Main economic factors
Economic factors are components,influencing the production and distribution of material goods. They can lead both to the growth of the economy, and to its stagnation. There are different classifications, which include a different number of factors. Separately, the factors of economic growth and economic security.
The most simple classification considers only 3 fundamental factors: labor, land and finance.
Labor plays an important role in economic lifesociety. It is determined by the total labor force and the degree of qualification of employees. With the increase in the share of high-technology production and management systems, qualification is becoming increasingly important. On it depends the quality of products and the effectiveness of process control.
Land can be used to grow crops, develop minerals, build businesses and houses.
Capital is understood not only financial means, but also material objects created by man, various structures, infrastructure.
An additional economic factor in thisclassification is information. Accumulated knowledge is important for the continued progress of technology and therefore directly affect the economy. In recent decades, the importance of this factor is particularly great.
According to another classification, economic factors are:
- Interest rate.
- Rate of inflation.
- The state of the financial market.
- The structure of consumption and its changes.
- Demand indicators.
- Trade balance.
- Financial and credit policy.
- Stock indices.
- The state of the world and regional economy in different countries.
- Dynamics of labor productivity and its level.
The degree and nature of the influence of economic factors on the state of the economy depends on the country and the current situation.
Also, the situation in the economy can be influenced by factors such as:
- Meetings of trade representatives, representatives of central banks, exporting countries of raw materials.
- Large economic forums (for example, the Davos forum, the G20 meetings, etc.).
- Forecasts of various indicators, indices and trends of changes in the economy from competent organizations.
- Different speculations.
- Changes in neighboring markets.
- Actions of banks.
- Political decisions.
The following economic factors have the greatest impact on the development of the national economy:
- Change in gross domestic product (GDP)has an impact on the average level of income, the level of employment, the amount of wages and social benefits, the value of interest rates on loans and the pace of development of the country as a whole.
- The size of inflation. Inflation largely determines the value of interest rates on loans, the distribution of demand between different consumer goods, the volume of money supply, the cost of goods and resources and its dynamics.
- The change in the exchange rate of the national currency may affect the pricing and structure of exports and imports of a particular country. Most of all, companies that have trade relations with other countries depend on it.
They have a great influence on the state ofeconomy. Legislative regulation changes the balance of supply and demand, affects the level of prices for certain types of products, can set a general vector for the development of the state's economy. Political influence can be manifested at the international level (sanctions, global agreements, etc.) or within the state (excises, taxes, subsidies, distribution of capital between industries, etc.).
Introduction of technological innovations in the field ofproduction can make it more quality, cheaper and more competitive both on the regional and global markets. Until recently, in the center of technological progress were technical innovations of consumer use: computers, mobile phones, cameras, etc. Now this center has shifted to energy and automotive industry.
In recent years, the development and implementation of newtechnology has made it possible to significantly reduce the cost of production of energy, and electric vehicles are no longer a luxury, while their technical indicators have significantly increased. According to various forecasts, this will lead to a radical change in the energy market in the coming decades, or even years. As a result, the inflow of foreign currency into oil producing countries such as Russia and Venezuela can dramatically decrease.
These factors are one of thosewhich builds the economy. Each country, due to its geographical location, has a certain set of conditions and resources. The position of Russia in this regard is very advantageous, despite the harsh climatic conditions: in our country there are large reserves of mineral raw materials, including oil, gas, diamonds, and non-ferrous metal ores. Also, Russia is rich in forests and has many opportunities for maintaining and developing agriculture.
Social and demographic factors
The demographic situation and its dynamics havea significant impact on the economic development of the regions. With a lack of population and population density, the opportunities for economic growth are limited, which is due to a shortage of labor resources and a large proportion of representatives of older age groups in the total mass of the population. In countries with high population density, where there is also a rapid growth (India, China), the aggregate GDP is rapidly increasing. This is due to the fact that more people of working age are able to produce more products. However, such growth will not necessarily be favorable for the country and people living in it.
The welfare of the population influences the purchasingability, so the higher the average per capita income level, the faster the economy can develop. The main driver of growth is the middle class by income, whereas the large gap between the incomes of different people and the absence of the middle class leads to a decrease in demand for many types of products.
Factors of economic development
Factors affecting economic growth,were studied on the example of states with a fast-growing economy (China and some other Asian countries). Among them are the main and minor factors. The main factors of economic growth were recognized: human capital, material capital and the development of technology.
The main factors of economic growth
Human capital is determined by the numberemployees, their qualifications, ability to learn, discipline, the degree of motivation to work. An important role here is played by education, on the average level of which the productivity and quality of labor depends.
Material capital is money,various equipment, housing stock. As the economy grows, its size increases. The more factories and plants, the more products can be produced per unit time. Thus, as the accumulation of means of production increases, the opportunities for economic growth increase.
Scientific and technological progress makes it possible to producemore quality products and more. It includes the accumulation of new knowledge, technology, modern machinery and equipment. The engine of progress can be increased energy efficiency of production. However, excessive growth of this indicator slows the development of the economy, as it is often not economically profitable. This is especially the case under the pressure of tougher standards for the release of pollutants.
Possessing a variety of natural resourcesmay be one of the factors that favor economic growth. An example of such a connection is the United States. However, in practice this factor does not always become decisive. Japan has a small amount of land and resources, but has achieved great results in economic development. China has little oil and gas, but the country is developing dynamically. At the same time, Russia has almost all the necessary resources for successful growth, but in economic development clearly did not succeed.
Additional factors of economic growth
Many of these factors are also factors of economic security.