation activity;

– development of a system of venture investment and insurance of innovative risks;

– reorganization and closure of inefficiently operating organizations;

– restructuring of a part of branch research and design institutes into engineering organizations with a developed financial, economic, marketing and commercial structure;

– protection of intellectual property rights.

findings

1. Economic growth is an increase in GDP per capita, a process that occurs at the stage of production, acquires a stable character at other stages of social production, leads to a quantitative and qualitative change in productive forces, an increase in the social product over a certain period of time and an increase in people's well-being.

2. There are two main types of economic growth: extensive and intensive. Economic extensive growth is an increase in GNP due to an increase in the number of factors of production used, i.e. more factories, land. GNP (the output of material goods in the country) can be increased even in the short term if idle resources can be used. Economic intensive growth is an increase in GNP due to the introduction of new equipment and technology.

three ways:

- an increase in real GNP over a certain period of time, for example, for a year;

– an increase in real GNP per capita;

- annual growth rate of GNP in percent.

4. Economic growth is determined by a number of factors. Main factors of economic growth:

- an increase in the quantity and quality of labor or human resources;

– increase in fixed capital;

- technical progress;

– new in the management system;

– development of natural resources.

5. There is a division of factors depending on the nature of growth into intensive and extensive.

To extensive growth factors include:

– increasing the volume of investment while maintaining the existing level of technology;

– increase in the number of employed workers;

– growth in the volume of consumed raw materials, materials and other elements of working capital.

To intense growth factors include:

- acceleration of scientific and technological progress (introduction of new equipment, technologies through the renewal of fixed assets, etc.);

– professional development of employees;

– improving the use of fixed and working capital;

- increasing the efficiency of economic activity due to its better organization.

6. There are single-sector, two-sector and multi-sector models of economic growth.

A two-sector model of economic growth is a model of economic growth built on the assumption that only two factors - capital and labor - are involved in the creation of the gross national product.

The three-factor model of economic growth takes into account all three factors of production, as well as scientific and technological progress.

7. Problems of ensuring economic growth in Russia:

– reduction of industrial production. The main growth of the economy and exports is still based on the extractive industries, which gives only a formal reason to talk about any success;

– continued problems in agricultural production;

– the country receives a small amount of foreign investment;

- in most modern market economies, small and medium-sized enterprises (not more than 50 employees) are the main driving force behind development, competition and innovation processes. The support of the state of small business for its active development is required:

– further reform of the tax system and radical changes in the field of tax administration are needed;

- corruption. The fight against corruption in modern conditions is becoming a necessary and rather powerful factor in accelerating economic growth in the country;

- Inflation depreciates not only the currency, but also incentives to work, the entire system of macroeconomic regulation as a whole.

Basic terms

Issues for discussion

1. What is economic growth? Give a definition.

2. Name two main types of economic growth.

3. Economic growth can be measured three ways. Name them.

4. Name the main factors of economic growth.

5. Name the models of economic growth.

6. What is a two-factor model?

7. What is a three-factor model?

8 What is a multivariate model?

9. Name the problems of ensuring economic growth in Russia.

Tests

1. The law of diminishing productivity of factors of production operates in the economy. How is economic growth supported under these conditions:

a) fewer and fewer production resources will be required;
b) more and more resources will be required;

c) the increase in additional resources will not increase, but will reduce the total volume of production?

2. An increase in the volume of productive resources expands the ability of society to:

a) improvement of production technology;

b) raising the standard of living;

c) an increase in the production of goods and services.

3. In the long run, the level of output is determined by:

a) the preferences of the population;

b) the value of aggregate demand and its dynamics;

c) the amount of capital and labor, as well as the technology used.

4. What is meant by the category "extensive factors":

a) an increase in labor productivity;

b) reduction of labor resources;

c) an increase in the volume of investments while maintaining the existing level of production technology?

5. Intensive factors include:

a) expansion of production capacity;

b) growth of labor productivity;

c) decrease in return on assets.

Literature

1. Economic theory: textbook for universities / ed.: A. I. Dobrynin, L. S. Tarasevich. − 4th ed. - St. Petersburg: Peter, 2010. - 560 p.: ill. - (Ser. "Textbook for universities").

2. Course of economic theory: textbook. / under. editors: M. N. Chepurina, E. A. Kiseleva. – 5th ed. correct, add. and reworked. - Kirov: ASA, 2006. - 832 p.

3. Economic theory: textbook. allowance / ed.: A. G. Gryaznova and V. M. Sokolinsky. - 2nd ed., revised. and additional - M.: KNORUS, 2005. - 464 p.: ill.

The mechanism of state regulation.
financial policy

13.1. The role of the state in a market economy.

13.2. Finances and the financial system of the state.

13.3. Taxes and the tax system.

13.4. State budget and public debt.

13.5. Fiscal policy of the state.

13.1. The role of the state in a market economy

In a broad sense, the role of the state in the regulation of a market economy is to spread the macroeconomic impact of the political system on the national economy.

Ideas about the role of the state, the degree of its impact on the country's economy have a long history. It should be noted that the role and functions of the state change as the market economy itself develops.

Historically, the first concept of the role of the state in a market economy is the concept of the classics of the political economy of capitalism. Many prominent economists of the 19th and early 20th centuries, who entered the history of economic thought as representatives of classical political economy(David Ricardo, John Stuart Mill, Alfred Marshall and others) believed that the market system is capable of ensuring the full use of resources in the economy. From the point of view of the classics, such levers of market regulation as fluctuations in the interest rate, on the one hand, and the elasticity of the ratio of prices and wages, on the other hand, are able to maintain full employment and that, acting together, these two regulatory mechanisms have turned the full employment of available resources into inevitability. Capitalism began to be perceived by them as a self-regulating economy in which full employment is considered the norm. State assistance in the functioning of the economy was considered unnecessary and even harmful. The logic of the classical theory led to the conclusion that the most acceptable is the economic policy of state non-intervention.

A. Smith, in particular, argued that the desire of producers to achieve their private economic interests and the presence of competition from contractors in the market is the main mechanism for the development of a market economy, which leads to an increase in the wealth of each producer and society as a whole.

In the economic sense, state intervention at an early stage in the development of capitalism was reduced to two main functions: the legislative protection of private property rights and the independence of decision-making, i.e., the protection of freedom of economic choice. The economic role of the state in the 18th-19th centuries consisted in the protection of these primary rights.

The end of the 19th century was characterized by a deepening of the social division of labor under the influence of the acceleration of the pace of scientific and technological progress and the emergence of new industries. To ensure the normal functioning of individual capitals, there was a need for coordination and anti-crisis regulation.

World crisis 1929–1933 and the Great Depression forced a revision of the classical theory of the role of the state in a market economy.

In 1936 the leading English economist John Maynard Keynes after the end of the Great Depression of the 1930s, he developed a comprehensively substantiated theory of the objective necessity of state intervention in the market economy. J. Keynes identified the relationship between the main macroeconomic indicators and took practical measures to implement them through government decisions, while putting forward a new explanation for the level of employment in the capitalist economy. According to this theory, under capitalism there simply was no mechanism to guarantee full employment, full employment is more random than regular, capitalism is not a self-regulating system capable of endless prosperity. Thus, J. M. Keynes in his writings laid the theoretical foundations of macroeconomics, or the national economy - the sphere of state activity.

Representatives of modern economic thought believe that the economy cannot run itself without state intervention, even if it is directed by the ubiquitous and "invisible hand" of personal gain.

In a modern market economy, there are many reasons that cause the objective need for government intervention to prevent or mitigate the negative impact of the market. All these reasons are connected with the very essence of the market economy and its imperfection.

As you know, there are economic problems that are commonly called fiascos (failures, insolvency) of the market, that is, situations where the market (price) mechanism cannot allocate resources efficiently. First of all, market forces are not enough to maintain such a volume of national production that would ensure full employment of the productive resources available in the economy, as well as to maintain a stable price level. In this case, it is necessary to use the mechanism of state regulation.

A market free from any state intervention can only be a theoretical abstraction. The economic reality is that the state is an active participant in market relations. Already in the period of free competition, a significant part of the productive forces outgrew the framework of classical private property and the state was forced to take on the maintenance of large economic structures: railways, post, telegraph, etc.

In conditions of monopolistic competition, when production began to be characterized by great complexity, capital and energy intensity, the monopolies themselves turned out to be interested in strengthening the regulatory role of the state, in constant support from it in the domestic and foreign markets. The current effort of interstate integration leads to the fact that common economic processes step over national borders, form new socio-economic tasks related to defense, science, ecology, and reproduction of labor force. The market mechanism is not able to solve all the problems of economic growth. Along with the driving forces, it also contains elements that hinder economic development. This was also observed earlier, when equilibrium in the economy was achieved with underemployment of resources and, above all, labor force.

The decline in production, mass unemployment, the depreciation of money, the growth of crime adversely affect the bulk of the country's population, causing an increase in social tension. Thanks to state intervention (redistribution of income, flexible credit and financial policy, development of state entrepreneurship, etc.), the economic crisis of 1929-1933. was the last destructive socio-economic phenomenon in the world economy of the 20th century.

The state is now able to modify the economic cycle, reduce the depressive phase of the cycle to a minimum, and reduce economic losses. In the 21st century, the importance of state intervention in the socio-economic life of society is increasing, acquiring new features. The 21st century is the century of mankind's entry into the post-industrial era of development with its new productive resources - information and knowledge, the formation of a new factor of production - intellectual capital. In connection with new trends in the socio-economic development of the world economy, nation states, along with traditionally performed functions (redistribution of income through taxes and transfers, maintaining the stability of the country's monetary system, reducing inflation and unemployment, etc.), are called upon to increase investment and its influence on the development of fundamental research, infrastructure and education (especially higher and higher education).

The active participation of the state in economic life is due to the following main reasons:

First of all, this is required by the "core" of the market mechanism - competition. The development of monopolies undermines the competitive beginning of a market economy, adversely affects the solution of macroeconomic problems, and leads to a decrease in the efficiency of social production. Therefore, the omnipotence of the monopolies must be opposed by the legislative and other anti-monopoly activities of the state.

The first experience of organized antitrust activity of the state was laid down by the adoption of antitrust legislation in the USA in 1890 (the “Sherman Law”). Later, similar laws appeared in other countries. Antimonopoly legislation is aimed at maintaining such a structure of production that would allow it to remain competitive.

Secondly, there have always been such types of production that "reject" the market mechanism. First of all, this is production with a long payback period of capital, without which society cannot do, and the results of which cannot be measured in monetary terms, for example: fundamental science, maintaining the country's defense capability, law enforcement, maintenance of the disabled, organization of education, healthcare, creation and maintenance normal functioning of the general economic structure (money circulation, customs control, etc.).

Thirdly, there are reasons arising from the limited capabilities of market self-regulators: ensuring a balance in the economic system, maintaining employment at the required level, legal support for the functioning of the market mechanism, developing a theory of public choice and principles of rational economic behavior.

In the development of the economy, the state is called upon to correct those shortcomings that are inherent in the market mechanism. The market does not contribute to the conservation of non-reproducible resources, environmental protection, and cannot regulate the use of resources that belong to all mankind (the fish resources of the ocean). The market has always been focused on meeting the needs of those who have money.

Summarizing, we can say that the strengthening of the economic role of the state in a market economy is usually associated with "failures", "fiasco" of the market - cases when the market mechanism does not ensure the effective use of the limited resources of society. Market failures include:

Monopolization (transition from perfect market to imperfect market competition);

Failure to conserve non-renewable resources and protect the environment;

Irrational distribution of society's resources;

Lack of market interest in the production of public goods;

Uneven distribution of income;

Instability of macroeconomic development.

"Failures" of the market, as well as a number of external factors (the existence of socialist countries in the recent past, the collapse of the world colonial system, increased competition in world markets) led to the increased participation of the state in the economic life of society.

Based on the foregoing, the need for state intervention in a modern market economy should be based on the principles of protecting national socio-economic interests, the interests of society as a whole.

What indicators are used to evaluate the scale of economic activity of the state? There are several opinions on this issue. For example, in the course of Marxist political economy, it is customary to use mainly statistical data on the share of employees in state enterprises and on the share of output of state enterprises in the total volume of goods produced.

In modern science, this approach is not rejected, but it does not enjoy due authority. The most representative indicator is the share of government spending in GDP, the so-called government quota. At the same time, the idea is taken as a basis that the fullness of the state's activities is most fully reflected in the scale of its financial costs, implemented through the budget. The purely production activity of state enterprises does not fully reflect the entire sphere of economic activity of the state (for example, in the social field).

Various definitions are given in the economic literature. economic policy.The broadest concept of this economic category is that economic policy is usually understood as a strategy developed by the state for the behavior of all power structures, aimed at achieving their socio-economic goals.

Under the concept "subject of economic policy" usually refers to the state itself. This view is simplistic. Economic theory takes a broader approach. There are several subjects of economic policy. These include the following:

1. The state: endowed with power precisely so that it can connect the interests of various groups among themselves, encourage them to be active in order to achieve certain common goals. Within the framework of the state system of government, there is a division of power functions. At the parliamentary level, discussions and principal approval of the main directions of economic policy take place. Responsible for its implementation is the executive branch - the government. It, in turn, transfers the rights (and tasks) for the implementation of the policy to institutional bodies. The nature of the division of functions depends on the type of organizational and political structure of the state itself. It is known that it can have federal, confederal, centralized and other structures. In the federation, it is customary to distinguish three levels of subjects of economic policy: federal, regional and local.

2. Regional, local institutional formations included in the state.

3. Non-state unions, associations: these include various associations that express the interests of certain strata and groups of the population. These are, first of all, trade unions, unions of entrepreneurs, cooperatives, etc. Religious and cultural organizations also play a certain (albeit rather modest) role in implementing the social aspects of economic policy.

It is necessary to pay attention to the fact that the mode of action of these subjects is different. The state is endowed with political and economic power. Unions, associations can rely only on their economic strength - they have no legislative power.

Objects of state regulation are:

– economic cycle;

– sectoral and regional structure of the economy;

– conditions for capital accumulation;

– employment and prices;

- money turnover;

– conditions of competition;

– the state of the environment;

– foreign economic relations, etc.

main goal The economic policy of any state is to achieve the well-being of the country's population, the growth of its income and, accordingly, consumption.

There is a group of economic theories, which is called the theory of economic welfare. Its supporters make attempts to define the concept of well-being, which seems to be very difficult, since the assessment of this category by an individual is largely subjective. A distinction is made between economic welfare, social welfare and the welfare state.

economic well-being is that part of well-being that is determined by the consumption of goods and services. According to A. Pigou, this part can be expressed in monetary terms and, therefore, objectively evaluated.

public welfare- the well-being of society as a set of individuals and groups. Unlike the economic one, it includes a subjective, individual-evaluative side.

welfare state- a state where the government sets the main goal of economic policy to achieve welfare for each member of society.

Welfare is also studied using the welfare function, which is a variant of the utility function:

U = U(X, Y, Z, …),

where X, Y, Z are the quantities of consumed goods.

In addition to the main goal of economic policy, there is a set second level goals, which include:

– free development of society;

- legal order;

– external and internal security.

Achieving these goals provides the fundamental, so-called framework conditions for the existence of a market-oriented society.

The classification in the main objectives subgroup has changed over time. The first, which became "classical", was given by A. Smith. Based on the work of F. Bacon and V. Petty, he put forward the following list of goals:

1) ensuring safety in relation to the external environment;

2) creation of a legal order;

3) provision of infrastructure by the state.

Subsequently, economists developed this classification, making it much more extensive. It is indicative that goals related to the free development of society are now put forward in the first place.

Having considered the main objectives of economic policy, let us turn to the totality practical goals. They are methods for achieving the highest goal - ensuring the welfare of the nation. In practice, they are implemented as a desire for maximum GDP growth. At the same time, the task of the state is to pursue such an economic policy that the scale and proportions of the GDP created are as optimal as possible.

However, in real practice, focusing on the GDP growth indicator is rather complicated. This index does not accurately reflect the level and quality of life.

When using the GDP indicator as a criterion for the level of well-being, it is important to take into account not only its absolute, but also its relative volume, i.e., GDP per capita. At the same time, the proportion between the growth rate of GDP and the increase in the population of the country decides a lot. If population growth is faster than the increase in GDP (as is currently the case in some developing countries), then the real level of welfare, despite the absolute growth of GDP, falls.

There is another weakness of the GDP indicator in relation to the assessment of the level of well-being. This estimate, as is well known, is determined not only by the volume of the product produced, but also by the nature of its distribution. A certain rate of GDP growth does not unequivocally show a similar increase in the welfare of the entire nation.

All this leads to the conclusion that the formulation of the main goal of economic policy as the growth of welfare does not provide precise and unambiguous economic guidelines for the specific development of a strategy. That is why, in specific practice, the introduction of a system of more particular, clearly defined targets is required.

The economic policy of the state is also a process of solving certain tasks.

In addition to compensating for the fiasco of the market, the state also performs such an important task as legal support for the functioning of the market mechanism. The market is a system of voluntary exchange. In this regard, it is necessary to create a legal framework that protects economic entities from violence (deception, theft, extortion). Here it is necessary to recall that the state in the broad sense of the word means "a set of institutions that have the means to legal enforcement, which are used in a certain territory and in relation to its population, denoted by the term "society".

Legal protection of producers and consumers is the most important task of the state. First of all, the right of ownership must be secured. An owner who is not sure of the inviolability of his property will be afraid of its alienation and will not be able to use his creative and material potential to its full potential. Therefore, it is necessary to have legislation providing for the specification of property rights.

The state develops laws regarding the protection of intellectual property, the activities of the banking sector and other areas of economic life. For example, criminal legislation against theft, violence, murder, creates a more stable situation in the country and also improves the functioning of the market.

Thus, the state comes to the aid of the market in those areas where the market fails.

It should be noted that the influence of the state on the economy cannot be arbitrary. The competitive market "dictates" its requirements to the economic actions of the state. The use of "external" regulators should not lead to a weakening of market incentives. Otherwise, society is faced with such phenomena as the breakdown of the monetary system and public finances, with the interweaving of unemployment with rising inflation, etc.

In a mixed economy, the government is fully integrated into the circulation of material and monetary resources that form the economic mechanism. All really functioning economic systems are “mixed” systems; everywhere government and the market system share the function of answering the central questions of economics:

1. What and how much should be produced? To what extent or what part of the available resources should be borrowed or used in the production process?

2. How should these products be produced? How should production be organized? Which firms should produce and which technology should be used?

3. Who should receive these products, how should they be distributed among individual consumers?

Different economic systems of the world and individual states differ from each other in the ratio of the roles of the government and the market in managing the economy. The differences relate to the set of methods and forms of regulation, the limits of one form or another, as well as the direction of economic regulation.

Based on world experience, all the tasks that can and should be resolved at the level of a modern state can be reduced to the following:

1. Ensuring the development of basic industries: energy, metallurgical, fuel industries, stimulating new industries.

2. Strategic forecasting of the development of science and technology, long-term forecasting of the development of the economy as a whole, assessment of the socio-economic consequences of scientific and technological progress from a national standpoint.

3. Coordination of society's efforts to protect and improve the environment.

4. Creation of industrial and social infrastructure: transport, communications, culture, education, healthcare.

5. Development and provision of social guarantees, especially for groups of the population that cannot fully engage in socially useful work.

6. Maintaining the normal state of the monetary and financial system.

None of these tasks can be solved at the level of an enterprise, corporation, industry or region. This is the exclusive prerogative of the state.

In economic theory, the field of activity of the state (government) is characterized by the functions performed by it.

Before dwelling on the functions of the state in more detail, it is necessary to consider the spheres of its activity. These include, in particular: the production of public goods, minimization of negative and encouragement of positive externalities, suppression of asymmetric information, protection of competition, smoothing of macroeconomic fluctuations, income maintenance policy. In all these cases, the state contributes to minimizing the transaction costs associated with the operation of the market mechanism. This provision is not entirely new to us, since institutions contribute to saving transaction costs by facilitating the coordination of the actions of economic agents.

Economic functions of the state very diverse, among them are:

1) ensuring the legal basis for the functioning of private business (defining the "rules of the game" for economic entities) - reasonable, stable, binding legislation is the key to the successful functioning of a market economy;

2) protection of competition - the monopolization of the economy has a number of negative consequences: there is a shortage (underproduction) of goods, overpricing, average costs do not reach a minimum, etc. It is impossible to solve this problem using exclusively market methods. That is why antimonopoly activities and maintaining competition are becoming one of the main functions of the state;

3) redistribution of income through a system of progressive taxation and transfer payments (pensions, benefits, compensations, etc.). In the distribution of income, the market system can generate large inequalities. In stable states, governments develop and implement social security programs, set minimum wages, unemployment benefits, fix prices in order to increase the incomes of certain groups of the population, establish differentiated tax rates on personal incomes of the population. Thus, governments regulate the distribution of income through direct intervention in the functioning of the market and indirectly through a system of taxes and other payments. Through the mechanism of taxation and government spending on social security, an increasing share of national income is transferred from the relatively rich to the relatively poor;

4) financing of fundamental science and environmental protection;

5) financing of national defense, maintenance of public order, socially normal living conditions, education, medical care, etc.;

6) changing the structure of production in order to adjust the distribution of resources, taking into account the negative and positive external effects arising in the economy - effects attributable to third parties (not participating in a market transaction).

There are two main ways to minimize negative externalities. The first way is to take administrative measures in relation to those whose activities cause negative externalities. The state is entrusted with exercising control over activities that generate negative externalities using administrative-command measures, penalties, market licenses for waste disposal to a certain level of environmental pollution, etc. With the help of these measures, the state contributes to the creation of market mechanisms to combat negative external effects. Another way to deal with negative externalities is an indirect method, which is carried out through the tax sphere. Its essence lies in the fact that producers, who are the main culprits of negative externalities, are taxed, which forces them to change their behavior in a certain sense.

In addition to negative externalities, as we know, there are also positive externalities, when not only the direct consumer of this good, but also “third parties” benefit. “Third parties” here, as a rule, refers to society as a whole.

The state encourages activities that generate positive externalities. For this purpose, producers or consumers of positive externalities are subsidized. As a rule, the government seeks to provide a subsidy to someone with a large income elasticity of demand, since the sensitivity of demand for goods after a subsidy will be higher. The state subsidizes health care, education, various charitable programs, since not only the direct recipients of the benefit, but also society as a whole benefit from the implementation of activities in these areas: after all, the more healthy, educated and cultured people there are in society, the lower the transaction costs of coordinating activities between people. Therefore, other things being equal, such a society has more prerequisites for economic growth;

7) control and regulation of the level of employment, prices, economic growth rates, as well as smoothing macroeconomic fluctuations. The function of the government to stabilize the economy is to help the private sector to ensure full employment of resources and a stable price level. The level of production directly depends on the total volume of expenditures. A high level of total spending means that it is beneficial for many industries to increase output, a low level will not ensure full employment of resources and the population. Any government should, on the one hand, increase its own spending on public goods and services, and on the other hand, cut taxes in order to stimulate private sector spending. Another situation may arise if society tries to spend more than the productive capacity of the economy allows. The excess of total expenditure over the value of the product at full employment will cause an increase in the price level. Excessive total spending is always inflationary. The phenomenon of cyclicality inherent in the market gives rise to a lot of economic problems that the market itself is not able to cope with. Therefore, counter-cyclical policy is the prerogative of the state;

8) suppression of asymmetric information - for example, those who try to insure their health have more information than those who provide insurance services. In this regard, due to asymmetric information, private insurance companies may refuse to insure certain types of risks, and then the state does this. The state can smooth out the asymmetry of information by controlling the quality of goods and services, disseminating information that consumers need, preventing the dissemination of misleading advertising, etc. Legislation in the field of consumer protection is of great importance. Serious sanctions are taken against the sale of low-quality goods, the provision of false information about the activities of firms, etc. The state, providing consumers with information about the quality of goods, the degree of risk in the areas of investment and insurance, etc., thereby creates a public good (information) , which is used free of charge by all economic entities;

9) financing of production or direct production of public goods and services. An important function of the state in a market economy is the production of public goods. The peculiarity of public goods is that their utility extends to more than one person (example: national defense, bridges, flood protection, etc.), they cannot be provided to one person without providing others. The production of such goods is unprofitable for the private sector, but since they are necessary for society as a whole, the state takes over their production.

Distinctive features of public goods (in comparison with private, individual) are:

Non-excludability - an individual cannot be excluded from the consumption of public goods (a person cannot be excluded from the consumption of street lighting or traffic light services). The private sector has no incentive to produce such goods, since the positive externality from their creation and consumption can be enjoyed by anyone, regardless of whether they paid for these goods or not;

Indivisibility - it is impossible to divide the services of law enforcement agencies into all residents of the country;

Independence of production costs from the number of consumers (if a traffic light is installed, the costs of its production and installation do not depend on whether 100 or 1000 people cross the street every day);

Non-rivalry - public goods do not compete with each other;

The benefits received by consumers of public goods are not associated with their purchase (as is the case with private goods), but with their production (a bridge built across the river allows the consumer to receive benefits, although he, as a rule, does not pay, “does not buy” the passage through bridge). It is customary to distinguish between pure public goods and mixed public goods. Pure public goods have properties to a pronounced degree. The classic example is national defense. For mixed public goods, individual properties may be less pronounced. An example of a mixed good is roads. In some cases (in case of traffic congestion), a fee is charged at the entrance for certain sections. As competition increases on congested highways, non-excludability from consumption is undermined by the introduction of tolls on congested sections of the road.

Goods that do not have these properties at all are called "private" and are produced on a market basis. To acquire a private good, one must pay for it;

10) development of foreign economic policy and regulation of foreign economic relations is an exclusive function of the state. The goal of the foreign economic policy of any country is to protect and implement national economic interests, solve foreign economic problems on a mutually beneficial economic basis, and ensure the economic security of the country. A well-thought-out, flexible protectionist policy of the state is essential in achieving these goals.

State protectionism is a system of relations that the state enters into as a spokesman for the interests of the national economy with internal and external economic entities regarding the creation and maintenance of the best conditions for the development of the national economy (in general), ensuring the sovereignty of economic development, maintaining and improving the country's position in the world economy.

It is necessary to distinguish between the narrow and broad meaning of the concept of "protectionism". In a narrow sense, protectionism is limited to the sphere of trade and is aimed at protecting national producers in the domestic market.

In a broad sense, protectionism is a system of protective measures covering the entire process of reproduction and aimed at realizing long-term national economic interests before foreign economic expansion.

In the framework of the policy of protectionism, the state protects broad public interests. Defending the economic interests of the nation, protectionism is an institutional regulator of the immunity of the national economy.

State protectionism is carried out in three directions:

1) to prevent an existing or potential threat to national economic interests from external forces - defensive or passive protectionism;

2) to create especially favorable conditions for the accumulation of domestic capital in order to accelerate economic growth and stabilize the entire national economy - active protectionism;

3) to strengthen the competitive opportunities of national entrepreneurs and enter the world market - offensive protectionism.

When developing foreign economic policy, it should be taken into account that protectionism and free trade are two interrelated contradictory processes in market conditions, in the development of which two trends can be distinguished.

The first is the struggle between protectionism and free trade in the same period. In this case, two participants in this struggle can be traced - large commercial and financial capital with the protection of free trade and productive capital, which is interested in protecting domestic producers from foreign competition.

The second trend is the struggle of these two tendencies (protectionism and free trade) over time. The bottom line is that when domestic production is just gaining strength, it is interested in implementing a protectionist economic policy. But as domestic production accumulates and grows, there is an interest in the free market.

The leading countries are interested in free trade. In practice, the policy of free trade for economically developed countries is a continuation of the policy of protectionism. Developed countries have had a long period of tough protectionism in their history. It should be noted that even now they are pursuing a selective policy of protectionism and tough trade (ensuring defense capability or national security, protecting young and weak industries from dumping, etc.).

In the implementation of protectionism in foreign economic policy, the state uses a whole system of economic institutions (benefits and restrictions, tariffs, duties, quotas, licenses, state legislation), determines the order of economic relations between economic entities and foreign countries.

Russia's foreign trade relations during the years of reform were characterized by the absence of any well-thought-out protectionist state policy. In this area of ​​activity, as well as within the country, the government has essentially abandoned comprehensively justified cost-effective regulation. Having opened the domestic market for foreign producers and destroyed the manufacturing industry, the government has focused its interests on raw material exports, which makes the Russian economy unstable and dependent on the outside world.

The Russian economy and Russia's national interests require the development and implementation of a flexible, comprehensively thought-out protectionist policy of the state in all three directions.

The performance of complex functions of regulating market relations can be effective when powerful economic control levers are concentrated in the hands of the state, when it is itself economically strong.

The state has economic and means and tools that allow it to achieve effective results in economic regulation.

The material means of influencing economic development are state property, the country's budget, gold and foreign exchange reserves, and the issue of money.

The instruments of state regulation are the rules, norms and institutions that implement them, allowing the state to exercise its regulatory role. The main instruments of state regulation include: licensing, regulation, antimonopoly prohibitions, quotas, standards, regulations;

– government orders, loans, grants and subsidies;

- forecasts, plans, programs;

– taxes, tax incentives, customs duties, discount rate, required reserves ratio, open market operations, foreign exchange interventions, etc.

The goals and objectives of macroeconomic policy are implemented through state regulation. We single out the main methods of state intervention in the economy.

1. Administrative methods: involve the expansion of state ownership of material resources, management of state enterprises, lawmaking. These methods are based on the power of state power and include measures of prohibition, permission, coercion and persuasion, they limit the freedom of economic choice. Administrative measures are based on relevant legislation – on property, transactions, contracts and obligations, consumer protection, labor and social security, nature protection, taxes, restriction of monopolistic activities, etc.

2. Economic methods: they imply the preservation of freedom of choice, they involve the impact of the state on the economic interests of economic entities, the creation of their material interest in choosing such a line of behavior that contributes to the ongoing state policy. Economic methods are divided into:

Direct: designed to influence certain industries, corporations (for example: government subsidies to corporations, direct government investments, benefits, subsidies, etc.). These include the activities of the public sector - the totality of enterprises, institutions and other organizations owned in whole or in part by the state. State entrepreneurship (production, purchases, sales of goods, investments) has a great influence on the development of the private sector and the economy as a whole;

Indirect: they equally affect all economic entities of a market economy, without creating any competitive advantage for anyone. They involve the implementation of state regulation through the use of the main instruments of state economic policy, which include: fiscal (fiscal) policy - maneuvering budget revenues and expenditures and monetary (monetary) policy - regulation of the amount of money in circulation in order to influence the economy.

In practice, indirect methods prevail over direct ones. Indirect methods are perceived by commodity producers as inevitable, while direct methods cause a certain alertness.

Legal legislation and the institutions that practically implement it form the basis of the economic role of the state in a market economy. Legislation establishes the "rules of the game", or the legal principles of interaction of all economic entities in society - producers, consumers, the state. Among these rules, one should single out legislative and regulatory acts that determine the status of private property, forms of entrepreneurial activity, the conditions for the functioning of enterprises and their interaction with each other and the state. Legal forms apply to problems of product quality, issues of relations between the labor collective and the administration, compliance with safety and health protection at enterprises.

The adopted laws allow the state to prohibit certain types of activities (for example, the sale of drugs and weapons), as well as to apply sanctions in case of violation of the country's legislation.

Legislation is designed to ensure the normal implementation of economic activities by all entities. The laws and mechanisms that ensure their implementation contribute to the achievement of a compromise (coordination) between the numerous, always economically contradictory, interests of the subjects of a market economy. If the state manages to find a coordinated solution in the system of economic interests of economic entities in society, then the solution to the problem of state regulation can be recognized as basically effective.

To develop an effective economic policy in countries with developed market economies, forecasting and programming methods are used.

Economic forecasting- this is a system of scientific ideas about the direction in development and the future state of the economy as a whole, as well as its individual elements. The method of economic forecasting consists in the quantitative and qualitative processing of the collected information on the socio-economic state of the national economy at the moment, identifying regular trends in its change, allowing you to get an idea of ​​the main directions of the state and development of the country's economy in the future. The use of modern methods for collecting and processing factual material using the latest computer technology allows not only to quickly process a huge amount of factual data, but also to build a lot of scenarios and possible options for the socio-economic development of the country. Economic forecasts can be refined and revised in accordance with prevailing conditions in the country at a given time.

Economic forecasts serve as the basis for the development of socio-economic programs designed to be implemented within the time frame provided for in the program. The program is concretized according to the spheres of activity of the state, tasks to be performed, quantitative parameters in each area. In addition, the program provides for the expected results from its implementation.

State programming is the highest form of state regulation and involves the integrated use of all methods of state regulation to achieve certain economic goals.

The objects of programming are industries, regions, the social sphere, scientific and technological progress, employment, economic growth rates, foreign trade, etc.

Programs are classified according to various criteria. According to the terms, short-term, medium-term and long-term programs are distinguished. By type of program are divided into:

- targeted (programs for the development of any industry or region, a certain area of ​​scientific and technical progress or employment, for example, youth);

– nationwide (stabilization or development of the economy as a whole);

- emergency (fight against inflation, mass unemployment, social protection of the poorest population, etc.).

Programming stages:

1) formation of the target function;

2) development of several options for economic policy that ensure the achievement of the goal;

3) budgeting for individual options, determining the system of management and control over a particular policy;

4) choice of program.

The difference between programs developed in a market economy and plans adopted in an administrative-command (planned) economy and which were of a directive nature lies in their recommendatory-indicative (positive) character.

Thus, state intervention in the modern market economy is objectively necessary. However, the measure, methods and scope of this intervention cannot be borrowed from other countries and cannot be constant for each country, since the conditions of production and the socio-economic situation in the country change. Only the main principle of state economic regulation remains unchanged - to correct the imperfections of the market economy, with which it cannot cope or solves it economically and socially inefficiently.

The modern economy of most countries is neither purely market nor entirely state-owned. “Two components - the market and the government - are necessary for the sustainable functioning of the economy. Running a modern economy without them is like applauding with one hand.” Thanks to state intervention in the work of markets, developed countries have managed to significantly reduce the amplitude of cyclical fluctuations, relieve the severity of crisis phenomena and achieve significant progress in economic development. The macroeconomic role of the state is manifested through the conduct of monetary and financial (budgetary) policy.

Judging by the clearly defined trends in the socio-economic development of modern society, the role of the state in a market economy will increase. This is primarily due to the aggravation of the need for the state to participate in the formation and development of human and intellectual capital, in financing fundamental scientific research, protecting the natural environment, etc. The state can solve these problems, relying only on an efficiently functioning national economy, in creating conditions for which the state is indispensable.

13.2. Finance and financial system of the state

In a market economy, finance occupies a special place, since it is financial flows that reflect the quantitative and qualitative aspects of the use of factors of production, trends in the development of the country's economy, as well as regions, enterprises and corporations. Efficient financial relations are a complex lever for the development of production and the acceleration of economic growth in any state.

Mankind in the process of evolution has gone from direct commodity exchange to commodity-money relations, in which money has become the universal equivalent, and the state, in the development of its activities to manage economic and social processes, began to keep records of income and expenses in monetary form, forming various monetary funds.

Finance as a historical category appeared simultaneously with the state during the stratification of society. As a result of the first major division of society into classes, slave owners and slaves appeared, as well as the first state - the slave state. Then, in the process of development of society, a transition from the slave-owning socio-economic formation to the feudal one followed, which led to the formation of feudal states.

In pre-capitalist formations, most of the needs of the state were satisfied by establishing various kinds of in-kind duties and dues, and the money economy was developed only in the army. With the gradual transition to the capitalist mode of production, money incomes and state expenditures began to acquire increasing importance, while the share of in-kind dues and duties began to decline sharply.

Public finances became a powerful lever for the initial accumulation of capital that took place in the 16th-18th centuries. Huge wealth came to the mother country from the colonial countries, and could at any time be used as capital. State loans and taxes were widely used to create the first capitalist enterprises.

Until the second half of the 18th century, the emergency financial resources for the Russian state and its government were mainly requisitions (compulsory alienation) or forced loans from monasteries and private individuals. The forced nature of the credit relations of the state with the creditors of the treasury was explained mainly by the shortage of free capital in Russia, which could be voluntarily loaned to the government.

At present, finances mediate direct and inverse relationships that arise in the process of formation of funds of funds, act as a kind of complex indicator of the socio-economic development of the country. The solution of a complex of both tactical and strategic socio-economic tasks of the state depends on the effectiveness of the financial mechanism.

In the works of economic thinkers, the definition of the category under consideration is its understanding in a broad and narrow sense. Finance in a broad sense- this is a system of relations in society regarding the formation, distribution and use of monetary funds (in the areas of: public (state) finance, the credit system, branches of the reproduction process, the secondary financial market, international financial relations) in order to fulfill the state's functions and tasks, ensure conditions for expanded reproduction. Finance in the narrow sense only state (public) finances are considered - a system of monetary relations regarding the formation and use of funds necessary for the state to perform its functions.

In domestic literature essence of finance is the subject of discussion. Some economists adhere to the so-called imperative concept of finance.According to this concept, finance arose with the formation of the state and in modern conditions perform functions related to the role of the state in the socio-economic sphere.

The most common is distributive finance concept.Its supporters define finance as monetary funds formed in the process of distribution of the gross social product and national income and relations regarding the formation and use of these funds.

There is also reproductive approach in considering the content of finance. Supporters of this concept proceed from the fact that relations regarding the formation of finances arise not only in the distribution of national income, but also in all areas of its movement and, above all, in the sphere of direct creation of national income.

According to the supporters of the distributive concept of the content of finance, their reproductive approach makes it difficult to identify the specifics of financial relations and their place in the system of monetary relations.

If we take into account that finance is the monetary resources necessary to ensure the process of reproduction both within the country and at the level of each enterprise, then the reproductive concept of the financial system is not devoid of economic sense.

Financial resources- an object of financial relations, which is money at the disposal of all economic entities of the country-state, legal entities and individuals. Finance and financial resources are not identical concepts. By themselves, financial resources do not determine the essence of finance, do not reveal their internal content and social purpose.

Section 3. Macroeconomics

Topic 7. Dynamics of economic development

3.7.3. Economic Growth Models

Development of the theory of growth is carried out by economists of various directions.

In the modern economy, there are three main areas of economic growth modeling:

1. Keynesian models of economic growth;

2. neoclassical models;

3. historical and sociological models.

1. Keynesian models are based on the dominant role of demand in ensuring macroeconomic equilibrium. The decisive element is the investment, which, through a multiplier, increases profits. The simplest Keynesian growth model is the E. Domar model - this model is one-factor (demand) and one-product model. Therefore, it takes into account only investments and one product. According to this theory, there is an equilibrium rate of real income growth at which production capacity is used. It is directly proportional to the savings rate and the marginal productivity of capital. Investments and incomes grow at the same constant rate over time.

R. Harrod's model: economic growth rates are a function of the ratio of income growth and capital investment.

2. neoclassical models consider economic growth in terms of factors of production (supply). The basic premise of this model is the assumption that each factor of production provides a share of the product produced. This model is called the production function: the volume of product is determined equal to the sum of the products of each factor and its marginal product. Thus, economic growth is the sum total of these interchangeable factors: labor, capital, land, and entrepreneurship.

3. Historical and sociological models.

R. Solow identified the stages of economic growth:

1. class society:

Static equilibrium of the economic system;

Limiting the possibility of using scientific and technological progress;

Falling per capita income.

2. creating conditions for increasing growth by increasing production efficiency.

3. takeoff stage- due to the growth of the share of investment in the national income. All the achievements of science and technology are actively used.

4. mature society(path to maturity):

High rates of economic growth, in which production growth outpaces population growth.

5. society of high mass consumption:

Durable goods.

Previous

“It is clear that economic growth is an extremely complex phenomenon.

A Satisfactory Theory of Economic Growth

should take into account natural resources,

political institutions, legislation, and

many psychological and social factors.

The development of an overarching theory seems to be

almost impossible task"

Ben B. Seligman

Limited resources, cyclical development have a direct impact on the country's economic growth, which is one of the most important goals of the country's economic policy.

In economic theory, dynamic models of economic growth are developed that help to explore the conditions for achieving the optimal (equilibrium) rate of economic growth for each specific country and develop an effective long-term economic policy.

The economic growth -

Economic growth rates are calculated in terms of real GDP growth rates as a percentage and are usually calculated for the year. However, depending on the nature of the study, this indicator can be calculated for a month, a quarter, a decade, i.e. for any reasonable period of time.

Economic growth can be measured in physical and cost terms. Comparison of production volumes in physical units (tons, kilometers, etc.) helps to avoid errors caused by inflation. However, new and old types of goods and services are not always possible. Therefore, as a rule, a cost measurement is used, cleared (deflated) from price increases.

To measure economic growth, indicators of absolute growth or growth rates of real output in general or per capita are used. For example:

t - time index

The main indicators of economic growth are:

· Increase in the annual volume of gross domestic product (gross national product, national income);

· Increasing the share of gross domestic product (gross national product, national income) per capita.

Economic growth depends not only on general trends determined by medium- and long-term cycles, but also on the level of development of the national economy of the country, the form of the political system, the nature of the policy pursued, and so on.

So, at present, high growth rates are characteristic of countries that are modernizing production with the help of advanced Western technologies. These are the countries of Southeast Asia in the 80s, a number of former socialist countries in the 90s. 20th century High rates (more than 10%) will inevitably lead to the development of inflation in the future.

In Russia, the rate of economic growth in the 90s. - negative, and only in the late 90s. after a deep decline, there was some stabilization, and then an upsurge. In 2003 GDP growth (as a percentage of the previous year) amounted to 7.3%.

Developed countries are characterized by low (1 - 4%) economic growth rates. These countries can no longer freely involve additional labor and natural resources in production. The development of production is carried out by improving existing technologies. In addition, the high level of development of these countries poses such growth-limiting tasks for the economy as protecting the environment and preserving non-renewable natural resources, and improving the quality of life.

§2. Factors of economic growth

The real volume of services produced is the result of the application of factors of production, which include: labor, land and natural resources, capital, entrepreneurial ability, scientific and technological progress.

Obviously, economic growth is achieved through additional costs of production factors that are interdependent and the use of one factor determines the use of another. For example, an increase in production volumes due to additional labor resources will lead to an increase in the cost of raw materials and equipment.

Since economic growth is one of the most important goals of society, it can be assumed that all the resources available in society will be involved in production and that the more resources there are in the country, the higher the growth rate will be. However, in real life, the use of ever new additional resources leads to their rise in price and, accordingly, to an increase in costs, making it unprofitable to increase production. In addition, a purely mechanical increase in the use of resources is opposed by the law of diminishing returns of production factors, i.e. as the use of a factor increases, its marginal productivity decreases.

An excess of free resources can even negatively affect economic growth. For example, the growth of the labor force in African or Asian countries, not accompanied by an adequate growth of capital, requires an increase in spending on social programs. The resulting income is spent on consumption, and the level of saving and investment is insufficient for growth.

In turn, capital surplus, taking the form of excess capacity, stimulates the development of production cost inflation, lower incomes and slower economic growth.

Countries rich in natural resources, as a rule, either begin to trade them, turning into the raw material base of the world economy, or use obsolete material-intensive technologies, gradually lagging behind advanced countries in technical development. States that do not have significant reserves of natural resources are forced to develop resource-saving technologies, develop high-tech industries and advanced manufacturing industries. For example, Switzerland and Japan.

Thus, for economic growth, it is necessary not just to have resources, but to achieve an effective combination of them.

The quality and rate of economic growth directly depend on its type. We can distinguish between extensive and intensive types.

An extensive type of growth is based on the involvement of additional resources in production, while maintaining the level of technology and the quality of the resources themselves. For example, the plowing of new lands, the recruitment of workers to organize work in several shifts, etc.

Intensive type - production growth due to improved technologies, improved quality of resources, increased labor productivity, etc.

Naturally, both types exist simultaneously, dominating each other at different time stages. The predominance of one type or another is determined by the existence of various factors of production.

Extensive factors include the growth of capital and labor costs, while intensive factors include technological progress, economies of scale, the growth of the educational and professional level of workers, increased mobility and improved distribution of resources, improved production management, a corresponding improvement in legislation, etc., i.e. . everything that makes it possible to qualitatively improve both the factors of production themselves and the process of their use. Sometimes, as an independent factor of economic growth, aggregate demand is singled out as the main catalyst for the process of expanding production.

Chapter 2. Types of economic growth models

Most growth models proceed from the fact that the increase in real output occurs primarily under the influence of the growth of the main factors of production - labor. (L) and capital (TO). The “labor” factor is usually weakly influenced from outside, while the amount of capital can be adjusted by a certain investment policy. As is known, the stock of capital in the economy decreases over time by the amount of retirement (depreciation) and increases due to the growth of net investment. It is quite obvious that economic growth is valuable not in itself, but as a basis for improving the well-being of the population, therefore, a qualitative assessment of growth is often given through an assessment of consumption dynamics.

Keynesian models of growth use basically the same logical tools as the Keynesian short-run equilibrium models that we know of. But now the analysis from the side of demand must be combined with the factors that determine the dynamics of supply, and find out the conditions for the dynamic balance of supply and demand in the economy. The strategic variable with which to manage economic growth is investment.

Harrod-Domar model.

The simplest, Keynesian model of growth is the model of E. Domar, proposed in the late 40s. The technology of production is represented in it by the Leontief production function with a constant marginal productivity of capital (provided that labor is not a scarce resource). Domar's model assumes that there is an excess supply in the labor market, which causes the price level to remain constant. There is no capital outflow, the ratio K/Y and the savings rate is constant. The output actually depends on one resource - capital. For simplicity, we can also take the investment lag equal to zero.

A factor in the increase in supply and demand in the economy is the increase in investment.

If in a given period investments increased by A, then in accordance with

With the multiplier effect, aggregate demand will increase by:

where m- cost multiplier b- marginal propensity to consume s- marginal propensity to save.

The increase in aggregate supply will be:

where α - the marginal productivity of capital (according to the condition, it is constant).

capital gain AK provided with an appropriate amount of investment I, so you can write:

Equilibrium economic growth will be achieved if supply and demand are equal:

those. The rate of investment growth should be equal to the product of the marginal productivity of capital and the marginal propensity to save. The value of α is set by the production technology and, in accordance with the accepted assumptions, is constant, which means that only an increase in the savings rate can increase the investment growth rate s(but for the period under consideration it is taken constant).

Since investment equals saving in equilibrium, I = S , a

S = sY for s = const, the level of income is proportional to the level of investment, and then

Thus, according to the theory of E. Domar, there exists equilibrium pace the increase in real income in the economy, in which the available production capacities are fully used. It is directly proportional to the savings rate and the marginal productivity of capital, or capital gains. Investment and income grow at the same constant rate of time.

This dynamic equilibrium turns out to be unstable as soon as the growth rate of planned private sector investment deviates from the level given by the model.

E. Domar's model did not claim to be the theory of growth. It was an attempt to extend the short run Keynesian equilibrium conditions to a longer period and to find out what those conditions would be for an evolving system.

R.F. Harrod built a special model of economic growth (1939), including an endogenous investment function (in contrast to Domar's exogenously given investment) based on the accelerator principle and the expectations of entrepreneurs.

The impact of income on the level of investment is considered using an accelerator.

An accelerator is a numerical coefficient that reflects the impact of changes in the level of total income (production) on the level of induced or derivative investments:

where v - accelerator; I t is the level of derivative investments at a point in time t ; Y t -1 t -1; Y t -2 - the level of total income at a point in time t -2.

Entrepreneurs plan the volume of their own production based on the situation in the economy in the previous period: if their past forecasts regarding demand turned out to be correct and demand completely balanced supply, then in this period entrepreneurs will leave the growth rate of output unchanged; if the demand in the economy was higher than the supply, they would increase the rate of expansion of production; if supply exceeded demand in the previous period, they would lower their growth rate. This can be formalized as follows:

where α=1 if demand in the previous period (t - 1) was equal to the offer; α > 1 if demand exceeded supply and α < 1 if demand was lower than supply. Hence the volume of supply in the economy:

To determine aggregate demand, an accelerator model is used, (and

Also the condition of equality I=S):

Equilibrium economic growth assumes the equality of aggregate demand and supply:

After a little transformation, we get:

Suppose that in the previous period, demand was equal to supply, i.e. α = 1. Then, in accordance with the accepted conditions of behavior, entrepreneurs in the current period will retain the same production growth rates as in the previous period, i.e.

Then the previous expression can be represented as follows:

hence the equilibrium growth rate of output will be:

Harrod called the expression "guaranteed" pace height: by supporting it, entrepreneurs will be completely satisfied with their decisions, since demand will equal supply, and their expectations will come true. This growth rate ensures the full use of production capacity (capital), but full employment is not always achieved.

An analysis of the relationship between the guaranteed and actual growth rates led to the following conclusion: if the supply growth rate actually planned by entrepreneurs differs from the guaranteed growth rate (exceeds or does not reach it), then the system gradually moves away from the equilibrium state.

In addition to the guaranteed growth rate, Harrod introduces the notion "natural" growth rate. This is the maximum rate allowed by the growth of the active population and technological progress.

At this rate, full employment of factors - labor and capital - is achieved. If the guaranteed rate of growth that satisfies entrepreneurs is higher than the natural rate, then due to the lack of labor resources, the actual rate will be lower than the guaranteed one: producers will be disappointed in their expectations, reduce output and investment, as a result of which the system will be in a state of depression.

If the guaranteed growth rate is less than the natural growth rate, then the actual growth rate may exceed the guaranteed one, since the existing labor surplus makes it possible to increase investment. The economic system will boom. The actual growth rate can also be equal to the guaranteed one, and then the economy will develop in conditions of dynamic equilibrium, fully satisfying entrepreneurs, but in the presence of involuntary unemployment.

The ideal development of the economic system is achieved when guaranteed, natural and actual growth rates are equal in conditions of full employment of resources.

But since any deviation of investment from the conditions of a guaranteed growth rate is known to throw the system out of equilibrium and is accompanied by an ever-increasing divergence between supply and demand, the dynamic equilibrium in Harrod's model also turns out to be unstable.

Often both models are combined into one Harrod-Domar model. From both models it follows that under given technical conditions of production, the rate of economic growth is determined by the marginal propensity to save, and dynamic equilibrium can exist in conditions of underemployment.

The limitations of these models are already set by the prerequisites for their analysis. For example, the Leontiev production function used in them is characterized by the lack of interchangeability of production factors - labor and capital, which in modern conditions is not always true.

Paul Romer model

Model with constant savings rate

The problem of the existence of a constant growth in per capita output, which is solved within the framework of the first generation growth models by introducing an external (exogenous) function of technical progress, has another way of solving it. As already noted, constant growth in these models is possible in the absence of a decrease in the marginal productivity of capital. However, such an assumption, which ignores one of the main provisions of economic theory, requires special justification.

The second significant obstacle to the introduction of this provision is the need for a first-degree homogeneity (constant returns to scale) premise for the production function, which follows from the need to comply with the basic identity of the system of national accounts, which implies a complete distribution of the product between factors. A linearly homogeneous function of two or more factors implies a decreasing marginal productivity of each of them.

One of the simplest options for combining these two contradictory provisions - non-decreasing marginal productivity and linear uniformity - is the introduction of external effects (externalities) into the model. This is the basis of one of the first models of endogenous growth - the model of learning by doing (learning by doing, learning by doing, by doing, by doing), first developed by Kenneth Arrow in 1962 and recreated by Paul Romer in 1986 .

The model demonstrates the possibility of the existence of sustainable growth with a constant growth rate based on technical progress, which is a consequence of the training of workers in the process of activity. The output of this process is appropriated by firms as an externality. A constant growth rate depends (version of the model) on behavioral parameters: in the base case, on the rate of intertemporal preferences of consumers (subjective discount rate), it is also possible to introduce a state policy.

Therefore, the model shows the possibility of endogenous growth.

The model assumes the same assumptions that were accepted for the basic models of exogenous growth. The standard neoclassical production function has the same properties as the base model, and Harrod-neutral technological progress is included in it:

Investments correspond to the dynamic equilibrium condition of financial markets:

The population increases at a constant growth rate, which can be either positive or zero:

Technological progress depends on the amount of knowledge of employees acquired in the course of work, on their own experience (learning by doing). The amount of knowledge and skills acquired in the process of work (in a broader sense, the possibility of improvement as a result of this equipment process) depends on the amount of capital involved, or the equipment of each workplace, or the entire amount of capital in the economy. This implies the free flow of knowledge between workers - the effect of knowledge transfusion or spreading. . Firms benefit from this process at zero cost, as an externality from the amount of capital or capital-labor ratio.

1. Thus, the function of employee training in practice can be written in two versions:

a) with the dependence of worker learning in practice on the total amount of capital in the economy:

ϕ - parameter of learning efficiency, elasticity of the stock of knowledge on capital.

Accordingly, the return on training can also be in two versions: constant return ϕ =1, or diminishing returns(0<ϕ <1) (the variant of increasing returns is not considered as not justified by any realistic assumptions, nor does it give a significant result in the model);

The training of an employee in practice depends on the level of capital-labor ratio of each employee:

Dependence on the amount of capital, constant return on training f = 1.

Here the production function of the economy is:

Obviously, in this case there is no sustainable growth, the output growth rate is constantly increasing (explosive growth) and the capital growth rate is expressed by the equation:

Sustainable growth is possible here only if the population growth rate is zero.

Accordingly, this growth rate can be endogenous when savings are optimized, as in the Ramsey model. A sustainable growth rate will depend on a behavioral parameter - the subjective discount rate.

Dependence on the volume of capital, diminishing returns on training 0 < f < 1.

The production function of the economy:

A sustainable economic growth rate is possible with a constant output and capital growth rate:

And, accordingly, output per capita and capital-labor ratio:

The rate of increase in capital-labor ratio positively depends on the effectiveness of training in practice and the rate of population growth.

In the absence of population growth, sustainable growth rates are zero. The growth rate is fixed, therefore, there is a constant but exogenous growth.

Dependence on the level of capital-labor ratio, constant return on training f = 1.

The production function for the economy as a whole is as follows:

For the intensive form of the production function, the equation takes the following form:

In this case, the result corresponds to the elementary model of endogenous growth, the so-called AK-model. The sustainable growth rate of the economy (output per capita and capital-labor ratio) is equal to:

With zero population growth, the sustainable growth rate of the economy will be:

Dependence on the level of capital-labor, diminishing returns on training 0 < f < 1.

The production function in intensive form is expressed as follows:

As in the Solow model, a steady state is reached at zero growth rate of the intensive variables.

Thus, under the basic assumptions of the model, permanent and exogenous economic growth is possible in the second case, and endogenous growth is possible in the third case, as well as in the first, provided that there is no population growth.

Consumption Optimization and Savings Behavior in Competitive Growth

Assume that consumption behavior is inferred from intertemporal optimization:

The real interest rate is equal to the private marginal productivity of capital, namely

This condition is sufficient to determine the overall growth rate.

In the cases discussed above:

the production function of the firm

private marginal productivity

respectively, the equilibrium growth rate

In this equation, where the equilibrium growth rate is located, there is a dependence on the behavioral parameter - the subjective discount rate. Consequently, growth in the model depends on the subjective behavior of economic agents and is endogenous.

Here, for the first time, we encounter the dependence on the size of the economy - the size of the population and workers, the so-called effect of the size of the economy, obtained and noted by Paul Romer. This effect often occurs in endogenous growth models with externalities. Despite the external paradoxical nature of this effect (a larger economy should also have a larger growth, China seems to have a much larger growth than Hong Kong or Singapore), it has a fairly simple explanation.

In this case, we are talking about regions or economies connected by the effect of knowledge spreading, which allows each firm to have an external effect from the total amount of capital and the economy. To eliminate the emerging improbability, it is sufficient to assume a different degree of connectedness of economies by the spreading effect: for the regions of China or Russia, this connection, within and between regions, as well as integration into the world information exchange, can be significantly lower than the connection between the EU countries, for example, or the degree of involvement Singapore in the global process of knowledge spillover. For empirical research, here you can enter the coefficient of the degree of spreading, the spread of knowledge.

In the third analyzed case, the production function, partial marginal productivity and equilibrium growth rate are equal to:

From the equilibrium competitive growth equation with consumption optimization

and the equation of stable equilibrium growth, which is also valid here

we can express a stable savings rate, which for the third case will be equal to:

Accordingly, for the first case under consideration, the savings rate will be as follows:

The savings rate here is a constant value, since on the right side of equations (3-46, 3-47) all parameters and variables are constants. Since the expression in square brackets is positive at a positive growth rate, the dependence on the parameter o (the intertemporal elasticity of substitution of the utility function) is also positive. This means that with higher elasticity (the ability to move utility over time), the consumer will prefer to save a larger share of his income, i.e. postpone consumption. With a negative expression in square brackets, the situation is reversed. Thus, the intertemporal elasticity parameter plays the role of an amplifying factor when expressed in square brackets.

The dependence of the savings rate on the share of capital in income is positive, and on the subjective discount rate it is negative, which also corresponds to the economic meaning of these parameters.

The dependence on the depreciation rate and population for the general case is not defined.

The dependences for the savings rate in the third case are the same with one exception: a positive dependence on the population growth rate has been added.

Optimal growth and non-optimal competitive growth

The competitive growth rate obtained above can be compared with the optimal growth rate.

The first-order condition for optimal economic growth follows from the solution of this system:

1.case:

2.case:

Obviously, the optimal growth rate is higher than the equilibrium g opt >g eq . The reason is that the social glider takes into account the social marginal productivity of capital, which is higher than the private one due to the presence of an externality.

Graphically, this can be shown by displaying (in the coordinates "interest rate - sustainable growth rate") two equations: savings, obtained from the standard condition for optimizing consumption (respectively, savings) Ramsey

and return (social and private interest rates), which is found from the condition:

Robert Solow Model

Neoclassical growth models overcame a number of limitations of Keynesian models and made it possible to more accurately describe the features of macroeconomic processes.

R. Solow showed that the instability of dynamic equilibrium in Keynesian models was a consequence of the non-interchangeability of production factors. Instead of the Leontief function, he used the Cobb-Douglas production function in his model, in which labor and capital are substitutes. Other prerequisites for analysis in the Solow model are: diminishing marginal productivity of capital, constant returns to scale, constant retirement rate, and no investment lags.

The interchangeability of factors (changes in capital-labor ratio) is explained not only by technological conditions, but also by the neoclassical premise of perfect competition in factor markets.

Aggregate demand in the Solow model is determined by investment and consumption:

where i and c are investment and consumption per employee.

Income is divided between consumption and saving according to the savings rate, so that consumption can be represented as

where s – savings (accumulation) rate, then

where. In equilibrium, investment is equal to saving and proportional to income.

The conditions for equality of supply and demand can be represented as

The production function determines the supply of goods on the market, and the accumulation of capital determines the demand for the product produced.

The dynamics of output depends on the amount of capital (in our case, capital per employee, or capital-labor ratio). The volume of capital changes under the influence of investments and disposals: investments increase the stock of capital, disposals decrease it.

Investments depend on the capital-labor ratio and the rate of accumulation, which follows from the condition of equality of supply and demand in the economy: i = sf(k). The accumulation rate determines the division of the product into investment and consumption for any value of k:

Depreciation is taken into account as follows: if we assume that annually, due to the depreciation of capital, its fixed part retires d(retirement rate), then the amount of disposal will be proportional to the amount of capital and equal to dk.

On the graph, this relationship is reflected by a straight line emerging from the point of origin, with a slope d.

The impact of investments and disposals on the dynamics of capital stocks can be represented by the equation, or, using the equality of investment and savings, Capital stock ( k ) will increase (Ak>0) to a level at which investments will be equal to the amount of disposal, i.e. sf ( k )= dk. After that, the stock of capital per employee (capital-labor ratio) will not change over time, since the two forces acting on it will balance each other (Ak=0).

The level of capital stock at which investment equals retirement is called balanced (steady) capital-labor ratio labor and is designated k *. Upon reaching k * the economy is in a state of long-run equilibrium.

The equilibrium is stable because, regardless of the initial value to the economy will tend to an equilibrium state, i.e. to k *. If initial k < k *, then the gross investment sf(k) there will be more dropouts (dk), and the capital stock will increase by the amount of net investment. If a k 2 > k *, this means that the investment is less than depreciation, which means that the capital stock will decrease, approaching the level k *.

The rate of accumulation (savings) directly affects the sustainable level of capital-labor ratio. An increase in the savings rate from s to s2 shifts the investment curve upward from s/(k) to s2(k).

Initially, the economy had a stable stock of capital kx *, where investment equals retirement. After the increase in the savings rate, investments increased by (i 1 ’ - i,), and the capital stock ( kt *) and disposal (dk) remained the same. Under these conditions, investments begin to exceed retirement, which causes the capital stock to rise to a new equilibrium level. k 2 *, which is characterized by higher values ​​of capital-labor ratio and labor productivity (output per employee, y).

Thus, the higher the rate of savings (accumulation), the higher the level of output and capital stock can be achieved in a state of stable equilibrium. However, an increase in the rate of accumulation leads to an acceleration of economic growth in the short run, until the economy reaches a new stable equilibrium point.

Obviously, neither the process of accumulation nor the increase in the savings rate can explain the mechanism of continuous economic growth. They show only the transition from one state of equilibrium to another.

For the further development of the Solow model, two prerequisites are alternately removed: the invariance of the population and its employed part (their dynamics are assumed to be the same) and the absence of technical progress.

Assume the population is growing at a constant rate P. This is a new factor that, together with investments and disposals, influences the capital-labor ratio. Now the equation showing the change in capital stock per worker will look like this:

Population growth, like retirement, reduces the capital-labor ratio, although in a different way - not through a decrease in the available stock of capital, but by distributing it among the increased number of employees. Under these conditions, such a volume of investments is needed that would not only cover the outflow of capital, but would also make it possible to provide new workers with capital in the same volume. Work P k shows how much additional capital is required per worker to keep the capital-labor ratio of new workers at the same level as the old ones.

Accounting for technological progress in the Solow model modifies the original production function. A labor-saving form of technological progress is assumed. The production function will be represented as U - P(K, LE), where E- labor efficiency, a (LE)- number of conventional units of labor with constant efficiency E. The higher E, the more output can be produced by a given number of workers. It is assumed that technological progress is carried out by increasing the efficiency of labor E at a constant pace g. The growth of labor efficiency in this case is similar in terms of the results of the growth in the number of employees: if technological progress has a rate g\u003d 2%, then, for example, 100 workers can produce as much output as 102 workers previously produced. If now the number of employed (L) grows with the pace P, but grows with the pace g, then (LE) will increase with the pace (n + g).

The inclusion of technological progress somewhat changes the analysis of the state of stable equilibrium, although the line of reasoning remains the same.

In a state of stable equilibrium, the capital-labor ratio k "* balances, on the one hand, the impact of investment, which increases the capital-labor ratio, and, on the other hand, the impact of retirement, growth in the number of employees and technological progress, which reduce the level of capital per effective unit of labor:.

At steady state (to" *) in the presence of technological progress, the total amount of capital (TO) and release (U) will grow at a pace (P + g). But unlike the case of population growth, will now grow at a rate g capital-labor ratio and output per one employed; the latter can serve as a basis for improving the well-being of the population. Technological progress in the Solow model is, therefore, the only condition for a continuous increase in the standard of living, since only with it there is a steady increase in per capita output. (y).

Thus, in the Solow model, an explanation was found for the mechanism of continuous economic growth in the equilibrium mode with full employment of resources.

In the neoclassical Solow model, for any savings rate, the market economy tends to a corresponding stable level of capital-labor ratio (to *) and balanced growth, when income and capital grow at (rate (n + g). The value of the savings (accumulation) rate is an object of economic policy and is important in evaluating various programs of economic growth.

Since equilibrium economic growth is compatible with different savings rates (as can be seen, an increase accelerated the growth of the economy only for a short time, while in the long run the economy returned to a stable equilibrium and a constant growth rate depending on the value P and g), the problem of choosing the optimal savings rate arises.

The optimal savings rate corresponding to ≪ golden rule "E. Phelps, ensures equilibrium economic growth with a maximum level of consumption. We denote the stable level of capital-labor ratio corresponding to this rate of accumulation k **, and consumption - with **.

The level of consumption per one employed person at any stable value of capital-labor ratio A: * is determined by a series of transformations of the original identity: y = c + i . We express consumption with through at and i and substitute the values ​​of these parameters that they take in a steady state:

where c* - consumption in a state of sustainable growth, and i = sf(k) = dk to determine the sustainable level of capital-labor ratio. Now from various stable capital-labor levels ( k *), corresponding to different values s, it is necessary to choose one at which consumption reaches a maximum.

Thus, at the level of capital-labor ratio corresponding to the "golden rule" ( k **), condition must be met: RTOs = d(the marginal product of capital is equal to the rate of disposal), and taking into account population growth and technological progress: RTOs = d + p + g.

If the economy in its initial state has a stock of capital greater than follows the "golden rule", a program is needed to reduce the rate of accumulation. This program causes an increase in consumption and a decrease in investment. At the same time, the economy leaves the state of equilibrium and again reaches it with proportions corresponding to the "golden rule".

The considered Solow model makes it possible to describe the mechanism of long-term economic growth, which maintains the equilibrium in the economy with full employment of factors. It highlights technological progress as the only basis for sustainable growth of welfare and allows you to find the optimal growth option that ensures maximum consumption.

The presented model is not free from shortcomings. The model analyzes the states of stable equilibrium achieved in the long term, while short-term dynamics of production and living standards are also important for economic policy. Many of the exogenous variables of the Solow model are s, d, n, g - it would be preferable to define them within the model, since they are closely related to other model parameters and can modify the final result. The model also does not include a number of growth constraints that are essential in modern conditions - resource, environmental, social. The Cobb-Douglas function used in the model, describing only a certain type of interaction between factors of production, does not always reflect the real situation in the economy. These and other shortcomings are trying to overcome modern theories of economic growth.

Chapter 3

The model looks like:

where Y is production output, A is neutral technical progress, K is the amount of capital used, L is the cost of living labor, α 1 , α 2 are the parameters of the function.

Production data available Y), K- the amount of capital used, L- the cost of living labor. Let's create an equation for the production function and evaluate the quality of the resulting model:

First, let's create a pairwise correlation matrix:

From here it can be seen that the factor of neutral technological progress (A) has the greatest influence on the production of products. Here you can also notice that the factors: neutral technical progress (A), the amount of capital used (K) and the cost of living labor (L) are strongly correlated (correlation level< 0.7 – 0.8) между собой, что не является хорошим показателем модели.

Dependent Variable: Y
Method: Least Squares
Date: 12/28/10 Time: 14:10
Sample (adjusted): 1 15
		Mean dependent var
Adjusted R-squared		S.D. dependent var
S.E. of regression		Akaike info criterion
Sum squared resid		Schwarz criteria
Durbin-Watson stat		Prob(F-statistic)

Consider this equation. It is built without taking into account "neutral technological progress", on the basis of the Cobb-Douglas production function.

The neutral type of technical progress is the type when technical progress is accompanied by a proportional increase in the products K (capital) and L (labor), so that the marginal rate of their technical substitution remains constant when moving to the origin.

Let us interpret the coefficients of the model of this equation. With an increase in Capital (K) by an average of 1 (in units of measurement), then output falls on average by 33 (in units of output), with other factors unchanged.

With an increase in the cost of living labor (L) per unit of output, output increases on average by almost 3 times, with other factors unchanged.

The equation itself is statistically significant, because Prob(0.0000) and F is stat= 214.03. Since the model is multifactorial, we also evaluate it by the adjusted coefficient of determination (Adjusted R-squared) = 0.968, because it takes on the increase in the number of factors and shows the tightness of the relationship of the variables in the equation. However, the coefficients in the equation are not statistically significant, which indicates the need to move to another model or some unaccounted for factors in the model.

Let's try to correct this model by adding the factor of "neutral technological progress" to it.

Based on the formula of the R. Solow model, we express the variable A:

Thus, all the necessary variables are found, you can begin the analysis of the model. Let's build the equation of the model by adding the factor of "neutral technical progress" to the previous equation without changing the model's appearance. Accordingly, the model will look like.

Dependent Variable: Y
Method: Least Squares
Date: 12/28/10 Time: 14:08
Sample (adjusted): 1 15
Included observations: 15 after adjustments
		Mean dependent var
Adjusted R-squared		S.D. dependent var
S.E. of regression		Akaike info criterion
Sum squared resid		Schwarz criteria
Durbin-Watson stat		Prob(F-statistic)

Let us interpret the coefficients of the model of this equation. With an increase in Capital (K) by an average of 1 (in units of measurement), then output falls by an average of 2.05 (in units of output), with other factors unchanged.

With an increase in the cost of living labor (L) per unit of production, output decreases on average by almost 3 units of measurement of output, with other factors unchanged.

With a change in neutral technical progress by an average of 1 unit of measurement, output increases by an average of 1.13 units of output.

As can be seen from the equation of the model, its quality has improved. because Prob(0.0000) and F is stat=107 . Since the model is multifactorial, we also evaluate it by the adjusted coefficient of determination (Adjusted R-squared) = 0.99, because it takes on the increase in the number of factors and shows the tightness of the relationship of the variables in the equation. However, the coefficients in the equation are not statistically significant, which indicates the need to move to another model or some unaccounted for factors in the model. The Akaiki and Schwartz criteria are equal, respectively (5.46 and 5.45).

This model is still not very good, because. the free coefficient is not significant (Prob.=0.5), the coefficient at the factor L is also insignificant.

Therefore, it is necessary to change the model itself and evaluate its quality.

The model will look like this:

This model is semi-logarithmic.

Dependent Variable: Y
Method: Least Squares
Date: 12/28/10 Time: 14:10
Sample (adjusted): 1 15
Included observations: 15 after adjustments
		Mean dependent var
Adjusted R-squared		S.D. dependent var
S.E. of regression		Akaike info criterion
Sum squared resid		Schwarz criteria
Durbin-Watson stat		Prob(F-statistic)

Let us interpret the coefficients of the resulting equation as follows: with an increase in the action of neutral technical progress, the production output increases by 0.91 (unit of measurement), all other things being equal.

With an increase in the amount of capital used (K) by 1%, output (Y) increases on average by 2.663 units. products, other things being equal.

With an increase in the cost of living labor (L) by 1%, the output (Y) increases by an average of 0.92 units. products, other things being equal.

The equation is generally statistically significant at the 1% level, as Probobility=0.0000. All coefficients, except for the cost of living labor, are significant at least at the 5% level of significance, since Probobility =0.000, and with log(L) probability =0.19. The Akaiki and Schwartz criteria are equal to (3.27 and 4.47), respectively, which indicates an improvement in the quality of the model.

Since one of the conditions of the model is that in the absence of one of the factors in the model, the output is zero, the exclusion of any of the correlating factors is impossible. Therefore, we choose the third model.

Conclusion

In the course of this work, its purpose and objectives were determined.

The purpose of this work is to study modern models of economic growth. To achieve this goal, it is necessary to solve the following tasks:

· Definition of economic growth , indicators and economic growth factors;

· Identification of types of economic growth;

· Analysis of economic growth models;

· Exploring the Robert Solow Model.

The definition of economic growth, its factors and types is given.

The economic growth is an increase in the volume of goods and services produced over a certain period of time (usually a year).

The economic growth - is the increase in real GDP at full employment as a result of the expansion of a country's productive capacity over a given period of time.

Extensive type growth is based on the involvement of additional resources in production with the same level of technology and the quality of the resources themselves. For example, the plowing of new lands, the recruitment of workers to organize work in several shifts, etc.

Intensive type– growth of production due to the improvement of technologies, improvement of the quality of resources, growth of labor productivity, etc.

Some types of economic growth models are also listed (the Harrod-Domar model, Paul Romer and Robert Solow). And an example is given based on the Robert Solow model.

Bibliography

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textbook - 5th revised, supplemented and revised edition - Kirov: ASA, 2004. - S. 605-644.

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Safronchuk M.V. Economic growth (Ch. 25, paragraphs 1-6) // Course of economic theory: textbook - 5th revised, supplemented and revised edition - Kirov: ASA, 2004. - P. 605-644.

Course of economic theory: General foundations of economic theory. Microeconomics. Macroeconomics. Fundamentals of the National Economy: Textbook / Ed. Doctor of Economics, prof. AB. Sidorovich; Moscow State University M.V. Lomonosov. - 2nd ed., revised. and additional - M.: Publishing house "Delo i Service", 2001. - 832 p. - (Series "Textbooks of Moscow State University named after M.V. Lomonosov").

In some cases, land or natural resources are allocated, but it is considered that

for industrialized countries, they are not particularly important economic factors.

mimic growth. (Sidorovich A.V. Course of economic theory, 2nd ed., 2001)

Borisov E.F. Economic theory: Textbook. - 3rd ed., revised. and additional - M.: Yurayt-Izdat, 2005. - 399 p.

Economics: textbook / A. I. Arkhipov [and others]; ed. A.I. Arkhipova, A.K. Bolshakov. - 3rd ed., revised, and additional. - M.: Prospekt, 2009 -848s.

E. Berndt. The practice of econometrics. Classics and modernity: a textbook for students of higher educational institutions, translated from English. under. ed. prof. S.A. Ayvazyan/E.R. Berndt. - M.: UNITI-DANA, 2005 - 863 pp. ("Foreign textbook series")