External reasons for the cyclical development of the economy include ... External factors of economic development

The development of a market economy does not seem to be a straight line, where everything goes monotonously and stably. Usually, she experiences regular ups and downs, which are closed in the framework of successive stages. The cyclical nature of the development of the economy is manifested in the fluctuations of the conjuncture, which has a periodic character.

The economic cycle and its phases

The theory of cyclical development of the economy is described in each textbook on a core subject. Industrial periods were analyzed by such well-known scientists as Joseph Kitchin, Clement Juglar and Simon Smith Smith. They argued that the economic cycle is a change in business activity in the economic system, characterized by a waveform and a time interval between the same state of the conjuncture.

In the economic cycle , four phases are distinguished:

• The peak (rise). The country's production is expanded: new products and services are offered on the market. The population is employed, and the income growth is observed.
• Recession (contraction). Production is gradually declining, accordingly, consumption, investment inflow, GDP level and profit are falling.
• Recession (crisis). The economy has reached the bottom and for some time remains in this state.
• Revitalization. Production grows, bringing in incomes.

The cyclic economy of a particular country may not coincide with a similar process at the level of the world economy or macroeconomics as a whole.

Internal causes

The consequences of the cyclical development of the economy are manifested at the level of experience. After all, each new stage is not a copy of the previous one: humanity is learning from mistakes and making changes during the next period. Of course, the cyclicity is greatly influenced by events and politics in the country. Allocate such internal factors that are displayed on the economy of the state:

1. Reduction of production caused by excessive release of goods. They are set to low demand due to the large availability and high prices. In fact, supply exceeds demand.
2. New items. For example, with the advent of computers on the market, typewriter manufacturers are beginning to shut down the business or are shifting capital to the development of other industries.
3. Monetary policy. The release of a huge amount of money generates inflation, while their inadequate availability leads to a decline in production and a reduction in investment.

Internal causes include the demographic situation, the development of the social sphere, the level of education, culture in the country and so on. All these factors are also reflected on the standard of living of ordinary citizens.

External influence

It also plays an important role. External reasons for the cyclical development of the economy include:

• Hostilities. During the armed conflict, the economy is rebuilt to a new "wave" - the production of ammunition and equipment for fighters. Additional workforce and resource are attracted. When the war ends, the recession begins.
• Innovation. They have a huge impact on prices, investment, demand and consumption.
• The impact of other factors. For example, here you can refer to the jumps in the world level of oil prices.

External factors of economic development may include the international policy pursued by the government, as well as the diplomatic ties of the state and its activity on the world market. The totality of internal causes and stimuli from the outside and forms the atmosphere in which the economy resides, they also directly influence its level and the qualitative component. It is clear that the cyclical nature of the economy is "entangled" in this complex process and is completely dependent on it.

Economy and War

Political upheaval, civil confrontation or the invasion of another country into the territory of the state - all this invariably leads to human, humanitarian and economic losses. Armed conflicts have broken more than one economy for many millennia, but the 20th century was the most massive and destructive. Two World and one Civil War shook not one state: many people were killed, factories and factories were destroyed by explosions. Citizens suffered from hunger and lack of shelter over their heads, as all the forces were thrown on the production of shells, tanks and machine guns.

War and economy are incompatible concepts. A crushing blow of the first destroys all the achievements of the second. In world history, there is no example when, in a state of armed conflict, the state would maintain the economy at a high level and in no need. At the same time, especially dangerous are civil wars: more cruel and destructive not only for the economy, but for the people themselves. When a brother with a weapon in his arms goes to his brother, it is accompanied by a particularly pronounced aggression and hatred, which directly affects the level of destruction, including economic.

Example of Libya

Let us analyze how the war was reflected on the life of Libya. Armed conflict in this country continues from 2011: between the followers of the murdered leader of the state Muammar Gaddafi and the detachments of the National Transitional Council. During the confrontation over the past four years, 50 thousand people died, refugees were 10 times more. Figures continue to grow rapidly. Estimates of economic damage vary: the IMF says about 7.7 billion dollars, some consulting companies insist on 15 billion. The oil industry, which flourished and was the main wether of the people, lost 50 billion.

Since the external causes of the cyclical development of the economy are primarily war, it can conclude how this factor affected the situation in this case. With the development of mass protests, power seizures of enterprises, armed slaughter and bombing, the economy fell to the very bottom of its development. The economy actually stopped: people lost interest in the production, now their main goal is to achieve the truth and survive.

Role of black gold

External causes of the cyclical development of the economy include the so-called oil shocks - sharp price jumps in the product. For example, in 1973, the unification of states that are suppliers of black gold on the world market into one OPEC cartel resulted in an increase in the cost of the resource. This marked the beginning of the biggest economic crisis in the post-war period. In the US, the decline in production continued for two years and amounted to as much as 5%.

OPEC includes such Arab countries: Qatar, Kuwait, Libya, Syria, Saudi Arabia, Algeria, Iraq, Egypt, Arabia and, Abu Dhabi. On the general council, they decided to reduce fuel supplies to states that support Israel's policy. In addition to America, Japan also included most of the countries of Western Europe. The economies of the world's leading powers, which depended on black gold, became depressed, because the price per barrel from $ 2-3 grew to 15. This was the first time in history when oil weapons were used for political purposes.

Innovations

The cyclical nature of the development of the economy is also manifested when scientists invent something new, large-scale and functional. This, on the contrary, positively affects the production, increases it, improves the quality of the goods and so on. Sometimes innovative solutions simply turn the economy upside down. For example, such a "bomb" was the construction of the world's first railroad. How many opportunities for the economy opened the invention. Now the goods could be delivered in the shortest possible time for a thousand miles. Production has increased. People got a lot of jobs: on the railway itself, as well as in factories that began to open massively in all world powers.

As we can see, all the innovations concern the external reasons of cyclical development of the economy. If you come up with a new technique, it makes it possible to increase investment, a lot of capital goods. At the same time prosperity will not be a direct result of one discovery. It is the consequence of a whole mechanism of innovations that within the current cycle lead the economy to its maximum peak of development.