A huge contribution to the formation of modern theories of economic growth was made by empirical studies. The purpose of empirical research is to assess the impact of various factors on economic growth. It must be emphasized that it was the factor analysis of the sources of growth that led researchers to a completely new vision of the role and importance of man in the economy.

The American economist is considered one of the most prominent researchers in measuring the contribution of various factors to economic growth. Edward Denison. He divided the factors that explain economic growth into two categories. In the first he included physical factors of production(labor and capital), secondly - labor productivity growth factors.

Based on the analysis of extensive statistical data, Denison proved that the expansion of the use of labor and capital, and technical innovations could provide, at best, only half the increase in the national product produced in the United States in the twentieth century. The economy of Western European countries (from 1948 to 1969), according to Denison’s calculations, grew by 2/3 precisely due to increased labor productivity. Moreover, the share of education in the growth of national income in European countries and the USA ranges from 12 to 29%.

To measure the influence of the human factor, Denison took into account not only the size of the workforce, but also such indicators as the dependence of the return on labor on age and gender, level of education and professional training. To measure the capital factor, he also made some qualitative adjustments: housing, equipment, industrial buildings, inventories, foreign investment. Taking this into account, he then determined the contribution of each of these elements to economic growth.

The debate around the works of E. Denison became the basis for the innovative work of the American scientist Theodore Schultz who is recognized as the founder human capital theories.

It should be emphasized that in the last quarter of the twentieth century, under the influence of the scientific and technological revolution and increasing demands on the qualitative characteristics of the labor force, the content of economic development deepened. The social dimension of economic development is becoming as important as achieving high growth rates, expressed through GDP growth.

Moreover, in studies of economic growth, increasing emphasis is placed not on quantitative, but on its qualitative indicators. Human capital theory is the link between the goals of economic and human development. An illustrative example is the countries of East Asia and Japan (“Asian Tigers”). During the 1980s, per capita income growth in these countries amounted to more than 7% per year - this is a record figure that gave rise to the term “East Asian miracle”. The fundamental reason for such a rapid industrial leap and economic growth was the special development strategy adopted here, built with the human factor in mind as the most important element of scientific and technological progress and an unlimited resource for economic development. Thus, about 40 years ago, South Korea and Ghana had the same level of per capita income. By 1990, incomes already differed by 6 times in favor of South Korea. The reason for this significant difference is that South Korea developed through intellectualization of the economy, that is, creating a system that has a high rate of development through innovation, while Ghana chose the path of development through the accumulation of physical capital. It should be noted that human capital is acquiring particular importance not only as a way of accumulating knowledge, but also as a source of new trends in the structure of needs, which contributes to qualitative changes, expansion of choice and opportunities.

The main feature of more modern empirical studies of economic growth (R. Barro, Sala and Martin, V. Popov, V. Palterovich) is the identification of such growth factors as improving the quality of human capital; efficiency of government institutions; favorable investment climate; flexible strategy of macroeconomic regulation; depth of economic reforms (share of non-state ownership in GDP, indicators of openness and liberalization of the economy); reduction of market distortions in resource allocation.

The economic growth. Structural aspect of economic growth. Factors of economic growth. The relationship between the business cycle and economic growth. Theory of economic growth.

Theory of economic growth

Coursework in economic theory on the topic

Completed by student: Dulikov A.G., Group: 3212.

Moscow State Industrial University

Faculty of Economics, Management and Information Technologies.

Moscow 1999

The economic growth.

At the end of the twentieth century, the problem of economic growth throughout the world was promoted to a number of priority problems of economic development. The fate of any country currently depends on the mechanism of economic growth, which allows the most effective use of the achievements of scientific and technological progress. World economic science began studying economic growth trends quite a long time ago. This topic is of particular relevance for the current stage of economic reforms. Any measures to reform the economy must fit into the general trend of economic growth in industrialized countries at the turn of the 20th – 21st centuries. Economic growth has become a constant phenomenon, and despite some declines in output and even a deep decline in production that took place in many developing countries in the 80s, the long-term trend of development in the economies of most countries of the world is steadily upward. Average annual growth rate of production per capita in 1820 – 1980 in industrial countries amounted to 1.6%. The population during the same period increased annually by 1%. Analyzing the origins of modern era, E. Maddison divided the last fifteen centuries into 4 stages: agrarianism, developed agrarianism, commercial capitalism and capitalism. It is significant that the growth rate remained very low until the fourth stage. And only in the phase of modern capitalism did a sharp leap occur. S. Kuznetsov also believed that the acceleration of the pace of economic development in England, Germany and the USA arose during the industrial era. revolution, that is, when capitalism becomes the leading economic system. In the process of economic development, important evolutionary changes occur in the structure of the economy. The main distinguishing feature of modern growth is the decline in the relative share of the agricultural sector in total output and employment. Another characteristic feature of modern economic development is urbanization, as a consequence of the prosperity of the industry. The problem of economic development acquired particular relevance after the Second World War, and the boom in the development of these theories fell in the 50s and 60s, although the first attempt to give a holistic understanding of the mechanism of functioning and development of the national economy was made by J. Schumpeter in the 20s and 30s of the twentieth century.

Economic growth (EG) is usually understood as a change in the results of the functioning of the productive forces of society and consumed resources. Economic growth determines the nature of the functioning of the national economy.

Economic growth is defined and measured in two interrelated ways: as an increase in real GNP over a period of time, or as an increase in real GNP per capita over a period of time. Both definitions can be used. When comparing the living standards of the population in individual countries and regions, the second definition is preferable. Based on any of these definitions, economic growth is measured by the annual growth rate in %. Economic growth itself is contradictory.

An increase in the social product per capita means an increase in the standard of living. The growth of the real product entails an increase in material abundance. A growing economy has a greater ability to meet new needs and solve socio-economic problems within the country and internationally.

Issues of economic growth have become particularly acute for the world community as a result of the emergence of a contradiction between the production of material goods and the uncontrolled depletion of natural resources, accompanied by environmental pollution. Thus, a new approach to understanding the essence of economic growth is important not only from the point of view of destroying the contradiction between production and consumption, but also from the point of view of the survival of mankind.

The “production-consumption” contradiction is closely related to economic growth. With the development of commodity production, a contradiction between production and consumption develops; it manifests itself in crises of overproduction and the formation of shortages of certain types of products. The deepening contradiction slows down the pace of economic growth.

Economic growth makes sense when it is combined with social stability and social optimism.

In modern conditions, the manifestation of the contradiction between production and consumption is expressed, first of all, in the irrationality of the development of production forces, accompanied by environmental pollution. Nature puts a limit to the unbridled growth of production. Further growth in production is thus hampered by consumption itself.

Today, economic growth is an important feature of the modern world. The population, the scale of production and employment, the national product, the standard of living are growing, free time from work is increasing - economic growth occurs.

Types of economic growth.

There are two main types of economic growth: extensive and intensive.

Extensive economic growth means a purely quantitative increase in the volume of production of goods and services with qualitative unchanged factors of production.

Extensive factors of economic growth are: growth in the volume of consumed raw materials, materials, fuel; increase in employed workers; increasing the volume of investment while maintaining the existing level of technology. Extensive growth is historically the original path of expanded reproduction. Therefore, it has a number of negative characteristics that are a consequence of the imperfections of this type. The extensive path, thanks to the attraction of more and more labor into production, helps to reduce the level of unemployment and ensure the greatest employment of labor resources. A program to restore and maintain full employment at a reasonable scale is a compelling means of accelerating growth.

Intensive economic growth is associated with the fact that the increase in the production of goods and services is ensured by an increase in the efficiency of production factors. This type of production leads to overcoming limited production resources and advances the technological process.

Intensive factors of economic growth are: improved use of fixed and working capital; improving the qualifications of employees; acceleration of scientific and technical progress (primarily the introduction of new equipment and technologies by updating fixed assets); improvement of production organization. In reality, two opposite types of economic growth can interact and exist together, since the intensive use of some types of production resources is often achieved through the extensive use of others. Depending on which factors predominate, we speak of predominantly extensive or predominantly intensive types of economic growth. Intensive development is more successful than extensive development.

When studying economic growth, as when studying most economic problems, the time factor plays a significant role. Over time, intensive growth factors can become extensive.

Measuring Economic Growth

Economic growth is measured either as an increase in some indicator of the volume of national production (GNP, GDP, NNP) over a certain period of time, or as an increase in this indicator per capita. Both methods of determining economic growth are used, depending on the goals set, but in any case we are talking about growth rates (% per year).

Economic theory differs from other sciences in that all concepts and definitions are very versatile. This fully applies to measuring economic growth. Two main methods for measuring ER are necessary but not sufficient.

Economic growth is defined as a multifaceted concept that reflects changes in reproduction in space and time. ER is characterized by quantitative and qualitative indicators, has a socio-economic result in the growth of national wealth and is aimed at increasing well-being.

Economic growth rate

Economic growth is determined by the percentage increase in the volume of national production by itself or per capita at a certain point in time. It follows that there are high and low rates of economic growth.

In prosperous countries, the growth rate does not exceed 2-3% per year, but if these rates are maintained for at least 10 years, then this trend further strengthens the national economy.

But it also happens that the general trend of economic growth is disrupted. For example, we can cite the post-war growth of the German economy. After the end of the Second World War, the economy of this country was destroyed, but over the next few decades, this country raised its national economy to the level of economic superpowers.

The deterioration of the labor force structure affects the decline in economic growth.

Forecasts and prospects for economic growth

At this time, the state of the world economy is determined by the development of leaders - the USA, Japan and Western Europe. The US economy, which experienced a noticeable decline in the early 90s, achieved a very good GDP growth rate in 1997 (5%).

The lack of special prospects for accelerating economic growth in the West is forcing experts to think about the possibility of a radical redistribution of roles in the global economy by the beginning of the next millennium. The consistently high growth rates of the East Asian economies so far suggest that developing countries in general have much greater growth prospects. For example, leading economists believe that in the next 10 years the GDP growth rate of developing countries will be almost twice as high as the growth rate of industrial powers.

As a result, according to calculations by an influential economic organization, by 2020 the share of rich industrial countries in world production will be no more than two-fifths.

Economic growth trends.

Based on extensive statistical analysis of industrialized countries by representatives of various modern theories, seven main trends in economic development were identified.

1. There is a clear tendency towards wage growth.

2. Over the long term, the share of wages in national income changes insignificantly.

The population and labor force are increasing, but at a slower rate than fixed capital, so the capital-to-labor ratio is increasing.

For most of the 20th century, the ratio of savings to investment in gross national product was stable.

Capital intensity has actually been falling since the beginning of the 20th century, although it changed little in the second half of the 20th century.

Excluding the impact of the business cycle, the average annual growth rate of GNP is 3%. At the same time, the growth rate of production volume increases faster than the growth of production factors (capital, land, labor), which confirms the key role of technical progress in economic growth.

Combining these factual data, we can conclude that the economy can continue to develop at a high pace. But there are also uncertainties in economic growth, due to small deviations in the direction of its development. In 1973, there was a slowdown in the growth rate of production in industrialized countries. This means that high growth rates in the past will not necessarily continue in the future.

These seven trends reflect the fundamental facts of economic development in the 20th century. The second and third trends correspond to neoclassical theories of production and distribution.

Along with identifying general trends in economic growth, studies were carried out to measure it. Small growth rates over a long period result in large absolute increases. For example, at an annual growth rate of 4%, the doubling will occur in 18 years, at 3% - in 24 years, and at 2% - in 35 years.

Theory of economic growth.

Economic theory began to explore the problems of economic growth quite a long time ago. Most of the most famous

Economists, both past and present, have to one degree or another touched on a range of issues directly related to economic growth. Problems of economic growth currently occupy a central place in economic discussions and debates.

The two main directions of development of economic theory of the twentieth century - the neoclassical and Keynesian directions - approach this topic differently. The origins of the neoclassical approach should be sought in J.-B. Say, in his classification of factors of production. The main idea that unites all neoclassicals is the hope for the efficiency of the market system, which is considered as a perfect self-regulating mechanism that allows for the best use of all factors of production.

Neo-Keynesian models of economic growth. Like any models, growth models are an abstract, simplified expression of a real economic process in the form of levels or graphs. Keynesian theory of macroeconomic equilibrium is based on effective demand, which ensures balanced economic growth. Most growth models assume that an increase in real output occurs primarily under the influence of the main factors of production - labor (L) and capital (K), and their quantity is constant.

Neo-Keynesian growth models use mainly logical tools. An important and strategic variable through which economic growth can be managed is investment. Within the framework of the centralized planning system, the concept of “gross capital investments”, which meant all the costs of reproduction of fixed assets, including the costs of their repair. Investment is a broader concept. It covers both so-called real investments and “financial” investments, i.e. investing in shares, bonds, and other securities that directly give ownership rights and the right to receive income from owning property. In this case, the specific use of financial investments can be carried out both through stock trading on the securities market and through direct investments in shares of enterprises in various sectors of material production. Investments are a very important component of total expenses. Fluctuations in investment have a significant impact on economic growth. The dynamics and size of investments depend mainly on two factors: the expected net profit from the investment and the interest rate for the loan. Also, the amount of investment in the economy depends on the level of interest rates. At the same time, it is the real interest rate, taking into account the level of inflation, that has a decisive influence on the volume of investment expenses. The state, pursuing a certain monetary policy, through changes in the interest rate can have a serious impact on the growth of total investment costs, and therefore on economic growth.

The neo-Keynesian concept of economic growth is based on a fairly simple model, the main principles of which were formulated by E. Domar, proposed in the late 40s of the twentieth century. Production technology is represented in it by the Leontief production function with constant marginal productivity of capital. Domar's model assumes that there is excess supply in the labor market, which causes a constant price level. E. Domar, in accordance with the tradition of Keynes, pays special attention to stimulating investment. He believes that if the savings rate cannot be changed quickly, higher levels of income and employment can be achieved by increasing investment. Based on this, it can be understood that Domar emphasizes the importance of various investment promotion plans in terms of tax benefits for increasing profits, accelerated depreciation, etc. Domar also views investments as a “cure” for unemployment. Output actually depends on one resource – capital. A factor in increasing demand and supply in the economy is an increase in investment

According to Domar's theory, there is an equilibrium rate of growth of real income in the economy at which the available production capacity is fully used. It is directly proportional to the saving rate and the marginal productivity of capital. Investments and income grow at the same constant rate over time. Domar's model did not claim to be a growth theory. This was an attempt to extend the conditions of short-term Keynesian equilibrium over a longer period and find out what these conditions would be for a developing system.

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

According to the accelerator principle, any increase (decrease) in income causes an increase (reduction) in investment proportional to the change in income. If the supply growth rate actually planned by entrepreneurs differs from the guaranteed growth rate, then the system gradually moves away from the equilibrium state. The ideal development of the economic system is achieved when the guaranteed, natural and actual growth rates are equal under conditions of full employment of resources.

Both models lead to the conclusion that, given the technical conditions of production, the rate of economic growth is determined by the value of the marginal propensity to save, and dynamic equilibrium can exist under conditions of underemployment. In essence, both models are similar, and they are usually called the Harrod-Domar model. Also in this model, the economy is considered as one industry producing homogeneous products. The rate of population growth is determined by non-economic factors. The source of financing for the increase in new capacity is the share of national income intended for savings. Sustainable rates of production growth depend on population growth, increased labor productivity and the size of accumulated capital. The rate of economic growth in this general model ultimately depends on the share of accumulation in national income and the capital intensity of production.

The authors introduce the concept of “natural rate of growth,” which assumes a rate of production growth that corresponds to all the possibilities of technical progress and the full use of the entire labor force. The natural rate of growth ensures the “optimal well-being” of society.

Hansen's theory. Another fairly well-known theory of economic growth belongs to the American economist Hansen. He focuses on the dynamic theory of the cycle. This economist, who is often called the “American Keynes,” proposes to stimulate effective demand primarily at the expense of the state budget. The strategic direction of the state’s economic policy should be not only to maintain the investment activity of private capital, but also to expand public investment and government spending.

Hansen, among other things, created the theory of stagnation, thus recognizing the possibility of serious economic crises. Economists of all directions and schools are convinced that economic growth is necessary to increase the level of material well-being. Based on various theoretical approaches, many economic policy options for promoting economic growth can be developed. There are also negative consequences of economic growth. One English economist said that “economic progress may cause us to lose much of what attracts us to the world around us.”

Neoclassical growth model.

The neoclassical direction in the development of economic growth theory arose as a reaction to the weaknesses of the Keynesian model. The Keynesian and neoclassical models have similarities in the main goal (equality of actual growth rates to potential or natural ones); the approaches and methods of studying this problem have radically changed. Neoclassical models take into account not one, but several factors that determine economic growth. The presence of many factors and the possibility of combining them allows one to build a large number of models. A major contribution to the development of models of economic growth based on production functions, in particular the Cobb-Douglas function, was made by R. Solow, E. Denison and J. Mead.

Model R. Solow.

R. Solow substantiated the idea that scientific and technical progress is a leading factor in economic growth. R. Solow Professor at the Massachusetts Institute of Technology. The Solow model allows us to express the most important processes and results of economic growth. R. Solow showed that the instability of dynamic equilibrium in Keynesian models was a consequence of the non-interchangeability of production factors. Instead of Leontief functions, he used the Cobb–Douglas production function in his model.

Other prerequisites for analysis in the Solow model are: diminishing marginal productivity of capital, constant returns to scale, constant retirement rate, absence of investment lags. The interchangeability of factors 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 an economic system is the equality of aggregate demand and supply. Aggregate demand in the Solow model is determined by investment and consumption.

The dynamics of output volume depends on the volume of capital. The volume of capital changes under the influence of investment and disposal: investment increases the capital stock, disposal decreases it. The level of capital stock at which investment is equal to disposal (k=0) is called the equilibrium level of capital-labor ratio.

Since equilibrium economic growth is compatible with different saving rates, the problem of choosing the optimal saving rate arises.

Factors of economic growth and their dynamics

The factors of economic growth are quite diverse.

Supply factors: labor resources, natural resources, scientific and technical progress and the volume of fixed capital;

Factors of aggregate demand;

Sociocultural and institutional factors.

The action of all economic growth factors is interconnected. Currently, supply-related ER factors are of greatest importance.

Labor resources. The size of the working-age population is of decisive importance, as well as the problem of overpopulation, which is characteristic of many economically backward third world countries, widespread unemployment and underutilization of the labor force. The main indicator of the efficiency of the use of labor resources is labor productivity, and the ways to fully utilize and increase efficiency are the growth of education, improved health, improvement of labor organization - in a broad sense, investments in human capital.

Natural resources. This factor is of greatest importance for potential economic growth. Lack of natural resources can significantly limit growth opportunities. At the same time, we can name countries that have very limited natural resources, but have achieved high growth rates. An important factor in economic growth is land, or more precisely, the quantity and quality of natural resources. It is obvious that large reserves of various natural resources, the presence of fertile lands, favorable climatic and weather conditions, and significant reserves of mineral resources make a significant contribution to the economic growth of the country.

However, the presence of abundant natural resources is not always a self-sufficient factor for economic growth. For example, some countries in Africa and South America have significant reserves of natural resources, but are still included in the list of backward countries. This means that only efficient use of resources leads to economic growth.

Scientific and technical progress. This factor is closely related to supply, since the accumulation of knowledge leads to the accumulation of capital. Usually there are two types of development of scientific and technical knowledge: inventions and innovations. Inventions lead to serious, revolutionary, qualitative changes in production, and innovations improve existing knowledge. Inventions and innovations are embodied in capital and have a decisive impact on its growth. Scientific and technical progress as a factor of economic growth is becoming increasingly important in modern conditions.

Volume of fixed capital. One of the most important factors in economic growth is the accumulation of capital (equipment, buildings, and inventories of manufactured goods used in the production process).

Factors of aggregate demand. All factors affecting aggregate demand ultimately affect economic growth. Insufficiently efficient aggregate demand does not stimulate adequate economic growth. Keynes and his followers attach particular importance to this factor.

The realization of the increased national product depends on the factors of aggregate demand, i.e. all elements of aggregate demand must ensure full employment of all increasing resources. In addition, factors related to aggregate demand include the efficient allocation of resources.

Sociocultural and institutional factors. These factors together also have a significant impact on economic growth. Institutional barriers may manifest themselves in an ineffective system of state regulation of the economy, the absence of a well-thought-out legislative framework for economic activity, or otherwise, it is a set of inherently non-economic factors that can also influence the rate of economic growth.

The classification of factors of economic growth can be considered in more detail; this was done in most detail by E. Denison in his work “Study of differences in economic growth rates,” in which he identified 23 factors, including: employment, hours worked, gender and age structure of the employed, education, housing, non-residential premises, equipment, inventories, international assets, progress in knowledge, land, lowering the age of capital, growth of national and local markets, etc. The overall conclusion of this study is that the importance of each of these sources in different periods and in different countries.

The growing volume of real production makes it possible, to some extent, to solve the problem that any economic system faces: limited resources with limitless human needs. Economic growth can be assessed using a system of interrelated indicators that reflect changes in the result of production and its factors.

The assumptions of the Harrod model remain the same as those of the Domar model.

In theories economic growth Problems macroeconomic equilibrium are considered not in a static, but in a dynamic form and in long term. The main question here is: how can you increase the volume? gross domestic product(or national income) in conditions full employment?

Multiplier-accelerator concept

There are several approaches to analyzing economic growth. In particular, the concept of interaction animator And accelerator reveals the mechanism of economic growth. However, this does not exhaust the analysis of this problem.

Western theories of economic growth are strenuously seeking an answer to the question of what is the share of each production factor in increasing production output, in increasing income received. Solving this problem is important for finding the optimal combination of production factors that ensure an increase in economic growth rates.

Production function

The production function is used as a tool for such analysis:

Y = f(K, L, N),

The simplest production function examines the impact on the growth of output of two factors: labor And capital. It was developed in the 20s of the twentieth century. American economist P. Douglas and mathematician C. Cobb, who, based on statistics from wheat production in the United States, concluded that a 1% increase in labor input expands output three times more than a 1% increase in capital. The results of this empirical study suggested to the entrepreneur that improvements in the use of such factors as labor are preferable to attracting additional capital. In this regard, in developed countries market economy Developments that increase the effectiveness of work motivation have begun to be widely used. Theories of human relations and social partnership appear, the purpose of which is to ensure higher returns from the use of the human factor.

“Human capital” as a factor of economic growth

In the last quarter of the twentieth century. this perception was constantly strengthened. Competition in a dense market, the need to constantly improve product quality, update production and assortment dictated. At the same time, the employee’s ability to make non-standard solutions, to search for new things, and adaptability to constantly changing production conditions was increasingly valued. Only an employee who meets these requirements is able to contribute to ensuring a stable position of products on the market, and thereby to the growth of income from its sales. In modern industrialized countries, the qualifications of workers are becoming a key factor in competition. Investments in the workforce (education, social programs, etc.) are considered the most effective, or, in Western terminology, investments in human capital. It is precisely these costs that are capable of using long-term factors of economic growth based on NTP, since a skilled workforce has the ability to improve.

Economists have turned to the study of the problem of “human capital” since the early 60s. The concept is introduced investment into “human capital”, meaning the totality of direct monetary costs for education and income lost for the time spent on education.

Economists have proven that education is profitable for an individual if real price costs for education and profit are positive. To the extent that salary reflects the real products of labor, investments in “human capital” are real investments. According to estimates, in the United States, 2/3 of all accumulated capital is invested in “human capital”, namely in educational institutions, scientific, research programs and centers, training of specialists and professionals.

Job G. Becker“Human Capital: A Theoretical and Empirical Analysis” was recognized in 1964 by the Royal Swedish Academy of Sciences as the most significant contribution to modern economics. Becker distinguished between general education and special education. In his opinion, general education improves the overall skill of the individual, i.e. his ultimate performance. However, an individual entrepreneur pays for this public good without guarantees of obtaining the proper result in a specific job and is not interested in paying for the general education of citizens and workers. But any entrepreneur has a direct interest in special training of employees, since this ultimately leads to increased productivity in a particular business.

Becker applied the theory of "human capital" to the problem of inequality income. If a particular individual invests in his education, this subsequently leads to the evolution of his opportunities for obtaining large incomes. He explored the quantitative relationship between abilities and education, distinguished between “human capital” in general and specific “human capital” companies. It is interesting that Becker argues that the greater mobility of young workers is not due to traditional psychological factors, but to the fact that older workers have less time to profit from movement, while younger workers have much more time.

In the course of his research, Becker developed the “human capital” approach into a general theory that determines the distribution of labor income. He views the behavior of individuals in this area as rational: before deciding whether to continue education or not, the individual weighs all the benefits and costs. Like any entrepreneur, an individual compares the expected marginal rate of return on investments in education with the profitability of alternative types of investment. The conclusions of the theory, taking into account the wage structure, were formulated in the so-called “wage - human capital” functions, which reflect the relationship between wages and human capital.

G. Becker were bred demand curves And offers investments in “human capital” and a universal model for the distribution of personal income was created. Demand curves for human capital ( D And D 1 ) are located at different levels, which is associated with the unequal natural abilities of individuals, and supply curves ( S And S 1 ) reflect their unequal financial capabilities (Figure 6.1). “Human capital” will be distributed unevenly - depending on individual curves. The greatest unevenness is observed in the case when more capable individuals also have greater financial possibilities.

Rice. 6.1. Demand, supply and equilibrium in the human capital market:

I - investments in human capital; Q - number of human capital

This model explains the inequality of individuals associated not only with labor (income), but also with property (property). In the case of initially large opportunities for investing in “human capital”, initially the income from such investments is greater than from investments in physical capital, but with further growth of investments the return decreases. Thus, at a certain stage, one should switch from investing in “human capital” to investing in other assets so that subsequent generations can use such assets for their education.

Based on statistical data, Becker calculated that the return on investment in human capital in terms of higher education is 10–15%.

Becker was the first to introduce the distinction between general and specific investments in human capital. By general investment he understands the acquisition of knowledge and skills, which the individual can then use at any place of work, so these investments are made by the individual himself. Specific investments are, as a rule, investments of each specific company to train an employee in something that he cannot use anywhere else except for this company (for example, the procedure for internal document flow). This difference formed the basis for the development of a new theory of the firm by O. Williamson.

The concept of “human capital”, proposed by G. Becker, subsequently received a powerful impetus in its development in connection with research J. Akerlof. He proposed a theory of deteriorating market selection resulting from the asymmetric distribution of information between economic entities. Thus, it was demonstrated that the value of “human capital” is that additional market signal for the employer, which partially eliminates the asymmetry in the distribution of information between him and the employee that arises when the latter is employed in the form of the so-called “pig in a poke” problem.

The theory of “human capital” was subsequently subjected to serious empirical testing. Many economists, based on a large amount of statistical information, tried to verify Becker’s hypothesis about the positive functional relationship between investments in “human capital” and the return on these investments. The task turned out to be quite difficult. For the American economy, empirical relationships have been identified between a person’s length of education over his entire life cycle and average per capita income for each period of his age. As a result, it was possible to find out that the average per capita income not only directly depends on the duration of the employee’s training, but, more importantly, the growth of income outpaces the growth of the duration of training itself. Moreover, the more time a person spends on acquiring additional knowledge, skills, abilities and reputation, the more pronounced this trend is (Fig. 6.2).

Rice. 6.2. Dependence of the average per capita income for individual age intervals on the duration of education

Accepted as basic income person with incomplete secondary education (curve A). Already with an increase in the duration of education by 1.15 times, the average per capita income increases in the peak years (age 40–55 years) by 1.5 times (curve B). A further increase in the duration of education by 1.7 times leads to an increase in the maximum value of average per capita income by more than 2.3 times (curve WITH). And finally, an increase in the duration of training compared to the base level by 2.14 times and 2.42 times leads to an increase in “peak” income by 3.5 times, respectively (curve D) and 4 times (curve E). It should also be noted that for people who have received a more serious and high-quality education, along with the growth of their “peak” income at working age, the average amount of annuities (annual payments) that they receive after retirement also increases.

Harrod-Domar model of economic growth

Based on the Keynesian model of macroeconomic equilibrium, in short term savings are equal to investments, but in the long term they do not coincide. Economists - English R.F. Harrod and American E.D. Domar- at the same time proposed a model for analyzing economic growth in long term within the framework of Keynesian views (currently known as the Harrod-Domar model):

G=s:c,

From this model it can be concluded that growth rates are directly dependent on s, since the more clean saving, the more they can be investments; growth rates are inversely related to c- coefficient capital intensity: the higher it is, the lower the rate of economic growth.

Can be calculated s And c From statistical data, therefore, using the Harrod-Domar model, it is possible with a certain degree of probability to predict future rates of economic growth. However, it has too high a degree aggregation of indicators to serve as a precision instrument. Rather, it is a useful theoretical analysis tool for economic policy development.

The researchers noticed another drawback of this model. According to the assumptions, the growth rate that ensures full capacity utilization is determined by one group of factors, and the growth rate that ensures full time, - others. Their coincidence is a rare case, and the model does not provide for it. Factor substitution "work" And "capital" not expected. The economy in the Harrod-Domar model balances on a knife edge. The challenge of creating sustainable growth rates lies outside this model.

Neoclassical Solow model of economic growth

The considered theory received its further development and improvement in the neoclassical factor model of economic growth Roberta Solow, which already implies replacement factors of production, as their relative prices change. According to Solow, investment and savings are determined not by the rate of economic growth, but by the relationship between the factors capital - labor and the volume of production per capita.

Solow took a simple production function as the basis for his model, introducing into it the level of technology development ( T):

Y = Тf(K, L).

Based on his approach and data on the development of the American economy for 1909–1949. Solow determined that more than 80% of the growth in output per man-hour worked is explained by scientific and technological progress.

Thus, if in the Harrod-Domar model NTP acts as a factor external to economic growth (exogenous), then in the Solow model it is considered as an internal (endogenous) factor organically inherent in modern economic development. This corresponds to the fact that it is scientific and technical progress that is the main factor of economic growth in the long term.

Follower of Solow - American economist E. Denison, using data for 1929–1982, made a detailed breakdown of scientific and technical progress into individual components and identified the components of economic growth. E. Denison pointed out the importance of the process of accumulating knowledge, which provides almost 2/3 of the contribution of technical progress to production. The remaining 1/3 of this contribution is due to more efficient placement resources and, in addition, with savings in production factors per unit of output. Such savings when increasing the scale of production are also ensured by scientific and technical progress (Table 6.1).

Table 6.1

Factors in US National Income Growth (1929–1982)

Conclusions drawn from empirical research allow us to determine the most effective factor of production. The concepts of growth and progress are associated not only with the need to replenish the material and material basis of production, but increasingly with the accumulation of knowledge, improving the skills of workers, without which the introduction of scientific and technical progress is impossible.

Phelps' Golden Rule of Capital Accumulation

The Solow model was used by economists to answer the question: what should be the optimal economic growth? American economist Edmund Phelps answered this question in his work “A Fable for Those Dealing with Economic Growth,” in which he examined the economic problems of his invented kingdom of Nightingale (named Solow). Phelps formulated the so-called “golden rule of capital accumulation.” Its essence is that each generation must save for future generations such a share of the income that it received from previous ones. In other words, interest rate should be equal to the population growth rate. In this case, the trajectory of economic growth will be optimal. Sometimes the “golden rule” is called the “biological interest rate” rule.

There are many theories of economic growth, which can be roughly classified as follows:

• · Neo-Keynesian theories of economic growth
• · Neoclassical theories of economic growth (R. Solow model)
• · Empirical theories of economic growth
• New theory of endogenous growth
• · Neo-Keynesian theories of growth by E. Domar and R. Harrod

These theories arose as a result of the development and critical revision of the Keynesian theory of macroeconomic equilibrium. Based on such economic quantities as national income, consumption, savings and investment, J. Keynes developed a theory designed to explain changes in the level of economic activity. He proved that during an economic downturn and rising unemployment, consumption and savings, as well as investment, decrease as a result of a decrease in income. Therefore, according to J. Keynes, in the absence of a market lever to increase aggregate demand, in order to revive business activity, the government must intervene in the economy, implementing macroeconomic fiscal policy by reducing taxes or increasing government spending.

Neo-Keynesian theories of economic growth were formulated by the American economist of Polish origin Yevsey Domar and the English economist Roy Harrod. The results they obtained turned out to be so close to each other that they later began to be called in science as the Harrod-Domar theory.

The main postulate of the neo-Keynesian theory of John Keynes is aggregate demand. An increase in effective demand is the most important factor in economic growth, through which the standard of living rises and the standards of people's quality of life improve.

Limitations of the theory Harrod-Domar is determined by the fact that:

• · economic growth depends only on the increase in investment, and this dependence is a linear function;
• · economic growth does not depend on the increase in the use of labor;
• · The theory does not take into account technological progress.
• · Neoclassical growth theories (R. Solow model)

The fundamentals of R. Solow's growth model are outlined in his article “Contribution to the Theory of Economic Growth.” R. Solow came to the conclusion that the main reason for the instability of the economy in the Harrod-Domar model is the fixed value of capital intensity, reflecting the rigid relationship between production factors - labor and capital (K/L). In accordance with the principles of neoclassical theory, the proportions between capital and labor should be variable (this is precisely the neoclassical nature of R. Solow’s theory of growth) . They are determined by producers minimizing costs depending on the prices of these factors of production. Therefore, instead of fixed K/L R. Solow included a linearly homogeneous production function in his model:

Y= F(K, L).

Dividing all terms into L and indicating the income per employee ( Y/L) through y, a capital intensity K/L through k, we get:

y=LF(k,l)=Lf(k).

As in the Harrod-Domar model, it is assumed that the population grows at a constant rate and investment constitutes a constant share of income, determined by the saving rate u.

Rate of increase k then we can write it as

dk, = sf(k) - nk.

This so-called “fundamental equation” by R. Solow is expressed in words as follows: the increase in the capital-to-work ratio of one worker is what remains of specific investments (savings) after it has been possible to provide capital goods to all additional workers.

If sf(k) == nk, then the capital-labor ratio remains the same (dk = 0), i.e. the economy grows without any structural changes in the relationship between factors. This is balanced growth.

In the R. Solow model, in contrast to the Harrod-Domar model, the trajectory of balanced growth is stable. R. Solow shows this with the following graph (Fig. 1)

Straight nk This graph shows how much each worker should save and invest from his income to provide capital goods for future workers (including his own children).

Curve sf(k) demonstrates what his actual savings are depending on the level of capital ratio achieved. With the increase in capital ratio A; The growth rate of investments/savings naturally falls. The vertical distance between the curve and the straight line denotes, in accordance with the fundamental Solow equation, the differential change in the capital-labor ratio dk. At the point k* it is zero and there is balanced growth. At all points to the left k*(For example, k^) capital-labor ratio will grow, and at all points to the right k*(For example, k.) fall, so that the economy constantly shifts to the side k* and the balanced growth trajectory is sustainable.

In R. Solow's model, the savings rate s matters only until the economy enters the trajectory of sustainable development: the larger the value s, the higher the graph skn accordingly the level k*. But once growth has become balanced, its further pace depends only on population growth and technological progress.

"Golden Rule". From R. Solow’s model it followed that the higher the savings rate, the higher the capital-to-worker ratio of a worker in a state of balanced growth and, consequently, the higher the rate of balanced growth.

· Empirical theories of growth

Empirical research has made a huge contribution to the formation of modern theories of economic growth. The purpose of empirical research is to evaluate the impact of various factors on economic growth. It must be emphasized that it was the factor analysis of the sources of growth that led researchers to a completely new vision of the role and importance of man in the economy.

One of the most prominent researchers in measuring the contribution of various factors to economic growth is the American economist Edward Denison. He divided the factors that explain economic growth into two categories. In the first, he included physical factors of production (labor and capital), in the second, factors of growth of labor productivity.

To measure the influence of the human factor, Denison took into account not only the size of the workforce, but also the dependence of the return to labor on age and gender, level of education and professional training. To measure the capital factor, he also made some qualitative adjustments: housing, equipment, industrial buildings, inventories, foreign investment. Taking this into account, he then determined the contribution of each of these elements to economic growth.

The main feature of more modern empirical studies of economic growth (R. Barro, Sala and Martin, V. Popov, V. Palterovich) is the identification of such growth factors as improving the quality of human capital; efficiency of government institutions; favorable investment climate; flexible strategy of macroeconomic regulation; depth of economic reforms (share of non-state ownership in GDP, indicators of openness and liberalization of the economy); reduction of market distortions in resource allocation.

· Theory of endogenous economic growth

A new round in the development of the theory of economic growth occurred in the 80-90s, which made it possible to talk about the “new theory of growth”. It reflects the influence of imperfect competition and the role of possible changes in the rate of profit. And most importantly, scientific and technological progress (STP) began to be considered as an endogenous, i.e., a factor of economic growth generated by internal reasons. For the first time, in the formalized economic and mathematical models of American economists P. Romer and R. Lucas (USA), a hypothesis was put forward about the endogenous nature of the most important production and technical innovations based on investments in technological progress and human capital.

Theories of endogenous economic growth reject the neoclassical assumption of diminishing marginal productivity of capital, accept the possibility of economy-wide economies of scale, and often emphasize the impact of externalities on the return on investment. Positive externalities are the most important prerequisite. The significance of these effects is as follows:

• § external effects arise as a result of the training of workers in the process of production activities and contribute to the fact that technological progress acts as an internal factor in endogenous growth models;
• § externalities neutralize the decrease in the marginal product of capital, promoting long-term growth in per capita income;
• § external effects are manifested in the fact that the increasing returns from scientific and technological innovations accrue not only to those who carry them out, but also to the entire society.

In endogenous growth theories, technological progress is not the only possible cause of economic growth in the long run. The value of intensive and qualitative determinants in the theory of endogenous economic growth is determined using the following factors:

• · the quality of human capital depends on investments in human development (education, healthcare);
• · creating the necessary conditions and prerequisites for the protection of intellectual property rights in conditions of imperfect competition;
• · state support for the development of science and technology;
• · the role of the government in creating a favorable investment climate and borrowing new technologies.

So, the theories of endogenous growth made it possible to formalize the connection between the mechanisms of economic growth and the processes of obtaining and accumulating new knowledge, which is then materialized in technological innovations (Fig. 2). These theories explore the reasons for differences in the rates of economic growth of individual countries, the effectiveness of certain measures of state scientific, technical and industrial policy, and the influence of the processes of international integration and trade on the rate of economic growth.

Fig.2.

The essence of the theory of endogenous growth is precisely that man is the driving force of economic growth and the means of achieving material prosperity. The main conclusion of the new theories of endogenous growth is formulated as follows: the best strategy for increasing national income is the accumulation of not physical, but human capital, i.e. human development. Moreover, this statement is fundamental to the concept of human development. However, this thesis also clarifies the difference between the theory of endogenous growth and the concept of human development, the main postulate of which is that people are not just an effective means, but the goal of development.

The main problem of the theory of economic growth is to determine the sources and factors of growth that ensure its long-term sustainability. Many of these factors can be identified. According to the way they influence economic growth, all factors can be divided into direct and indirect.

Direct factors of economic growth directly determine the possibility of physical growth in production volume, which is why they are called supply factors. They characterize the economic resources that a society has and include: the volume and quality of natural resources; availability and degree of development of labor resources; size of fixed capital; scientific and technical progress; entrepreneurial abilities of society. The degree of use of these growth factors is expressed in private indicators of production efficiency, such as material intensity of products, capital productivity, and labor productivity. Increasing labor productivity is the basis of economic growth.

Supply factors determine the possibility of economic growth. However, their presence does not mean that economic growth will occur. For a real expansion of production, consumption of produced goods is necessary, which is influenced by factors of aggregate demand, such as the growth of consumer, investment, government spending and the expansion of exports. Aggregate demand factors ensure the complete involvement of resources in economic turnover.

An important condition for ensuring optimal rates of economic growth is also the rational distribution of resources across industries and regions and the procedure for distributing income between economic entities. Distribution factors, like demand factors, are indirect growth factors; they can contribute to the realization of the potential inherent in supply factors, or they can limit it.

There are two main groups of growth theories.

Neoclassical theory of economic growth assumes that a market economy is stable in nature and tends toward full employment. It examines static macroeconomic equilibrium under conditions of perfect competition and considers economic growth on the supply side as the total result of the interchangeable factors of labor, land, capital and entrepreneurial ability. The first models of economic growth were those of F. Ramsey and G. Feldman, published in 1928.

The fundamental concept in neoclassical models is the concept of the production function. The production function determines the maximum value of output when using certain specific values ​​of the costs of production factors for a given technology. For the first time, work on constructing production functions was carried out in the USA. The first empirical production function, that is, built on the basis of statistical data, is production function H. Cobb-P. Douglas. Its specific form:

Y – production level,

L – calculated employment index,

K – calculated fixed capital index.

An important stage in the history of neoclassical modeling of economic growth was the production function of J. Hicks, reflecting the impact of scientific and technological progress on economic growth.

Keynesian and neo-Keynesian theories of economic growth consider economic growth primarily from the point of view of demand factors, as a derivative of consumption and accumulation. The basis of these models is the multiplier-accelerator principle. The simplest neo-Keynesian model is the Harrod-Domar model.

Based on the influence of supply factors on economic growth, supporters of the theory of supply-side economics believe that the basis of the principles of state regulation of growth should be measures to increase the productive potential of the economy by reducing taxes and stimulating savings and investment. Keynesians, considering the lack of aggregate demand as the main cause of problems in the national economy, propose policies to manage aggregate demand as a means of government regulation of economic growth. Proponents of industrial policy assign an active role to the state in shaping the structure of industry to promote economic growth.

There are also economic theories that consider economic dynamics over a very long period, from the point of view of a global historical perspective. IN formation theory of periodization by K. Marx social development is considered as a consistent change of socio-economic formations (primitive communal, slaveholding, feudal, capitalist and communist), occurring as a result of growing contradictions between productive forces and production relations. IN theories of growth stages by W. Rostow the process of economic development of society is divided into five stages, the differences between which are manifested primarily in the level of development of technology, the rate of accumulation and the level of consumption - traditional society, the creation of prerequisites for take-off, take-off, the path to maturity, the stage of high mass consumption. Later, this model was supplemented by the sixth stage - the stage of searching for quality of life.

Basic Concepts

Test and discussion questions