What Is Stagnation

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What Is Stagnation
What Is Stagnation

Video: What Is Stagnation

Video: What is Stagnation | Explained in 2 min 2022, November

The term "stagnation" comes from the Latin word "stagno" - "stop." In general, it means stagnation in any development - economic, social, etc.

What is stagnation
What is stagnation

Such a different stagnation

In medicine, stagnation means venous stagnation of blood. In psychology - stopping the cultural development of a person and his social growth. In ecology - stagnation of water in a reservoir, which leads to a deficiency of oxygen. In an economy, stagnation means stopping production and trade.

Stagnation in the economy

Stagnation in the economy is a state of economic development, which is characterized by a stagnation of industrial and trade relations that has been observed over a long period of time. This phenomenon is accompanied by an increase in unemployment, a fall in wages and a decline in the standard of living of the country's population.

When the economy is in a state of stagnation, there is zero or insignificant growth in economic indicators, backwardness in terms of the introduction of promising production technologies, etc.

Types of stagnation

There are several types of stagnation. Monopoly stagnation is associated with the competitive struggle waged by monopolistic associations. First of all, the industry suffers from this. As a result of monopolistic stagnation, investment processes slow down, enterprises begin to experience a deficit in orders, difficulties in selling products and, as a result, are forced to cut their working staff.

Another type of stagnation is called "transitional". It arises in the case of the transition of the economy from an administrative-command system to a market one. The main reasons for the transitional stagnation are the mistakes made by the country's leadership at the previous stages of development. A typical example of transitional stagnation was the drop in production that occurred in the 90s in the countries of the former USSR.

As a result of the stagnation, production facilities were virtually destroyed, the intellectual, scientific and technical potential of society suffered greatly. As a result, a crisis of non-payments arose, further undermining the country's economy. The established ties between the sectors of the national economy were broken, and due to the low competitiveness of products, many enterprises were unable to integrate into the international market.

Nowadays it is customary to talk about stagnation, when the volume of the gross domestic product decreases to 2-3 percent. At the same time, one should distinguish between stagnation and economic crisis. As a result of the latter, the economy sharply slows down growth, and stagnation is characterized by a lack of growth, but not a sharp decline.

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