Stagnation- from the Latin stagnum - standing water. V general view stagnation is defined as stagnation, a state in which it ceases to develop, indicators of its effectiveness do not grow, and there are no noticeable innovations. Innovations do not find application in the economic system, the initiative remains unclaimed.

In numerical terms, stagnation means either the absence of growth economic indicators, or insignificant growth, within 2-3%.

The economic system existing in most countries needs growth only to maintain a stable standard of living of the population. So growth is necessary to maintain an acceptable level, etc. Stagnation is often accompanied by inflation, this situation is also called stagflation.

Although stagnation is not a crisis in the classical sense, production volumes are not falling, but the level of household consumption may decline. With stagnation, the distribution system changes, the incomes of some continue to grow, but not due to the growth of the economy, but due to its other elements.

In relation to the developed capitalist countries, the theory of stagnation, proposed by Alvin Hansen in the 30s of the 20th century, was first applied.

The essence of those used to explain stagnation in the formed capitalist society is to assert the cyclical nature of economic processes. During the period economic growth production, consumption, income and savings of workers are growing. To ensure the further development of the economy, more and more resources are being attracted to it.

• On the one hand, as readily available resources are depleted, development opportunities are narrowed. Which leads to stagnation, and then, to a recession, a crisis.
• On the other hand, the most efficient enterprises become monopolists and eliminate competition that threatens their position. Then, production is reduced to a level that yields an acceptable profit. The decline in production, in turn, increases unemployment, worsens the situation of households and, naturally, purchasing power. The term monopolistic stagnation is applied to this description.

Monopolistic stagnation is based on the contradiction between the desire to obtain maximum profit and the lack of the opportunity to invest it profitably.

Usually, such a development scenario is applied to the area of ​​production, but, as practice shows, something similar can be observed, for example, when small traders are crowded out by large chains.

As measures to overcome the described situation, the following are proposed:

• stimulating demand within the state;
• investing in other countries, as a way to motivate production owners inside the country to produce more, in order to then invest the resulting profit in another economy;
• investments in scientific and technological progress.

Stagnation is also possible in the administrative command system. A striking example of this is the period of "stagnation" in the USSR. Simplifying the situation, we can say that it was caused by the substitution of economic laws, guidelines and rigid planning. As a result, investments were made that did not bring economic effect, and the growing deficit of consumer goods was ignored. In other words: something was produced that could not be sold, money was paid for which there was nothing to buy. Decreased motivation for development. The link between the links of the chain was broken: “commodity - money - commodity”. The enterprises had such comparative advantages as guaranteed sales markets, no need to make efforts to promote products and compete. But, in the absence of freedom to dispose own funds, whole economic effect was distributed according to instructions "from above", thus the main concept in a market economy - "profit" lost its meaning.

The next type of stagnation, which can also be seen on the example the former USSR is a transitional stagnation. It has its own nature. This term describes the phenomena occurring in the economy transitioning from the command-administrative control system.

The reason for the transitional stagnation must be called, first of all, the inability of business entities to work on market principles... In the absence of the experience and skills of independent activity by enterprises, unpreparedness for competition, and the inability to attract resources for development, economic growth turns out to be unattainable. As a rule, the system of production and consumption continues to exist by inertia for some time. However, the transition to capitalism is usually accompanied by the opening of borders for foreign goods, local producers are not ready to compete in the domestic market, much less have the strength to master new ones. This is how stagnation turns into recession.

It is important to note the key difference between stagnation and recession for the economic forecast:

The recession occurs due to the contraction of certain industries and types of activity. This may be a sign that a new structure is growing in the economy, more balanced, capable of development.

By contrast, continuing stagnation shows that no structural change is taking place. If the negative trends on the economy continue, the prolongation of stagnation leads to an even greater crisis, a more severe breakdown. economic system.

Based on the foregoing, it can be concluded that neither modern market mechanisms nor planned management economies do not guarantee continuous economic growth. Available on this moment economic models do not have recipes for constant balanced development. At some point, for various reasons, certain elements in the structure of the economy are no longer capable of further positive changes, which inhibits the growth of the economy as a whole.

What is stagnation in the economy in simple words? What are its causes and consequences?

Stagnation Is a long period low level economic growth or lack thereof at all. Economic growth of less than 2-3% per year is considered stagnation and is often accompanied by high unemployment and forced part-time employment. Stagnation can occur on a smaller scale, for example, in certain sectors of the economy or companies.

Stagnation is a situation in which the total volume of production is either slowly declining or is practically at the same level. Although stagnation is characterized by a fairly high level of unemployment, economists do not attribute it to a recession. The consequences of stagnation are the absence of an increase in the number of jobs, wages, and an increase in production volumes. In a recession (economic downturn), these indicators go down significantly.

Stagnation can occur:

• naturally - when the economic cycle is in a downward swing
• artificially - due to certain factors (ineffective economic policy, natural disasters, etc.)

Stagnation can also occur during the normal business cycle of the business environment. It reflects the natural nature of ups and downs and should not, in principle, cause fear or panic in the short term.

Such a phenomenon as stagnation can take place both in developed countries with mature economic cycle and in underdeveloped states. In the former case, stagnation in a stable economy can be much more permanent than is experienced during the normal business cycle. Classics economic theory such a phenomenon is called a stationary state of the economy.

In the second case, the nature of stagnation has other roots. In the underdeveloped or developing countries stagnation persists due to the lack of change in traditional culture, where there is no incentive to develop or grow. By the way, this is why an innovative type of economic development is a necessary condition for sustainable growth.

Stagnation is not necessarily the result of government economic policies. Hunger, war, natural disasters can be external factors causing economic stagnation.

The main signs of stagnation

1. Deterioration of the situation in the labor market. With stagnation, economic growth slows down or slowly goes down, so there are no prerequisites for expanding jobs.
2. Lack of economic progress. Stagnation in the economy is often called another word - stagnation. Given this state of affairs, the economy of the state is in a kind of "sluggish state", which is clearly unfavorable from the point of view of competition in the international economic arena. There is a risk of lagging behind other countries and losing your competitive edge.
3. Lack of improvement in the standard of living of the population. Stagnation for the average man in the street means staying at the same level of material condition, which for many is regarded as very good. However, in the long term, this still means a deterioration in living standards.

What contributes to stagnation in the state economy? In most cases, if we are not talking about natural economic stagnation, then human factor, namely:

• ineffectiveness of economic decisions
• incompetence of senior officials
• lack of an innovative development strategy
• low investment in science

Examples of stagnation

If you look at the economic growth rate of the leading economies of the world - the USA, Japan, the European Union - in the period from 1966 to 2014, you can see a steady downtrend. Is not economic downturn in its pure form, but not upward growth, but a slow decline in the productivity of the economy, that is, stagnation.

Smooth decline in economic growth in the United States 1966-2014

Stagnation in Japan 1966-2014

Slowdown in economic growth in the EU 1966-2014

Reasons for stagnation

What caused the economic stagnation in the above examples? Let's list the main factors.

# 1 Financial crisis. The credit bubble and its prosaic explosion in 2008 (they even made a feature film about this) became a big factor in provoking a drop in economic growth. Huge losses of banks have led to a decrease in bank lending and investment volumes.

The financial crisis has undermined businesses and consumer confidence. All of this together led to more difficult conditions for economic recovery.

# 2 Low investment in the economy. One of the reasons for stagnation is also a decrease in investment volumes, which is observed in last years around the world. This is due, in particular, to the following factors:

1. Falling commodity prices - lower demand for capital investment in the production of goods
2. Low level of confidence among entrepreneurs and investors due to financial problems and low levels of economic growth
3. Limited access to credit resources due to previous losses of banks

# 4 Problems in the Eurozone. V post-war years Europe has experienced rapid economic growth, but in recent years there has been a recession. As a result, the economies of the countries of the world are closely intertwined with economic and financial relationships. That's why economic problems(stagnation) in one region may spill over to other states.

# 5 Demographic change are also the cause of stagnation. Many the developed countries face the problem of falling fertility, which leads to an aging population and a decline in its size. This increases the load on pension provision that is covered by taxes.

Thus, stagnation in simple words is a period of low economic growth, a kind of "marking time". In the long term, this negatively affects the standard of living of the population and the competitiveness of the state in the world economic arena.

P.S. Do you want to always stay in a good mood? Then watch this video!

- this is the state of the economy of a particular country, in which there is a gradual decrease in the level of its development and further extinction.

Distinctive features of stagnation are stagnation in production and problems with the sale of goods and services over a long period of time. This process quite often entails an increase in unemployment, as a result of which the average indicator decreases. wages and the general standard of living.

The emergence of stagnation requires drastic measures to implement possible metamorphoses, without which it would be very problematic to find a way out of this situation.

This stagnation in the economy is reflected in extremely low rates GDP growth(). It should be noted that during such a period, the structure of the economy does not undergo cardinal changes that are caused by scientific and technological progress.

Description of stagnation in simple words

Stagnation - information from Wikipedia

Features of stagnation

Stagnation is not always accompanied by high inflation. But provided that this process takes place in a single case, stagnation will be called ... Ultimately, the return on investment will gradually tend to decline.

According to some statements, one of the reasons for the emergence of economic stagnation is the exhaustion of the factor of its growth. To resolve the situation, it is recommended to invest in new directions. Otherwise, it will be very problematic to break out of stagnation. This is due to the fact that in order to resume economic growth, significantly increase government spending while admitting a consistently high level of deficit state budget... At the same time, economic growth rates fall to the level of 2.5-3% per year.

Stagnation phenomena have a direct impact on various spheres of economic life. In particular, the level of the average income of an individual family is declining. In addition, the overall production indicators tend to decrease. Within one country, all this is steadily leading to the depletion of cheap and easily accessible resources for growth in the form of significant technological advances, new lands, and an influx of immigrants.

Types of stagnation

As for the various variations of stagnation phenomena, they can be monopolistic or transitional. Each of these species has a different origin, forms of manifestation and, as a result, different ways overcoming.

Monopoly stagnation

Monopoly stagnation arises under the total domination of monopolistic associations that are interested in eliminating direct competition. As a result of this, an economic stagnation occurs, covering primarily the area of ​​production where monopoly is observed. There are several ways to resolve this situation:

• export of capital outside the country;
• increase purchasing power population;
• technical progress;
• elimination of monopoly.

Transient stagnation

With regard to the transitional type of stagnation, the reason for its occurrence is a gradual transition from one type of economy to another. If, as a result of this process, a number of economic mistakes and disregard for the elementary laws of economics are allowed, then in the end we can expect a manifestation of stagnation. At the same time, there is a sharp decline in production and a decline in investment activity.

In addition, the physical destruction of productive forces and devaluation of motivational incentives for effective work is carried out. It is also impossible to quickly integrate internal goods into the system. international market due to insufficient competition.

Reasons for stagnation

The stagnation of the country's economy is usually accompanied by a complete stagnation of trade, production, investment processes; an increase in unemployment and a decrease in the standard of living of the population. The reasons for this may be:

• a high level of corruption among the ruling officials, which significantly slows down many economic processes;
• the presence of bureaucracy among the country's leadership and unskilled personnel does not allow to adequately respond to external economic stimuli and make adequate decisions;
• illiteracy of the leadership in the development of the development plan and strategy of the state;
• inability to draw correct conclusions from the current situations in the country in the past;
• lack of investments in the most important branches of science that can increase the production capacity and the overall rating of the country in the world market;
• conservative methods of governing the country and unwillingness to delve into modern methods of governing the state;
• unstable economic and political situation in the world - warfare, world crisis;
• the scarce availability of minerals in the country, which does not allow for the proper development of industrial processes, but forces certain types of raw materials or finished products to be imported from other countries;
• depreciation of equipment industrial enterprises and the reluctance of the owners to update the equipment, and the desire to enrich themselves at the expense of their production.

Consequences of stagnation

• the growth of revolutionary sentiments among the population of the country, since there is a discrepancy between the level of prices for essential goods and the level of income, opposition forces are entering the arena;
• unemployment is growing uncontrollably and the country's population is becoming impoverished;
• drop in trade and production;
• outflow of investment capital;
• increase in taxes, active introduction of penalties;
• there is an economic stagnation, a runaway rise in prices called stagflation.

Stagnation is economic process, which got its name from the Latin word "to stop". The essence of stagnation is that the economy goes from a progressive state to a stagnant one, is not characterized by any changes. Stagnation can last from several months to several years, and if measures are not taken within the economic system to overcome it, then stagnation will lead to a crisis and economic decline.

The characteristic features of stagnation are as follows:

To avoid business stagnation, be sure to keep records and statistics, develop your own KPIs to measure performance. More details about KPI indicators, they can be used both for assessment and for building motivation systems.

Types of stagnation

According to economic theory, stagnation has two types:

• monopolistic stagnation;
• transient stagnation.

As the name suggests, monopolistic stagnation occurs when the economy begins to dominate monopoly organizations... The consequences of monopoly are obvious and known even to people who are not particularly versed in economics: competition diminishes, thereby eliminating the natural incentive of the economy to develop.

Quality begins to turn into quantity, the characteristics of goods and services are steadily declining, since manufacturers do not need to maintain them at a high competitive level.

The most famous historical example of monopolistic stagnation is the Great Depression in the United States caused by the overproduction crisis that took place in the 1930s. When "everything was too good," it ended up being "very bad."

Domination large monopolists, family businesses and state-backed corporations strangled small and medium business leading the economy to stagnation.

According to the Western theory of stagnation, developed by economists Stendl, Sweezy and Baran, monopoly stagnation can be overcome without crisis and decline.

This theory states that if the revival of competition in the near future is not possible, then it is necessary to make the monopoly income as useful as possible.

After all, the crisis of overproduction is precisely the inability to use the capital received from the stable operation of enterprises. This capital can be exported to other countries, thereby contributing to the enrichment of the state, and also actively introduced into scientific and technological progress and into social programs.

On the one hand, this will not allow production to lower the bar for product quality, and on the other, will increase the purchasing power of the population and will avoid overproduction.

As for the transitional stagnation, it is much less studied, although it took place in all countries where a complete change of the economic system took place. Therefore, the closest and most relevant example is the stagnation in the USSR in the 1980s, when the economy was already rebuilding to meet market standards, but still remained planned.

Old economic mechanisms have already exhausted themselves, and new ones have not yet entered into force. All this led to the disruption of the stability of the market balance, to a crisis and economic decline in the 1990s.

Read more about the crisis of the 90s in the section. Diversification helps to reduce the probability of default. Even if one of the lines of business becomes unprofitable, others can compensate for this risk.

Real investors know that if you invest money correctly, you can keep your equity and even earn in times of stagnation and in times of crisis. Where you can invest money, read on, which describes different options from bank deposits to PIFs and shares.

Stagnation theory does not offer any generally accepted solution to the problems of transitional stagnation. The reason is obvious: it is possible to consider the problem and look for a solution only within the framework of some economic model.

When changing models, a state of chaos can always come, and about any economic laws it will not be possible to say with certainty that they will act. That is why transitional stagnation in the economy heralds a crisis and decline that is almost impossible to prevent.

A modern person often hears the word "stagnation". Without knowing the meaning of this term, we sometimes cannot fully understand the meaning of an article read or news heard.

Meanwhile, explain what stagnation is simple language not that difficult. This broad definition applies to three disciplines.

And although it is described in different words, it still has a number common features, the main of which can be called stagnation and suppression of development with a tendency to rapid destruction.

So, ecologists call the problem of oxygen supply to water bodies stagnation;

Psychologists - stopping the growth of cultural development of society as a whole, or deliberate infringement of the rights of a group of people striving for development by a dictatorial government;

Economists - a series of production problems that lead to deterioration over time financial situation country.

The concept of "stagnation" is especially firmly entrenched in the economic implication, which will be discussed in more detail below.

Economic stagnation what is it in simple words

Specialists in the field of finance call the stagnation of the economy such a state, which is accompanied by a long-term stagnation in the production and sale of products.

In other words, over the course of several years, the economy of the state seems to be “dormant”. Lack of progress ultimately causes decline and inevitably leads to crisis.

Signs characteristic of economic stagnation:

1. Decline in employment;
   The depreciation of the state currency, accompanied by crisis phenomena, slows down the pace of economic development. It causes a deterioration financial condition enterprises, contributes to capital outflow and job losses.
2. The lack of an increase in the rate of production and its development, because of which the state in economic terms begins to lag far behind other countries.
3. Deterioration in the standard of living of the country's population.
   This process begins almost imperceptibly, the purchasing power decreases gradually, but continuously.

Negative phenomena contributing to stagnation in the economy:

• Bureaucracy;
• Lack of effective tools for the correct management of the economy;
• Poor performance by the regulatory authorities of the functions assigned to them;
• Insufficient investment in the development of science;
• Conservatism in solving economic issues;
• Appointment to the governing bodies of persons with inadequate or insufficient qualifications;
• Corruption among officials and civil servants;
• Bad political situation (lack of cooperation with other countries, conflicts, wars).

The consequences of stagnation can be delayed or mitigated by government measures support or seeking help from international financial institutions for example, the IMF.

What is stagnation in simple terms: Types of stagnation

To explain stagnation, what is it in simple words, it is necessary to understand in more detail, where does the described phenomenon "originate"? There are 2 types of economic stagnation:

1. Monopolistic.

The reasons for its occurrence are: the predominance of large firms in the state market and an obstacle to the development of market competition.

Lack of incentives is fraught with a halt in the development of the country's economy.

In pursuit of the quantity of goods and services, their quality begins to suffer, since the manufacturer is not interested in increasing their competitive characteristics.

1. Transition.

This type of stagnation is caused by a sharp decline in production volumes and a large outflow of capital from the country.

Despite the fact that this type has not been fully studied by economists, it is easily recognizable and quite widespread, especially often a transitional stagnation is accompanied by a radical change in the economic system of the state.

You can understand what stagnation is in simple terms by considering the most striking examples of both types of this phenomenon:

1. United States, 1920s - This is the period leading up to the Great Depression of 1929-1933. Then, against the background of an oversupply of production at the enterprises of the monopolists, all paths to the development of small and medium-sized businesses were blocked.
2. Soviet Union, late 1980s - the last years of the state's existence. At this time, it began to gain momentum market economy, but the process was hampered by the planned control system. It turned out that the old regulatory mechanisms were no longer effective, and the new ones did not gain strength. This triggered a crisis in almost all areas and by the 1990s led to economic decline.