Extensive growth
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Extensive Growth, in economics, is based on the expansion of the quantity of inputs in order to increase the quantity of outputs, opposite to that of intensive growth. Thus, extensive growth is likely to be subject to diminishing returns. It is therefore often viewed as having no effect on per-capita magnitudes in the long-run[1].
[edit] Examples
In a communist/socialist economy, extensive growth is often implemented, such as in China during the late 1950s through the early 1960s (see the Great Leap Forward). Extensive growth set a high priority on the increase of inputs on agriculture, heavy industry, savings, labor force participation and use of easily available resources which resulted in ecocide, decreased marginal returns, a lower marginal value of labor, poverty, famine and a near economic collapse. This is often the case for such regimes due to the obligation of providing jobs for its citizens at a state run enterprise.
The mere increase of input factors to provide economic growth becomes disastrous in the long-run as resources become exhausted. To maintain economic growth in the long-run, especially on a per-capita basis, it is essential for an economy to also introduce productive factors of growth, such as an advance in technology, to increase the production possibilities frontier of the economy.
[edit] References
- ^ The Transformation of the State Extensive Growth Model in Cuba's Sugarcane Agriculture, Lázaro Peña Castellanos and José Alvarez.
