Economic efficiency of production and its components

Economic efficiency, as a rule, is the main integrated indicator of the success of economic activity for any enterprise in any industry.

In the simplest terms, the economic efficiency of production (EEP) implies the value of the ratio of the result achieved by the enterprise or firm and the production and commercial activities and the costs incurred by the firm or enterprise to achieve this result. The quantitative parameter of this ratio is called the indicator of economic efficiency and is defined as the relative effectiveness of the entire economic system (here we mean the full production-commercial cycle for a given particular enterprise). The relativity of the performance parameter is determined by the fact that its indicators are taken in comparison with the indicators of resource costs.

As an integral indicator, the economic efficiency of production expresses the statistical sum of the performance indicators at various levels of the given economic system (enterprise, firm) and acts as the aggregate final characteristic of economic activity (from a particular enterprise or even a unit to the economy of the whole country as a whole). At the same time, as an integrated parameter, it also possesses the qualities of universality, that is, with equal degree characterizes any efficiency factors, be it the economic efficiency of agricultural production, industrial, services, or the economic efficiency of livestock production.

At the level of microeconomic analysis, the EEE is calculated as the ratio of the costs of final products of production to costs minus one. This calculation is similar at the macroeconomic level, only as the first indicator is the value of the entire GDP of the country. In addition, calculations of individual factors of production-capital, personnel, land, and means of production-are also very indicative . This allows us to analyze in more detail the state of affairs at a specific enterprise or in the country as a whole and to formulate specific management decisions based on cumulative technology, that is, to concentrate investment and other resources at the weakest link in the economic process from the point of view of its effectiveness.

In the most global expression, the main criterion of social production is the level of satisfaction of people's needs in the necessary socio-economic benefits. The narrower and more specific content of this criterion is the actual economic efficiency of production, which is characterized by a number of special parameters. The most important of such parameters is such an important and widely used indicator as labor productivity, which expresses the quantitative side of the production results in relation to time indicators. In addition to labor productivity, the efficiency of production, the return on assets, the profitability of production and indicators of profitability and payback are very capacious.

It is generally accepted that such a method of production activity is economically effective, in which conformity of volumes of produced products with a given specific volume of costs for its production is achieved. If the enterprise can not maintain such volumes without attracting additional resources, then such production is considered ineffective. That is, economic activity is the most effective with the least costs.

In this context, the economic efficiency of production differs from the technical efficiency, because it takes into account a much wider range of indicators, for example, such as the conformity of product quality to the requirements of the modern market or the needs of consumers.