What is stagnation? In Latin, there is such a word "stagnatio", which in translation into Russian means "immobility". From it comes the name of such an economic term as "stagnation". From the above translation it is clear that he describes a phenomenon of a negative nature. What is stagnation, in simple terms, will be described in the article.
General concept of the term
If we talk about stagnation in simple terms, this is an economic situation that is characterized by stagnation in the market, a h alt in the development of production, and a weakening of trading activity. All this should take place over a long period.
Stagnation in the economy is literally a slowdown, a lack of renewal both in production and in other types of business, including financial ones. At the same time, the production of new types of products ceases, unemployment increases, wages fall in all sectors of the economy, as well as the standard of living in the country as a whole.
Market stagnation is the lack of its susceptibility to innovations, to scientific and technological progress. It does not allow any innovations into itself, everything goes according to the thumb, the structure of the economy “freezes”. There are two types of economic stagnation, which differ from each other in the reasons for which they appeared, in the way they proceed, and in the possibilities of getting out of the current situation.
The first kind of stagnation
The first kind of stagnation is the monopolistic type. Its cause is an overabundance of monopoly enterprises in the economic arena. They stifle competitors, thereby preventing business development. Most of all, this type is inherent in the manufacturing sector, so the protracted economic "bogging" begins here. The main characteristics of this process are as follows:
- Sharp reduction of investment packages.
- Underloading and idle capacity.
- Unemployment on a massive scale.
American economists-theorists to overcome such phenomena propose to stimulate the growth of achievements in technology and science, the export of capital abroad and increase the purchasing power of the country's population.
Second type of stagnation
The second type of stagnation is the stagnation of the transitional period. It is characterized by the peculiarities of the country's transition from one economic system to another - from a planned-command to a market one. It took place in the countries that were part of the Soviet Union at the end of the last century, when an unprecedentedproduction and investment decline, there was an outflow of "minds" to Western countries.
All economic sectors were hit hard. Due to the lack of products that could withstand competition, the ex-Soviet republics were not able to smoothly merge into the global economy.
As a conclusion from the second type of stagnation, economists propose actions to stop the decline in production by attracting a complex of goods and services from abroad. As well as further stabilization of the situation with access to growth processes.
About the causes of stagnation in the country
Scientists are of the opinion that economic stagnation must be learned to predict, but this is a very difficult task. After all, there are always more reasons for stagnation than two or three. The causes of stagnation are a whole complex of factors. As a rule, they are easier to analyze after the fact. Some of the more common causes include:
- increased bureaucratization of government structures;
- corruption of managers and representatives of the business community in some industries;
- backlog in science funding;
- worn-out household equipment;
- weakening of financial and trade relations with other states;
- mistakes in choosing a political course (with the second type of stagnation).
Local causes of stagnation
As for stagnation in a particular sector of the economy or in a particularenterprise, the reasons here may be somewhat different. So, for example, the stagnation in the work of any commercial firm occurs when we are tired of continuous growth, from the decrease in resources, from the rigidity of the structure and methods of carrying out activities, the lack of new ideas and developments.
Stagnation within an individual business is easier to overcome than at the state level, however, if it coincides with an economic decline throughout the country, then a private structure falls under a double blow.
Theoretical Ways Out
For a country to emerge from a protracted crisis, its leaders must have a clear plan and take concerted action to restructure the economy.
Unambiguous recipe for what exactly these measures should be does not exist today. But still there are proposals of theoretical scientists in this regard. They come down to the following actions aimed at eliminating the causes of stagnation:
- Strengthening anti-corruption measures at the highest levels of government.
- Struggle against excessive bureaucratization of the administrative apparatus.
- Increasing the scale of investment in the development of scientific and technological progress, specific innovative developments (especially those related to the nanotechnology industry, medicine and space exploration).
- Updating the material and technical base of production.
- Optimization of economic ties with other states.
What practitioners advise
It would seem that practicing economists, likeno one else is able to make a significant contribution to resolving issues of overcoming stagnation. But in reality, the situation is quite difficult. Since the proposed ways are not always fully thought out, equipped with mechanisms for their implementation. Let's call them anyway.
- Speedy implementation of the latest developments in the field of science and technology in all economic segments. (Question: how could these developments be created in the face of declining financial injections?)
- Increasing people's purchasing power. (Question: what resources and mechanisms should be used to implement it?)
- Reducing the cost package in the production of products. (Question: is it possible to reduce costs in the presence of obsolete equipment and what else to save on?)
- Increase in income and tax revenues from the profits of monopoly enterprises.
- Stimulation of the development of output of products intended for export. (Question: how to turn the tide if ties with other states are at a low level?)
Dangerous consequences of stagnation
The results of stagnation are, in simple terms, the loss of jobs, a decrease in the opportunity to purchase something significant for the family, the lack of decent goods on the shelves, the need to "tighten the belts". This is a stop in the development of scientific thought and in its embodiment, a lag in he althcare, education and weapons.
What threatens this situation? It is very dangerous and can lead to revolutionarysentiments, to calls for the overthrow of the existing government, mass demonstrations in the streets, strikes at enterprises. Having familiarized in detail with the meaning of the word "stagnation", with its dangerous consequences and difficulties of overcoming, what conclusion can be drawn? How to get rid of it if neither theorists nor practitioners fully know this?
It seems to be necessary to conclude that, firstly, theoretically this negative phenomenon has been studied, and secondly, we are all witnesses that it can be overcome. For example, as it was in the USA after the 30s and in the territory of the former USSR after the 90s of the last century. This means that a specific government of a specific country that has fallen into a protracted economic crisis must and can find the only right solutions and ways to implement them.
