development of a market economy is not like a straight line, where everything goes uniformly and consistently.Usually, it is going through the regular ups and downs that are closed within the framework of the successive stages.The cyclical nature of economic development is manifested in the market fluctuations that has a periodic nature.
economic cycle and its phases
cyclical theory of economic development is described in every textbook on the profile subject.Industrial periods analyzed such famous scientists as Joseph Kitchin, Clément Juglar Clement and Simon Smith Kuznets.They argued that the economic cycle - a change of business activity in the economic system, characterized by an undulating and the time interval between the same states conditions.
The economic cycle is divided into four phases:
- Peak (lift).Manufacturing expanded powers: the market offers new products and services.Population employed, he observed income growth.
- recession (contraction).Production is gradually declining, falling consumption respectively, an infusion of investment, GDP and earnings.
- recession (crisis).The economy has reached bottom, and for some time remains in this state.
- recovery.Production is growing, bringing profits.
economy is cyclical particular country may be different from the same process at the level of the world economy and the macroeconomy as a whole.
Internal reasons
consequences of cyclical development of the economy manifested at the level of experience.For each new stage it is not a copy of the previous one: mankind learns from mistakes and make changes for the next period.Of course, have a great influence cyclical developments and policies in the country.There are internal factors that appear on the state's economy:
- reduction of production caused by the excessive release of the goods.They set low demand due to the high availability and high prices.In fact, supply exceeds demand.
- Novelties.For example, with the advent of computers on the market, manufacturers of typewriters are beginning to close the business or relocating the capital to the development of other industries.
- monetary policy.The release huge amounts of money generates inflation, while the lack of their presence leads to a decline in production and a reduction of investments.
Internal factors include demographics, social development, education, culture and so on Power.All of these factors are also displayed on the lives of ordinary citizens.
external influences
It also plays an important role.External factors include the cyclical development of the economy:
- hostilities.During armed conflict, the economy is rebuilt to the new "wave" - the release of ammunition and equipment for the fighters.Attract additional manpower and resources.When the war ends, the coming recession.
- Innovation.Has a huge impact on prices, investment demand and consumption.
- impact of other factors.For example, these include horse racing at world level of oil prices.
External factors may include economic development and international policies pursued by the government, as well as diplomatic relations of the state and its activity in the world market.The totality of internal causes and stimuli from the outside and generates an atmosphere in which resides the economy, they are also directly proportional to affect the level and quality component.It is clear that the economy is cyclical, "embroiled" in this complex process and is completely dependent on him.
Economy and War
political upheaval, civil strife or invasion of another country on the territory of powers - all this inevitably leads to human, human and economic losses.Armed conflicts broke not one economy for thousands of years, but the most extensive and devastating appeared XX century.Two world wars and one civil war rocked more than one State: many people were killed, bombings destroyed factories.Citizens suffer from hunger and lack of shelter, as all the forces were thrown on the production of missiles, tanks and machine guns.
war and the economy are incompatible concepts.A crushing blow destroy all the achievements of the first two.In world history, there is an example where, in a state of armed conflict, the State would be supported agriculture at a high level, and in no way needed.This is especially dangerous civil war more cruel and devastating not only for the economy but also for the people themselves.When a brother in arms comes to his brother, it is accompanied by particularly pronounced aggression and hatred, which directly affects the level of destruction, including economic ones.
Example Libya
analyze how the war will be displayed on the life of Libya.Armed conflict in the country continues in 2011: between the followers of the slain leader Muammar Gaddafi and the state units of the National Transitional Council.During the confrontation in the past four years, killed 50 thousand people became refugees in 10 times more.The numbers continue to grow rapidly.Estimates of economic damage vary: the IMF says about $ 7.7 billion, some consulting companies insist 15 billion. The oil industry, which flourished and was the main breadwinner of the people, has lost $ 50 billion.
As to external reasons, the cyclical development of the economy are mainly the war, it can be concluded as this factor influenced the situation in this case.With the development of mass protests, captures the power companies, the armed massacres and bombings economy has fallen to the bottom of its development.The economy actually stopped, people have lost interest in the production, is now their main goal - to find the truth and survive.
role of black gold
External factors include the cyclical development of the economy and the so-called oil shocks - sudden changes in prices for the product.For example, in 1973, a union of states that are suppliers of black gold on the world market, one of OPEC cartel has led to an increase in the value of the resource.This marked the beginning of the biggest economic crisis in the postwar period.In the US, the decline in production continued for two years and amounted to as much as 5%.
OPEC include such Arab countries: Qatar, Kuwait, Libya, Syria, Saudi Arabia, Algeria, Iraq, Egypt, Arabia and Abu Dhabi.At the general council, they decided to cut fuel supplies to countries that support Israel's policies.The list, in addition to America, came as Japan and most of Western Europe.Economy of leading world powers, which are dependent on black gold have become depressed, because the price per barrel from 02.03 dollars rose to 15.It was the first time in history, when for political purposes used the oil weapon.
Innovation
cyclical nature of the economy manifests itself when scientists invent something new, large-scale and functional.It is, by contrast, a positive effect on the production, increases it improves the quality of the product and so on.Sometimes innovative solutions simply roll over the economy upside down.For example, a "bomb" has been building the world's first railway.How many opportunities for the economy opened up the invention.Now you can deliver the goods as soon as possible for a thousand miles.Production increased.People have got a lot of jobs: at the very railway and in factories, which began en masse to open in all the world powers.
As we can see, to the external causes of cyclical development of the economy are all innovations.If you come up with a new technique, it gives the opportunity to increase investment, a lot of capital goods.This prosperity will not be a direct result of the discovery.It is a consequence of a mechanism of innovations that in the current economic cycle leads to its maximum peak of development.
