What is stagnation in the economy with simple words? What are its causes and consequences?
Stagnation - This is a long period of low growth in the economy or the absence of such in general. Economic growth less than 2-3% per year is considered to be stagnation, and it is often accompanied by a high level of unemployment and forced partial employment. Stagnation may occur at a smaller scale, for example, in certain sectors of the economy or companies.
Stagnation is a situation where the total production is either slowly reduced, or is almost at the same level. Although the stagnation is characterized by a sufficiently high level of unemployment, economists do not belong to the recession. The consequences of stagnation is the lack of growth in the number of jobs, salaries, increasing production volumes. When recession (economic decline), these indicators go much down.
Stagnation can occur:
Stagnation may occur during the usual business cycle of the business environment. It reflects the natural nature of lifts and recession and in the short term in principle should not cause fears or panic.
A phenomenon as stagnation may occur both in developed countries with a mature economic cycle and in underdeveloped states. In the first case, stable in a stable economy can be much more constant than it is felt during the normal business cycle. Classics of economic theory are called such a phenomenon in the stationary state of the economy.
In the second case, the nature of stagnation has other roots. In underdeveloped or developing countries, stagnation is preserved due to the lack of changes in traditional culture, where there is no incentive to develop or grow. By the way, this is why the innovative type of economic development is a necessary condition for sustainable growth.
Stagnation is not necessarily the result of government economic policy. Hunger, war, natural disasters can be external factors causing stagnation in the economy.
What contributes to stagnation in the state economy? In most cases, if it is not about the natural economic embossing, then the human factor comes to first place, namely:
If you look at the indicator of economic growth in the leading economies of the world - the United States, Japan, the European Union - in the period from 1966 to 2014, then you can see a steady downward trend. This is not an economic downturn in its pure form, but not growth upwards, but a slow decline in the performance of the economy, that is, stagnation.
Smooth decline in economic growth in the USA 1966-2014
Stagnation in Japan 1966-2014
Slow down the pace of economic growth in the EU 1966-2014
What is due to economic stagnation in the above examples? We list the main factors.
# 1 financial crisis.The credit bubble and his prosaic explosion in 2008 (even removed the feature film,) became a big factor provoked the fall of economic growth. The huge losses of banks led to a decrease in bank lending and investment volumes.
The financial crisis undermined the position of business and consumer confidence. All this in the aggregate led to more difficult conditions for economic recovery.
# 2 Low investment in the economy. One of the reasons for the stagnation is also to reduce investment volumes, which has been observed in recent years worldwide. This is due, in particular, the following factors:
# 4 problems in the eurozone. In the postwar years, Europe experienced the rapid rates of economic growth, but in recent years a decline has emerged. Due to the economy of the countries of the world, workers are worked out workal and financial relationships. Therefore, economic problems (stagnation) in one region can turn into other states.
# 5 demographic changes Also cause stagnation. Many developed countries face the issue of falling fertility, which leads to aging of the population and reduce its number. This increases the load on the pension provision, which is covered by taxes.
Thus, the stagnation is simple words - this is a period of low level of economic growth, some "trample on the spot." In the long term, this negatively affects the standard of living of the population and the competitiveness of the state in the global economic arena.
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Stopping in development and stagnation in all areas of human economic activity is customary to be called the term Latin origin - stagnation (English Stagnation from Lat. Stagnatio). Economists call stagnation such a state of the economy in which:
Do not confuse stagnation with recession. Although the other phenomenon is part of the same structure - the economic cycle, they, despite the external similarity, have a number of fundamental differences. And most importantly of them are that the recession is characterized by the dynamics of decline in all the main indicators of the economy, and the stagnation is expressed in the fact that every dynamics is practically reduced to zero (there is no growth and decline, and the economy, in fact, trample in one place) .
One of the status indicators is the dynamics of changes in exchange (stock) indexes. At that time, the main stock indices of the country (when analyzing the state of the national economy) or the world (when analyzing the global economic situation) show the dynamics of changes within one percent, it is suggested that the economy is in the stagnation phase.
Depending on the origins of origin, the forms of manifestation and methods of overcoming, in economic theory it is customary to allocate the following basic forms of stagnation:
The reason for the occurrence of the monopolistic form of stagnation is to reduce such a production progress engine as competition. Due to the fact that whole industries are subject to control of the same structure, they cease to compete with each other. The meaning of this completely disappears for the simple reason that the final consumer produced in the framework of the monopoly of products does not have any choice, or, in other words, he is forced to "take what they give."
The absence of the desire for the development and improvement of the quality of products inevitably leads to stagnation in the sphere of the production of goods. And this, in turn, can pull (brake) and the entire economy of the country as a whole.
There is a whole theory of stagnation, according to which it is possible to overcome its monopolistic form in such a way that the economy does not only fall into the next crisis, but also began to develop a new pace. The main steps for this are:
The transitional form of stagnation is associated with the transition of the economy from one of its form to another. As a bright example of this kind of stagnation, the transition from the administrative and command economic system to the mixed economy in the countries of the former USSR can be given.
In this case, the slowdown in the development pace (or complete stop) is directly related to the fact that the entire state infrastructure, sharpened under some standards, urgently is forced to rebuild for other norms and rules. And this is inevitably connected with some braking or even a complete stop of production activities and, as a result, with the suspension of the gross national product (GNP) growth of the country.
Such stagnation almost inevitably leads to a recession of the economy, which, in turn, continues until the entire transition of the entire country's economy is carried out in a new direction.
It should be noted that, contrary to a common opinion that stagnation is nothing more than the forerunner of the next financial crisis (decline or recession in the economy), in fact it can prevail equally as another decline and the next rise in economic development.
According to which economic development occurs within the framework of the structure consisting of four types of cycles:
In this structure, each small cycle is an integral part of greater, and he in turn is in an even greater economic cycle. So, large Condratyev cycles consist of two cycles of the blacksmith, four cycles of Jewor and eight kitchin cycles.
So, according to the theory of cycles, the period of stagnation precedes each decline and every lift in the economy. Stagnation After the decline is characterized by a gradual decrease in the rate of fall, and for stagnation after the rise, on the contrary, is characterized by a decrease in the pace of development in the main sectors of the national economy.
And in that and in another case, stagnation is a stop before starting movement towards the opposite of the previous movement of the economy. It can be called an equilibrium state between the tendency towards an increase and the tendency to reduce the level of economic development.
Stagnatio - immobility, from stagnum. - Standing water) - the state of the economy, characterized by the stagnation of production and trade over a long period of time. Stagnation is accompanied by an increase in the number of unemployed, decrease in wages and the standard of living of the population.It is expressed in zero or minor growth rates, the unchanged structure of the economy, its immunity to innovations, scientific and technical progress. The status of stagnation was characteristic of the US economy in the 1930s, for the Soviet economy in the late 80s.
According to the economist Academician Oleg Bogomolov, "It is the stagnation of the Soviet economy that gave the first impulse restructuring."
In the economy, two types of stagnation, monopolistic and transition, are distinguished, different by origin, forms of manifestation and methods of overcoming.
The first type of stagnation arises as a result of the domination of monopolistic associations, eliminating competition as a motor development engine; It is manifested in the trends of economic stagnation, which covers primarily the area of \u200b\u200bproduction in which monopolies dominate. Stagnation is manifested in the depressive nature of production, a slowdown in investment processes, chronic long-loading of enterprises, mass unemployment. According to the theory of stagnation (representatives - American economists, J. Standl, P. Baran, P. Sui) Stagnation can be overcome by the wide implementation of the achievements of scientific and technological progress, a decrease in the cost of production, the most fully use of the economic law of maximizing monopolous profit. Based on the analysis of the mechanism of capital accumulation of capital, supporters of the theory of stagnation come to the conclusion about the need to eliminate the contradiction between the desire to obtain the maximum aggregate income and the insufficient possibilities of its use. The main factors for solving this contradiction, in their opinion, is technical progress, capital exports to other countries, the growth of purchasing power of the population.
Another type of stagnation occurs during the transition from the command-administrative to the mixed economy and is the consequence of economic errors of governments, ignoring economic laws. In particular, in the economy of post-Soviet states in the 90s. The stagnation manifested itself in a sharp decline in production and investment activity, the physical destruction of the productive forces, primarily in the scientific and technical and intellectual potential of society, as well as the depreciation of the motivational incentives of productive labor. The crisis covered the scope of finance, money circulation, especially the sharp crisis of non-payment. Due to the shortage of competitive goods, post-Soviet countries could not quickly integrate into the system of the international market. At the same time, the national economic complex of the former USSR, economic ties between the sectors of the national economy was destroyed.
We often hear about stagnation in the economy. What does it mean? Stagnation - from Latin "Stop, immobile condition." The negative context is most often used, the value of forced or natural, but carrying unpleasant consequences of the stopping of any process in the economic world. The market should actively develop and work, any delays, stops lead to a crisis in one form or another.
The phenomenon of stagnation is usually stretching For months and years, even decades. External symptoms and manifestations are expressed in the growth of unemployment, reducing the average income of the population and the average salary. The well-being of people deteriorates sharply or does not grow, the overall level of business activity is reduced.
In view of the general trend towards the globalization of the market, the stagnation has become a common term, every economically active citizen is familiar with it. However, it is important to correctly interpret the meaning of the word and not mix it with an everyday context from news releases or analytics.
Understanding this term will facilitate the consideration of factors that form stagnation. The essence of it is quite simple. The economy develops jumps like, after progress, the Stage of "Sleep" or "Dream" comes, which is absolutely normal.
This script is quite traditional and even perceived by analysts. Positive, because there are no sharp shocking jumps, and the slowdown in market processes does not particularly injure players (not counting the smallest). But in practice it turns out that the period of stagnation of the market is a fruitful environment for the crisis. "Live" economy always needs an incentive to move, and there is no such jolts in the state of stagnation.
Let's draw an analogy with a sleeping person who went to sleep and relax, instead of solving his pressing problems. After a long sleep, it discovers that the number of problems has not been reduced, but only increased, some even moved to an unresolved stage.
Stagnation - term inter-sectoral, It is also used by psychologists, ecologists, biologists. But most often you can hear this word in the context of the economy.
Stagnation is traditionally divided two types:
Each species has its own method for solving the problem of frozen and exit from the crisis, stimulating economic life and production.
Monopolistic stagnation is mostly characteristic large firmsTransnational corporations. It is characteristic of economies without market competition - a planned economy, politically defined structures, administrative formations. The crisis is expressed in the fact that the monopolist, due to the lack of rivalry for the client, ceases to produce decent quality products, like services. This leads to a decrease in consumption, production, unemployment due to abbreviations.
What can help solve this problem? In this case, the state plays an important role that allocates different types of assistance to the small and medium business segment. It may be legal and financial support aimed at improving the competitiveness and retention of positions in the market, the ability to compete with a monopoly.
Also helps the introduction new techniciansDifferent innovations, production costs are reduced as a result of the modernization of production. As a result, buyers actively behave in the market, the economic ability increases.
The transitional stagnation is called, as a rule, an error in making strategic decisions, when the basic laws of the market, the state of the crisis, government errors are more often systematic, stretched for decades. In general, the sum of these factors leads to stagnation. Other symptoms:
As for the exit from the state of transitional stagnation, there is no universal recipe. The method is chosen on the basis of the sum of different factors. The transitional option is much more dangerous by the monopolist, it is able to lead to the complete collapse of the economic system.
Solutions May be as follows:
Is it possible to foresee the appearance of stagnation and recognize the causes? In general, it is possible, but they are so multifaceted and integrated that only consequences can be analyzed, and not the state of current development. You can highlight objective conditions which significantly contribute to the development of the crisis:
Often the consequences and symptoms of stagnation are tension in society, rallies, coups, sharp inflation, unemployment. Stagnation can and need to be controlled at all levels to avoid the detrimental effects of economic braking.
What is stagnation in the economy? This is quite a thin and at the same time a complex process that requires deep and in detail the study.
Stagnation in the economy is, if we speak in a simple language, a period of time spent in time in the economic vital activity of a particular country. (Stagnation in Russia, stagnation in England, stagnation in the USA).
What stagnation in the economy is now clear, but what is its causes.
Is it possible to avoid such a phenomenon? Is it really dangerous? Are there any ways to combat this situation?
If we talk specifically about our country, then the stagnation of the ruble may result in the fading of all business activity in Russia.
Does not grow (but not falling, which is important). There is no visible progress and regression, life in the economic sphere is silent.
It does not even swim by the flow, but stops at one point.
Against the background of such a phenomenon there is a sharp jump of unemployment. There is also crime, more social problems appear.
Important: inflation, the rise in prices for essential products is all negative factors that allow you to simply and explain in detail what stagnation in the economy is, and why it is not desirable.
For the first time this phenomenon was spoken only in the 20th century. If specifically, in 30 years.
The situation took place in the American economy. The description of the process clearly gives an outstanding economist of that time Murray.
He called stagnation by stagnation in centuries. There were methods for permission and output from this situation.
Then he listened to, in America agreed with the country's deficit to increase the costs of the most necessary. The path was correct.
I forgot about stagnation at the beginning of the next decade. Murray method used and used so far in different countries of the world.
Murray explained to America and the whole world, why it is impossible to allow the economic crisis to progress.
It can bring to the decline in the manufacturing sphere. Then the gross domestic product will dramatically fall, which is extremely undesirable.
The economy of a particular country may simply collapse. This is the collapse of the whole state, the collapse of the usual life of ordinary people.
Important: Murray substantiated that stagnation, if it did not "cure" in time, will reflect on each person without exception. His theory also states that a successful economy will always come to such a sad process. This is a fact that has been proved by time at different points of the globe.
To deeper to understand what stagnation in the economy should be dealt with its causes.
Experts say that such a phenomenon does not arise because of some kind of problem, we are talking about the complex "government troubles".
So let's go:
Important: the occurrence of the process may affect what person could not provide - elements, force majeure, war, crises in other countries. But this is a separate story, which, if it happens, is quite rare in comparison with the standard reasons for the occurrence of stagnation.
Any of these problems in itself is global, but in the complex they resemble a slow motion bomb.
Sooner or later, the ruble stagnation will occur (speaking of Russia, in particular).
If we talk about real numbers, then the normal GDP growth is about 3 percent per year. The less growth, the slower the country is developing.
Over time, the difference increases and after 20 years is 25 percent compared with developed countries.
After 20 years, Russia on GDP will lag behind the world powers by almost 50 percent.
This is the current level of Montenegro. Life of ordinary citizens can really deteriorate.
This is the stagnation period in Russia's life. And we have already survived the recession in 2014-15.
Important: in order to such a phenomenon in the country's economy, it is not observed, you need much attention to paying science financing and design innovation, in particular. Only the improvement of the production sector will help to avoid a dangerous phenomenon, either make it less painful for the country as a whole and each of its separate citizen.
Let's start in order. Stagnation - that this is such simple words we have already figured out.
Now you need to understand when the process arises, from which stages it consists.
Any stagnation, including the stagnation of the ruble, has four periods:
In the country (if we are talking, for example, Russia's stagnation of the ruble, if:
A big mistake to assume that the stagnation of the ruble in Russia may be the only problem. After all, this is, above all, the process affecting all spheres of life.
Modern economists and political scientists talk about 2 types of process:
Monopolistic arises when a separate monopolist appears in the state in each sphere of economic activity.
Another manufacturers simply have nothing to do in the same market so that they do not introduce, no matter how hard they try, to get one level with a monopolist, they do not work.
Important: in order not to arise the monopoly process in the economy, it is necessary that the state is interested in preventing the occurrence of a monopoly.
We are not only about the production, but also any other sphere! If the state puts obstacles for a monopoly, it will be extremely difficult for her to live and even impossible.
The stagnation of the ruble was observed in Russia, when the Soviet Union broke up.
Just then we moved from one economic model for the management of the country to another, completely new for us.
It should be understood that Russia in the next 20 years will experience stagnation.
In terms of well-being, we will fall to poor countries.
This is an already valid forecast of the Ministry of Economic Development of our country.
GDP will grow only by 1.8-2 percent per year. This for us is extremely small.
Only by the beginning of the 30s this figure will be somewhat increased, but then it will not be enough for healthy development of mills and infusion in it investments from abroad.
Overcoming stagnation will be possible only in the introduction of a number of innovative reforms, which will have a positive effect on the production field of activities.
To avoid stagnation of the ruble in Russia, we need GDP growth at least 3.5 percent per year.
Important: in order to prevent the ruble transitional stagnation (as it was in Russia), it is important to take care of a smooth transition from one economic state management model to another. The process can stretch for many years, but will be less painful than a sharp and not always reasonable change of such management.
Summarizing previous sections of the article, I would like to note that the perpetrators in the stagnation of the ruble (in Russia, for example) can be found for a long time and infinitely.
Of course, such a process is allowed because of:
However, any such process has the beginning and end. It is not necessary to talk about the duration of this phenomenon.
To minimize the consequences of this economic process, a simple person needs:
Important: w.church such simple things while there is time, and the crisis has not come. Experts recommend as an alternative to pay attention to agriculture, work in global web, creative activity, own.
Stagnation is a phenomenon that can be warned or make it consequences less rigid for different layers of the population.
So, let's begin:
The stagnation of the ruble in Russia can be quite dangerous. At least because:
The stagnation of the ruble will certainly lead to recession. This is an inevitable consequence that will also need to survive.
The recession occurs when the GDP level is at a very low level. But all this is far from critical and when properly managed will pass byert.
Recession distinguishes:
This period is important for the country to understand what mistakes were allowed, and how to avoid them in the future.
Any recession ends sooner or later, the stagnation retreats, the new round in the development of the economy begins.
