The Cyclical Fluctuation Transfer Mechanism By Means Of Production Factor Measurement
The publication justifies the appearance of cyclic processes in the economic environment occurring under the influence of changes in the correlation between production factors. Conclusions as to the impact of the change in the production factor structure on the economic development dynamics are drawn based on the performed classification of views on the reasons of economic crises expressed by various economic currents, such as: the German historical school, Marxism, Keynesianism and others. The authors separate monetary and non-monetary factors of overaccumulation as reasons of the existence of cyclical behaviour and justify their influence on the economic crisis origination. An economic cycle is viewed in relation to the interaction between production factors and industrial and financial capitals. The research brings technologies into sharp focus. Being developed so rapidly, they take the form of shocks. Technologic shocks are sudden fluctuations of the marginal productivity and cost of production factors. We assume that shocks adequately explain positive economic activity deviations. According to such paradigm suggesting that the change in the cycle phases is based on technologies, which are currently undergoing major development, it may be assumed that further economic development dynamics will depend on the stability of functioning of IT infrastructure. The results of this article may well be used by companies planning incorporation of foreign representative offices and choosing production factors stipulating operational cost cutting as well as credit subdivisions of banks analyzing prospects of the branch of a corporate borrower applying to the financial institution for a loan.
Keywords: Production factorseconomic cyclerate of returnconsumptionoveraccumulation
A significant number of research papers studying cyclic economic processes describe the impact of changes in industrial production on the economic dynamics in general. While upholding this position, we also believe that high elasticity of credit resource supply and the growing role of technology factors in the digital economy sphere have to be taken into account at research of the matter at hand. We refer monetary factors to passive conditions applied by default. However, we do not intend to set aside the mechanism of influence of financial capital on an economic crisis and will duly review this aspect. Some theoretical concepts explain the cyclic process dynamics by the origination and development of technological production methods. This article shows how rapid development of technologies transforms in the form of so-called shocks affecting production processes and the economic dynamics in general.
The aim of the research is characteristics of the process of cyclic transformations in the economic environment taking place under the influence of transformations of the production factor structure. The article also pursues the aim of showing significance of the conclusions to extrapolate the main provisions of the long wave theory to the modern macroeconomic performance. Another set aim is to study the issue of the influence of continuing changes in the correlation of production factors resulting from regular renewal of constant capital elements and steady growth of the value of variable capital elements in the form of an increasing level of qualification, salary on the transfer to the next economic cycle phase.
Cyclic processes in the economy depend on the change in the structure of production factors and the existing channels for spreading of such transformations between national economies. One of the questions of the research is identification of the reasons for the transformation of production factors. Another question is identification of channels for international spreading of such changes.
Purpose of the Study
The purpose of the study is research of the cyclical fluctuation transfer mechanism by means of production factor measurement. Processes of transformations of production factors have to be reviewed to achieve the set aim. Apart from that, special attention has to be paid to the definition of the mechanism of a modern economic cycle since running of the phases of such cycle is increasingly based on the prevailing concept of the technological development in a specific society.
The following methods are used in the article: a historical one to study the views on the nature of cyclic processes expressed by representatives of various economic schools and to identify the main reasons for economic crisis origination; a systemic one to group the main cyclical behaviour appearance factors. The method of analysis and synthesis are also used. Expert opinions of the world’s leading scientists are considered.
When a company incorporates a part of production abroad, it can export high-quality workplaces from the country of investment, which raises unemployment of the corresponding category of laborers and will change respectively the correlation between production factors. However, foreign high-tech companies may start production in this country and thus create new high-quality workplaces. Relative growth of constant capital elements will discontinue, the unemployment will decrease.
The reasons of recent economic crises are largely explained by factors reviewed in details in this article. However, it is worth mentioning that we have deliberately not analyzed the impact of institutional environment factors on the economic process dynamics as this issue stipulates explanation of the economic cycle dynamics not only by justification with purely economic factors, but also by inclusion of political motives in the research model as, e.g. in the political cycle model by W. Nordhaus illustrating the influence of the results of activities of politicians during their election campaign on the unemployment and inflation dynamics (Nordhaus, 1975). Our aim has been systematization and determination of the key economic factors affecting an economic cycle, which in our opinion, is achieved.
It should also be noted that another reason for economic crises may lie in the incompetence of the management personnel of financial structures; the distribution of money is irrational and unjustified due to the reduction in their intellectual capital (Konovalova, Mikhailov, & Persteneva, 2015). Such financial resource distribution may result in excessive “inflation” of volumes of issued and unsecured loans, transforming with time in “bad assets” of the financial structures issuing them. In the end, the balance of credit institutions and the financial stability of industrial enterprises are deteriorating leading to reduction in financing of the real economy sector.
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