Lecture
Like any complex formation, the national economy has its own
structure. In general terms, the concept of "structure" means a set of stable connections within an object that ensure its integrity and the preservation of its basic
properties under various external and internal changes.
The national economy is an economic system that has developed historically within certain territorial boundaries, an interconnected set of industries,
types of activity, and territorial complexes, encompassing all established
forms of social economy.
The structure of the economy represents stable quantitative relationships between its various component parts.
The reproduction structure of the economy characterizes the ratio of the incomes of the subjects of the national economy, representing the component
parts of the aggregate social product. The reproduction structure
of the national economy shows how its economic agents reproduce their production and economic potential on the basis of the reproduction of flows of goods and services.
The reproduction structure of the national economy is made up, in
interconnection, of 4 aggregated sectors (subjects of the national economy):
households, enterprises and organizations, the state, and the foreign economic sector, united into a single system by economic relationships, and performing certain functions within this system.
Households are the owners and suppliers of the factors of production that belong to them. By selling or leasing
out the factors they possess, households receive income, which they then divide into two parts, the first of which goes toward consumption, and the second –
toward savings. By consuming various goods using part of
their income, households reproduce labor resources, while by saving and investing the other
part of their income they reproduce capital.
Enterprises and organizations registered within the country manifest their activity in the following ways: they create demand for factors of
production, organize the production process, and ensure the supply
of goods and services. By investing part of their income, they reproduce capital.
The state includes all state institutions and agencies. From
an economic standpoint, the state engages in the production of public
goods (it ensures security, environmental protection, public services, social infrastructure, etc.). The state also takes care of increasing
the efficiency of the entrepreneurial sector, creates the legislative framework, and
ensures compliance with the law.
The foreign economic sector includes that part of the activity of economic agents (both domestic and foreign) that is connected with
foreign trade (imports and exports), as well as with the movement of capital and money (currency) into and out of the country.
The social structure of the economy is determined by the division of society into social groups (communities, classes, strata, groups). Depending on
which element is singled out as the main one, the structure of society can be represented as group-based, class-based, community-based, or organizational.
A social group is a set of people who share common social characteristics and perform a socially necessary function within the overall structure of the social
division of labor and activity. Such characteristics may include sex, age, nationality, race, occupation, place of residence, income, power, and education.
The social structure arises on the basis of the social division of labor, while social stratification is formed on the basis of the social distribution of the results of labor. The distribution of goods is always unequal. This gives rise
to the differentiation of social strata according to the criterion of unequal access to power, wealth, education, and prestige.
The territorial structure of the economy is determined by the division of the national economy into economic districts (regions).
The sectoral (branch) structure of the economy involves dividing the economy into branches (spheres of activity). As a rule, international statistics distinguish: industry, agriculture, services, and other branches.
Branches (spheres of activity) are qualitatively homogeneous groups of economic
units that produce products of the same type and purpose, applying similar technological processes, regardless of their territorial location.
All spheres of economic activity can also be divided into the production sphere (material and non-material production) and the non-production sphere.
Material production includes:
1) branches and enterprises producing material products
(industry, agriculture), grouped into two divisions: production of means of production; production of consumer goods.
2) branches and enterprises providing material services, i.e., services for
satisfying the consumer's material and household needs, the provision of which includes activity carried out in relation to a material
product, including one supplied by the consumer.
Non-material production includes branches and enterprises providing non-material (socio-cultural) services, i.e., services for satisfying spiritual, intellectual, and ethical needs and maintaining the normal life activity of the consumer, including the maintenance and
restoration of health, the spiritual and physical development of the individual, and the improvement
of professional skill, i.e., services not tied to a good in its material
form (insurance, banking, financial, expert, and legal services,
educational services, sports, tourism, recreation and leisure services, cosmetic services, medical services, rental and leasing services, communication services, etc.).
The non-production sphere is a set of branches and organizations that create non-material goods having no monetary value, ensuring the preservation and development of the individual's personality, life, honor and dignity, personal inviolability, business reputation, and authorship, as well as the intellectual and spiritual development of the individual and society (public activity, trust
in the state and in people, security, judicial and legal protection, scientific ideas, knowledge, religion, art as a whole, etc.).
The development of the non-production sphere ensures the all-round development of the individual and, thereby, the expanded reproduction of social and labor resources. Its role in the life of society is constantly growing.
In international statistics, the indicators of the system of national
accounts (SNA), developed by the UN Statistical Commission in 1953, are used to characterize the final results of a country's annual production.
The System of National Accounts (SNA) is a set of balance-sheet economic tables reflecting, on the one hand, the expenditures of economic agents on the purchase of goods and services, and, on the other hand, their income from the results of economic activity.
The SNA is built on the basis of a model of the national economic circular flow (Figure 1.3.3), reflecting the functioning of the national economy as closed flows of goods, services, and money moving between macroeconomic agents. The main goal of national accounting is to obtain, on the basis of statistical reporting data, quantitative information
on the production, distribution, and use of the social product. For this purpose, for each of the macroeconomic agents and for the economy as a whole, a system of functional accounts is compiled, reflecting the given agent's participation in the following economic processes: the production of goods and services, and the formation, distribution, redistribution, and use of national income. The basis of
this system consists of the accounts of Gross Domestic Product (GDP), capital investments, household and government income and expenditure, as well as the account
of foreign economic operations. The balance tables (accounts) break down the summary indicators into their components.
The following macroeconomic indicators are calculated on the basis of the SNA.
Gross Domestic Product (GDP) is the market value of all final goods and services produced within the territory of a given country during a year. GDP measures
output created by factors of production that are domestic to the given economy, regardless of who owns them. Here the so-called territorial principle of accounting is used.
Figure 1.3.3 – Model of the National Economic Circular Flow
Gross National Product (GNP) is the market value of all final goods produced by a country (i.e., by its citizens) during a year. Gross Regional Product (GRP) is the value of goods and services produced in a region across all types of economic activity and intended for final consumption, accumulation, and net exports.
Gross National Income (GNI) is the total sum of income earned by the people and enterprises of a country.
It is calculated as GDP plus income received by the country's citizens from abroad, minus income taken out of the country by foreigners. Gross National Income (GNI) takes income into account instead of output. It serves as an alternative to Gross Domestic Product (GDP) as a measure of wealth.
Although they do not differ significantly.
Table 1.3.1 – Differences in the calculation of GDP, GNI, and GNP.
Who earned the income: GDP GNI GNP
Residents of the country Includes all Includes all Includes all Foreigners in
the country
Includes Includes, if spent within the country
Excludes all
Residents outside the country Excluded Includes, if repatriated
Includes all
Foreigners outside the country
Excluded Excluded Excluded
GNP = GDP + (income received on all foreign assets) – (income received by foreigners within the country)
GNI = GNP + (income of foreigners earned and spent within the country) –
(foreign income of citizens not transferred back to the country)
Net National Product (NNP) is the sum of final goods and services remaining for consumption after replacing worn-out equipment, i.e., from
GNP the amount of depreciation charges is subtracted.
National Income (NI) is all the newly created value for the year that production has added to what was created previously. It characterizes the amount of income of all suppliers of productive resources (wages, interest, rent, profit) through which NNP is created. To calculate it, indirect business taxes (value-added
tax (VAT), excise taxes, and customs duties) are subtracted from NNP.
Personal Income (PI) is the amounts of income going toward the personal consumption of the population.
This indicator reflects the redistributive processes in the movement of national income, and to calculate it one must subtract from national income corporate profit taxes, the amount of retained corporate earnings, and the amount of social insurance contributions, but add all transfer payments to the population (pensions, stipends, etc.).
Disposable Income (DI) is the amounts that households direct toward savings and
consumption at their own discretion. To calculate it, the total amount of taxes paid by the population to the budget is subtracted from the sum of personal income.
Sequence for calculating macroeconomic indicators:
GNP – D = NNP (Net National Product)
GNP – D – IT = NI (National Income)
GNP – D – IT – CPT – RE – SIC + TP = PI (Personal Income)
GNP – D – IT – CPT – RE – SIC + TP – PIT = DI (Disposable Income)
D – depreciation;
IT – amount of indirect taxes;
CPT – corporate profit tax;
RE – retained earnings of enterprises;
SIC – social insurance contributions;
TP – amount of transfer payments;
PIT – personal income tax.
To measure the cumulative results of a country's development throughout its entire history, the indicator of national wealth is used, which
represents the totality of goods accumulated in the country at a given point in time. The main elements of national wealth include: available
natural resources (used and explored mineral deposits), means of material and non-material production, the property of the population, material and cultural values (historical and cultural monuments, museum
exhibits, etc.), as well as intangible values (human capital, information resources, scientific achievements, etc.). The socio-economic
progress of society is accompanied not only by an increase in national wealth, but also by a change in its structure, with an increasing share of intangible wealth.
Gross Domestic Product (GDP), as a summary indicator of the development
of a country's economy, is one of the most frequently used macroeconomic indicators.
There are three methods for determining GDP: the production method, the expenditure method, and the income method.
The first way of determining GDP – the production method – calculates it as the sum of the value added by all producers of goods and services
in the given country.
Value added is the value created (or added) in the production process; in this case, the cost of purchased raw materials and materials, semi-finished products, and components purchased from others is subtracted from the value of the output produced.
A product created at one enterprise and consumed at another
matters only for assessing the performance of the enterprises themselves. When all the value added across all branches is summed, the intermediate product
disappears. Only those goods intended for final consumption remain, i.e., the final product.
The second way of determining GDP is by expenditure (final use). Here, GDP is calculated as the sum of purchases of goods and services, i.e.,
the sum of expenditures by the agents of the national economy on final consumption.
GDP = C + I + G + Xn
C – personal consumer spending of the population.
I – gross private domestic investment (purchase by entrepreneurs of
machinery, equipment, and construction expenditures).
G – government purchases of goods and services.
Xn – net exports (the difference between exports and imports).
The third method – calculating GDP by income (the distributive method) – requires examining the flow of income to the owners of the factors of production.
GDP = Z + R + K + P + A + Nb
Z – compensation of employees for their labor.
R – rental payments, i.e., the income of owners of land and structures.
K – interest – the income of owners of capital.
P – profit – the income of entrepreneurs.
A – depreciation – income of enterprises.
Nb – indirect taxes – income of the state.
GDP is calculated in monetary terms. At the same time, it is necessary to take into account the dynamics of prices over the reporting period. For this reason, two types of GDP are distinguished.
Nominal GDP (current GDP, GDP in current prices) is the value of goods and services calculated at the prices at which they were actually sold.
Real GNP is the value of all goods and services produced in the economy in a given year, calculated at the prices of a fixed base year.
To calculate the real value of a macroeconomic indicator, the nominal value of that indicator must be divided by the price level or price index (the GNP deflator). In doing so, the change in prices is taken into account across the broadest possible range of
consumer and investment goods and services.
Real GNP can also be calculated by another method, using comparable prices. If nominal GNP equals the volume of output measured in current market prices, then real GNP is taken as the same quantity of goods and services valued at the constant prices of the base year, which are called comparable prices. If nominal GNP is then divided by real GNP, one obtains
the GNP deflator, which in this case makes it possible to judge the change in the average
price level in the reporting year compared with the base year.
As an alternative to using GDP as a comprehensive indicator of economic and social progress, in 1990 the UN introduced the
Human Development Index, which measures such factors as education, gender equality, and health, as well as the standard of living, assessed through
GNI (gross national income) per capita at purchasing power parity (PPP) in dollars.
Purchasing power parity (PPP) is the number of units of a currency required to buy a standard set of goods and services that can
be bought for one monetary unit of the base country (or one unit of the common currency of a group of countries).
PPP shows the relationship between two currencies based on the prices of similar
goods in the two countries. The simplest way of calculating exchange rates by purchasing power parity is the so-called Big Mac Index – an indicator introduced by The Economist magazine that makes it possible to compare exchange rates based on the price of the main product of a fast-food restaurant.
Finance is one of the most important economic categories, ensuring the successful functioning and dignified international positioning of economic systems.
Finance is present in all socio-economic formations,
brought about by the emergence of the state and the development of commodity-money relations. It manifested itself most vividly as a means of serving state interests in the Middle Ages, under the conditions of the feudal socio-economic formation. In each of the formations, finance had its own distinctive features regarding social essence, role in social production, forms of financial
relations, etc. For example, in the post-capitalist formation, speculative finance occupies a special place.
Speculative finance is short-term investments in assets (securities, commodities, etc.) made exclusively for the purpose of earning income from their resale.
The essence of finance is manifested in its main functions:
– the distributive (redistributive) function: connected with the distribution of gross domestic product and its main part – national income.
– the control function: consists in monitoring the distribution of gross domestic product and national income among the relevant funds and their use for the intended purpose.
The domestic school of finance is based on the distributive concept of finance (realized through its distributive function), the postulates
of which are built on comparing and distinguishing the related categories of "finance and money" and "financial and monetary relations."
Monetary relations are present at all four stages of the process of social reproduction (production; distribution; exchange; consumption), mediating the creation and movement of created value to the consumer. In this sphere the term "money" is used.
Distributive relations arise at the second stage of the process of social reproduction, where the distribution of created income takes place. Distribution is another way of bringing created value to the consumer. Distribution is characterized, first, by a one-way movement
of value (without a corresponding movement of goods) and, second, by its fund-based movement (through the formation and functioning of targeted centralized and decentralized funds). The distributive nature of the movement of created value leads to the formation of financial relations as a specific part of monetary relations, taking the form of financial transactions. In this sphere the term "finance" is used.
Money is a commodity that serves as the universal equivalent for all other commodities (K. Marx). The essence of money is expressed in its classical functions: a measure of value; a medium of exchange; a means of payment; a store of value; world money.
Finance is an instrument for the distribution and redistribution of society's income. It
does not perform any of the functions of money, but through the formation and targeted use of centralized and decentralized funds it ensures the effective use of the income created by society.
The terms "money" and "finance" exist in parallel. Each of them has its own sphere of application.
The role of finance in the economy:
– a basic resource for ensuring the continuity of the reproduction process;
– a source for meeting the financial needs of economic agents;
– a means of redistributing income;
– an indicator and regulator of socio-economic development;
– the basis of economic management by the state and control over the movement of financial resources.
Monetary relations are economic relations arising between people in the
process of producing and selling goods.
Financial relations are a specific part of monetary relations (distributive relations) that are connected with the formation and use of centralized
and decentralized funds of monetary resources.
Money circulation is the movement of money in cash and non-cash forms, serving the circulation of goods, as well as non-commodity payments and settlements.
The instrument mediating financial relations is finance. The instrument mediating monetary relations is money.
The development of financial relations at the level of a country's economy leads to the formation of the state's financial resources.
The development of monetary relations at the level of economic agents leads to the formation of the financial resources of organizations. At the microeconomic
level, finance is increasingly identified with monetary funds, i.e., money, and is considered in the context of the resource concept, within which
finance is understood as the working money of an organization. Monetary funds enter an organization in the form of revenue from its various types of activity. But as soon as the organization begins to manage them, putting
them into circulation, the monetary funds become its financial resources. Thus,
the financial resources of an organization are the totality of all, without exception, of
its monetary funds (own and borrowed, fund-based and non-fund-based,
equivalent and non-equivalent), at its disposal, intended for both simple and
expanded reproduction. In this case, monetary funds are understood to mean not only cash on hand at the organization, but also funds held on
accounts at a bank (settlement, foreign-currency, and others), as well as securities (shares, bonds, promissory notes, etc.) and other monetary assets of the organization.
The purpose of financial resources is to satisfy the needs
of all agents in the distributive process: the state, society, classes,
groups of individuals, and people.
The financial system of the state is a set of distinct but interconnected
spheres and links of financial relations and the corresponding financial institutions,
organizing the formation, distribution, and use of centralized and decentralized funds of monetary resources.
The spheres of the financial system reflect the level of development of financial relations: the sphere of "State Finance" (the level of the state, the macroeconomic level) and the sphere of "Finance of Economic Agents" (the level of organizations, the microeconomic level). The links of the financial system are distinguished
within the corresponding spheres as a set of financial relations and flows having a certain narrow specialization: the "State
Budget" link, the "State Credit" link, the "Households" link, and so on.
Figure 1.3.4 – Structure of the Financial System
The state budget is a set of distributive and redistributive relations, financial estimates of all agencies, government services, and government programs, reflecting needs to be met at the expense of
the state treasury. It is the balance of the state's income and expenditures.
State credit is a set of monetary relations arising between
the state as a borrower (or lender) of monetary funds and individuals (legal entities) and foreign governments, acting in the role of creditors.
State targeted funds are created by the state through the accumulation of significant monetary resources for financing public
needs and directing them toward achieving certain socio-economic goals and tasks (financing priority sectors, carrying out
measures of a social nature, addressing tasks in the sphere of education, environmental protection,
law and order, etc.).
To implement the state's targeted tasks and functions, state extrabudgetary
funds may also be created, each of which has its own
separate budget.
The links of the "Finance of Economic Agents" sphere are decentralized
funds such as the "Accumulation Fund," the "Consumption Fund," and the "Reserve
Fund."
Finance is closely connected with such an economic category as "credit."
Credit is a loan in the form of money or goods, which are transferred by a lender
to a borrower on terms of payment (for a fee (interest)), repayability
(with the mandatory condition of their return), and maturity (with a fixed repayment
date).
The financial system of the state
State
finance
(centralized
finance)
State budget
State credit
State targeted
(budgetary and extrabudgetary) funds
Finance of economic agents
and
households
(decentralized
finance)
Finance of commercial and non-commercial
organizations
Finance of households (the population)
The interconnection between finance and credit is clearly manifested in interest
(remuneration), which directly affects the profit of the borrower. For
providing credit resources, the lender charges the borrower
a fee in the form of interest. The source of interest on a long-term loan is
profit itself. In the case of a short-term loan, the costs of paying it
are charged to the cost of production of goods or services, which also affects the
borrower's profit. In turn, the lender pays a certain interest
for holding monetary funds in accounts opened at banks. Banks also pay interest
out of their income for the use of borrowed resources.
Financial policy is a special sphere of state activity in the area of forming
and using financial resources, both at the macro level and at the micro level
for the purpose of economic and social development9.
The state's financial policy includes tax policy, budget (budgetary-
financial) policy, and monetary-credit (monetary) policy.
Tax policy is the purposeful activity of the state, including
the development, adoption, and implementation of measures within the tax system in order to achieve
the economic and social results needed by society9.
Budget (budgetary-financial) policy is a set of goals, tasks, decisions
made by, and measures carried out by, government authorities aimed at distributing
the state's monetary funds and using these funds for sectoral,
territorial, and targeted purposes9.
Monetary-credit (monetary) policy is a set of measures aimed
at changing the money supply in circulation, the volume of credit, the level of interest
rates, and other indicators of money circulation and the loan capital market9.
The global financial architecture is the institutional and functional structure
of world finance, formed at its national, regional, international,
and global levels and including institutions, various instruments
of the international financial market, as well as obligations, rules, and norms aimed
at the internal and external balance of the system of world finance.
Functions of the global financial architecture:
– adapting the elements of the institutional structure of the world financial system
to the processes of globalization at both the international and national levels;
– ensuring the stability of the world financial system;
– forming new institutions for the purpose of regulating the world financial
system.
Today the world financial system is dominated by the dollar, which established itself as the
world currency under pressure from the United States within the framework of the Bretton Woods conference,
which established the dollar standard.
The gold specie standard was established at the Paris Conference (1867); the gold
exchange standard was established at the Genoa Conference (1922); the dollar standard was
established at the Bretton Woods Conference (1944); freedom of choice of exchange rate regime
for each state was established at the Jamaica Conference (1976).
The dollar became the basis of currency parities, the predominant means of international
settlements, an intervention currency, and a reserve asset. In this way the United States established
monopoly currency hegemony. In recent times the global financial architecture
has been changing. Russia and Asian countries, above all China, India, and a number of Indochinese
countries, are beginning to play a significant role on the world financial stage.
54
1.3.6. The State Budget. Budget Expenditures and Revenues
In all socio-economic formations, beginning with the slaveholding
formation, the state budget has played an important role in the performance of the functions of the
state. The budget, as a special system of social relations, historically
arose when the state not only began to collect revenues and make
expenditures, but also began to plan its activity for a future period of
time – drawing up an estimate of revenues and expenditures for a specific period.
A budget is a plan for the formation and use of monetary funds to ensure the implementation
of the tasks and functions of the state
Table 1.3.2 – Functions of the State Budget
Function Description
distributive
redistribution of gross domestic product and national
income
regulatory covers state regulation and stimulates the development
of the economy
social financing of the state's social policy is ensured
control control is exercised over the formation and use of the state's monetary
funds
The state budget accumulates and redistributes national income in order
to enable the government to implement its economic and social,
domestic and foreign policy.
Figure 1.3.5 – Structure of the Budget System of the Republic of Belarus
The formation of the revenue and expenditure parts of the state budget is
established within the framework of the Laws of the Republic of Belarus on the republican budget
for the next fiscal year (published annually in the open press) and the Resolutions
of the Council of Ministers of the Republic of Belarus on measures for their implementation.
Local budgets are established in the Decisions of local Councils of Deputies
and executive committees.
Budget of the Republic of Belarus
Republican
budget
Oblast
budget
District
budget
Budget of towns of district
subordination
Budget of village councils,
urban-type settlements
Budget of cities of oblast
subordination
Budget of the city of
Minsk
first-level budgets
basic-level budgets
oblast-level
budgets
55
The budget classification of the Republic of Belarus is a systematized grouping
of budget revenues and expenditures, sources of financing the budget deficit (directions
for the use of a budget surplus), and types of state debt of the Republic of Belarus,
ensuring republican and international comparability of indicators.
Budget revenues are monetary funds coming into the budget;
Budget expenditures are monetary funds directed toward financial support for the
tasks and functions of the state;
Budget deficit is an excess of budget expenditures over its revenues;
Budget surplus is an excess of budget revenues over its expenditures
The revenues of the state budget are divided into two categories:
– tax revenues (republican taxes, fees (duties), local taxes
and fees, other tax revenues; penalties assessed for late
payment of taxes and fees (duties); interest for the use of a deferral or
installment plan for the payment of taxes, fees, customs payments and penalties, and a tax
credit);
– non-tax revenues (income from the use of property that is state
property; fines; other non-tax revenues).
A tax is a mandatory individual gratuitous payment levied on organizations
and individuals in the form of the alienation of monetary funds belonging to them by right of ownership,
economic management, or operative management, into the republican
and (or) local budgets.
A fee (duty) is a mandatory payment to the republican and (or) local budgets,
levied on organizations and individuals, as a rule, as one of the conditions for the performance
by state bodies of legally significant actions in relation to them.
The budget process provides for inter-budgetary transfers between
higher-level and lower-level budgets.
A grant (subvention for balancing) is an inter-budgetary transfer provided from a higher-level
budget to a lower-level budget in cases where the lower-level budget's own and regulating revenues are
insufficient to balance it.
A subvention is an inter-budgetary transfer provided to another budget for the
implementation of certain targeted expenditures.
A subsidy is a budgetary transfer provided to an organization or individual
on terms of participation in financing (co-financing) for the production and (or) sale
of goods (works, services), or for the partial reimbursement of targeted expenditures.
A budget loan is budgetary funds provided from a higher-level
budget to a lower-level budget, as well as from the republican budget to the budget of a
state extrabudgetary fund, or from the budget of a state extrabudgetary
fund to the republican budget, on a repayable basis.
The system of inter-budgetary transfers includes not only the movement
of financial resources between the republican budget and local
budgets, but also between oblast (city) and district budgets.
Inter-budgetary transfers are necessary to balance the budget
system and ensure the even development of all territories within the state.
The formation of the budget is carried out in a similar manner to ensure
a fair distribution of financial resources among all levels
56
of the budget in order to ensure national security, social guarantees, and
widespread economic development.
1.3.7. Unemployment
Employment is the activity of citizens connected with satisfying personal and public
needs, not contrary to legislation, and bringing them income
(earned income).
Unemployment is an economic phenomenon reflecting a mismatch between the supply
of labor in the labor market and the demand for it, both in quantitative and
qualitative terms.
The economically active population (labor force) is the part of a country's population that is
engaged in the production and circulation of goods and services, i.e., the labor force.
The unemployed are persons of the age established for measuring the labor force, who are
fit for work in terms of health and who simultaneously meet the following conditions: they do not have a
job (an occupation bringing income); they are searching for work or taking
steps to organize their own business; they are ready to start work.
The unemployed also include: pupils, students, pensioners, and persons with disabilities, if
they were searching for work and were ready to begin it.
If even one of the conditions is not met, the person is classified in the category of the not
employed (and is not included in the labor force, or the economically active population).
Unemployment in a market economy is an inevitable phenomenon, like
inflation, associated with the cyclical nature of economic processes.
Types of unemployment
Type Description
Frictional associated with searching for or waiting for work
Structural caused by a mismatch of supply and demand in the labor market
Cyclical arises as a result of an economic downturn
Technological means the forced unemployment of workers due to the introduction
of new equipment and technology
Seasonal arises as a result of the seasonal nature of certain types of
work
Institutional connected with the inefficiency of the labor market and irrational
employment policy
Potential caused by the absence of demand for certain types of products, work,
and services
Regional arises as a result of regional characteristics (historical,
demographic, etc.)
Hidden expressed in excess employment in the economy beyond justified
needs
Formula for calculating the unemployment rate:
Unemployment rate =
number of officially registered unemployed persons
total labor force
× 100%
Unemployment is a complex socio-economic phenomenon. The labor market
reflects the employment of the population, the dynamics of unemployment, and the mobility of the labor
force.
Innovations. The development and implementation of innovations are one
of the priority directions of a market economy.
Innovation is a commercialized novelty.
Innovative development is one of the most important priorities of the Republic of
Belarus: large-scale modernization of the production and sectoral structure of
the economy, and the practical introduction of the latest scientific developments belonging
to the higher technological modes.
Technological mode is a set of interconnected industries that share a single
technical level and develop synchronously.
The period of time from the emergence of an idea, the creation and dissemination of an innovation,
to its actual use is commonly called the innovation life cycle.
An innovation performs the following functions:
1. Reproductive: the income from an innovation serves as a source
of resources;
2. Investment: the income from innovations can be directed toward the
financing of investment projects;
3. Stimulating: the stimulation of entrepreneurial
activity.
Basic features of innovations
Innovations are new or improved products, new or improved technology, a new
service, or a new organizational and technical solution of a production, administrative,
commercial, or other nature that have been put into civil circulation or are used for one's own needs.
A novelty is the result of intellectual activity possessing features of novelty
compared to existing analogues for a given market segment, of practical
applicability, and capable of producing a positive economic or other beneficial
effect when a new
or improved product is created on its basis;
Innovation activity is the activity of transforming a novelty
into an innovation.
Classification of innovations
Basic
distinguishing
features
of innovations
completeness and
practical
applicability
commercial
feasibility
scientific and
technical
novelty
58
Classification
criterion
Types
depending on the nature
of the concept on which the
innovation is based
- innovations with a technological dominant;
- innovations with a commercial and marketing dominant
by orientation of the innovation's
results
- product innovation: the introduction of an innovative
product or service;
- process innovation: the introduction of an innovative
method of production (or service delivery)
by content of the innovation - production (technological): new materials,
equipment, technologies, etc.;
- managerial: new methods of organizing production,
management, marketing, etc.;
- informational: new methods of collecting, processing, and
transmitting information;
- social: changes in working conditions, living conditions, the
environment, improving quality of life
depending on the conse-
quences of using innovations
that differ in their level
of novelty
- basic (radical);
- improving;
- rationalizing;
- pseudo-innovations.
by scale of
diffusion
- singular;
- diffuse (widely disseminated)
To implement innovation policy, the government develops
specific methods aimed at ensuring the effective
implementation of scientific, technical, and other programs.
State innovation policy is a component part of the state's socio-
economic policy, representing a complex of organizational, economic, and legal
measures carried out by the state and aimed at regulating innovation
activity.
Special attention in an innovation economy should be paid to the indicator
of the science intensity of GDP.
The science intensity of GDP is the portion of GDP allocated to conducting scientific
research and developing innovations.
There are various methods for determining this indicator. In countries
belonging to the Organisation for Economic Co-operation and Development (OECD),
it is customary to compare the amount of domestic R&D expenditure with the country's
GDP. In CIS countries a different approach is used: here the ratio
of the volume of work performed to GDP is assessed.
Human capital.
Under the conditions of the new economy, a special place is occupied by
human resources - the potential of a person (or group of people). It is the person
who possesses the necessary level of knowledge, skills, and abilities, capable of solving
the tasks set, who becomes the main object of competition - the fundamental
factor of economic development for states.
Analyzing the interaction between the categories "human resources" and "human
capital," we obtain the following: the magnitude of human capital as a whole
is formed by that portion of the workers' human resources that is engaged
in achieving the desired result.
Human resources (human potential) are the totality of the knowledge, skills, abilities,
and capacities of an organization's employee that are engaged and not engaged
in the financial and economic activity of the organization.
Human capital is that part of human resources (human
potential) that is engaged in achieving a desired economic
result.
This type of capital is recognized as the most important element of the national
wealth of states and a factor of economic growth. Ensuring economic
growth and maintaining its pace at a stable and optimal level is
one of the most important strategic goals of our country's
economic policy. The dominant importance of human knowledge, skills, and abilities in
forming the income of economic actors at all levels has
determined the importance of forming not simply an employee with a high
level of competencies, but a specialist ready to invest his entire human
potential in the process of solving the tasks assigned to him.
Human capital has the following distinctive features:
the person embodies a potential ability to generate income;
human capital is a set of a person's knowledge, skills, abilities,
capabilities, and motivations;
a high level of intelligence, health, and knowledge are the determining fac-
tors for obtaining high-quality and productive labor.
At the current stage of society's economic development, human
capital is acquiring ever greater significance within national
wealth, which also includes natural and physical capital (see figure).
Elements of National Wealth
"National wealth" is the totality of accumulated material and intangible
assets belonging to a country or its residents and located within the economic
territory of that country and beyond its borders (national property).
Physical capital is the totality of goods, property, and assets used to
obtain surplus value or profit.
Natural capital is the magnitude of the stock of limited natural resources (energy,
substances) that is capable of making a contribution to the growth of national
wealth.
This is primarily due to the fact that the development of a modern economy
largely depends on high-tech production based
on innovative technologies and high-quality human resources.
Natural
capital
Physical
capital
Human
capital
National
wealth
For cross-country comparison and measurement of the population's standard of living, level of
education, and quality of the protection and healthcare system (longevity) as the main
characteristics of the human potential (human resources) of the territory under
study, the human development index is used.
Thus, human capital is the portion of the potential of a state's working
citizens that is engaged in production and economic activity,
determining the rate of economic growth and, consequently,
the population's standard of living. Forming a conscious necessity to
engage the maximum acquired competencies of all members of civil
society at work is the foundation for the prosperity of a modern state.
Social capital. The development of the economy and society is accompanied by
the improvement of mechanisms of social exchange. The criterion for increasing
the efficiency of such exchange is the reduction of transaction costs, that
is, costs that do not relate directly to the production of goods
(such as expenses on raw materials, wages, transportation
and customs costs, etc.), but to the costs accompanying this production
- the costs of gathering and searching for all the information necessary for the activity,
concluding deals, contracts, and agreements, searching for and verifying the reliability of part-
ners, etc.
Transaction costs are costs that do not relate directly
to the production of goods but to the costs accompanying that production.
Transaction costs are not always obvious and are quite difficult to
calculate, but they can be reduced. The reduction of transaction costs
is facilitated by social capital. Social capital represents the "cha-
racteristics of social life - networks, norms, and trust - that motivate
participants toward more effective joint action in pursuit of common
goals."
Social capital is the sum of the benefits that actors obtain from mutual
specific informational actions (as a set of interpersonal
relationships that reduce transaction costs) for the purpose of mutually beneficial
cooperation, achieved through information exchange, that make it possible
to obtain a tangible socio-economic benefit.
The functional purpose of social capital in the economic system of
society, in macro- and microeconomic systems, is to reduce the transaction
costs of interaction among actors in the course of their economic activity.
Structurally, social capital consists of a set of social ties
and relationships that are used to transmit information, save
resources, provide mutual instruction in norms of behavior, and build repu-
tations. On the basis of social networks, which often tend toward relative
closure, the institutional foundation of social ca-
pital takes shape - belonging to a particular social circle, or membership in
a group.
Social capital is characterized by the level of trust that actors have in
one another within a given social group, which is why social capital
exists only within relationships between actors. On the one hand,
actors bear obligations to carry out a certain type of behavior
(for example, the conscientious fulfillment of contract terms). On the other hand,
they expect that other actors will also fulfill the obligations they have taken on
without the application of any sanctions. Consequently, the more obli-
gations accumulated within a given community, the greater the belief of that community's members
in reciprocity in the realization of a certain type of behavior, and consequently,
the higher the level of social capital.
The accumulation of social capital can take place at three main
levels of economic activity:
- at the microlevel (families and firms (enterprises), inter-firm inter-
action);
- at the mesolevel (between socio-economic actors interacting
within various regional formations);
- at the macrolevel (forming a positive image of the country, strengthen-
ing its competitive position in world markets).
A peculiarity of social capital is that its quantity in society
is not equal to the sum of the social capitals of individual actors. There are certain
manifestations of social capital that exist only at the level of society as a whole
(for example, a high level of law and order).
Social capital possesses the unique property of increasing the effec-
tiveness of invested resources and of achieving returns on investment in
physical, human, and other forms of capital. At the same time, social
capital can be used by different social groups of actors not
only for the benefit of society as a whole, but also for the purpose of enhancing their own vitality at
the expense of other actors. In social systems with a high degree of differ-
entiation and class contradictions, this leads to social ca-
pital being used predominantly for class struggle, which diminishes the constructive ef-
fect of social capital at the level of society and at the level of groups, and hinders the develop-
ment of the national economic system.
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Часть 1 Measuring and Assessing the Economy
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