Company stagnation. Stagnation - what it is in simple words and what to expect from it

Recently, we often hear that the Russian and European economies are in a state of stagnation.

From the general context it is clear that this is not the best phase of economic activity, but what exactly the negative is is not very clear to many ordinary people who do not have an economic education. Let's try to figure out what stagnation in the economy is.

Term "stagnation" derived from the Latin word "stagno", meaning “I stop, I make motionless” . This word denotes a situation in which a process stops and the system plunges into stagnation.

Stagnation can affect any processes, especially those related to development. Thus, stagnation is observed in a reservoir when there is no movement of water. Water masses do not move, so the lower, bottom layers begin to lack oxygen, which causes the death or departure of fish and other living creatures.

Stagnation in the learning process means that students do not learn new information or master new skills. In medicine, stagnation is the presence of a patient in a state where his condition does not improve for a long time.

The word "stagnation" is most often used today to describe the current economic situation. This is a fairly long-term stagnation, during which economic indicators do not show growth or grow very slowly.

This phenomenon is often accompanied by growing unemployment, which “eats up” insignificant growth, and other negative phenomena. Stagnation simultaneously with a high inflation level is called stagflation.

It is generally accepted that a period of stagnation is economic growth not exceeding 1-2% of GDP, observed for several years. This phenomenon occurs in cases where the economy has exhausted previous reserves of growth and needs some powerful impetus for further development.

The emergence of new markets and/or new technologies, accompanied, as a rule, by significant financial investments into the area of interest and a number of neighboring ones, can serve as an incentive for development. The “locomotive” for getting out of stagnation can be one or more industries in which the state can boast of high performance. For Russia, such locomotives are traditionally the oil and gas industry, metallurgy and weapons production.

Economists by market stagnation mean the absence of its growth. Those. a situation where the market remains stable for a long time, turnover does not grow or the number of sales does not increase, is considered negative for the economy. Modern macroeconomic processes are based on continuous growth, which goes side by side with inflation.

In fact, the profit received due to market growth is “eaten up” by inflation, which is a consequence of high interest rates. If the market does not grow, inflation is not compensated by an increase in turnover and number of sales. Those. The modern economy is placed in conditions where the lack of growth is already a factor of decline.

It is obvious that the current economic system has all the signs of a financial pyramid and one day must inevitably lead the world economy to collapse.

Recovery after the collapse will be successful for those states that can offer a new development model that is not based on the need for continuous artificial stimulation of market growth.

When talking about the stagnation of the ruble, it is customary to mention high inflation, which over the past year has manifested itself most clearly in the ruble economic zone. At the same time, leading economists believe that the depreciation of the ruble leads to an increase in the competitiveness of the Russian economy in foreign markets.

The harm of stagnation can be clearly explained by analogy with the activity of the circulatory system. As long as blood flows freely through the vessels, tissue cells grow and divide, the overall body feels great. If you compress the vessels in one place, the blood flow will stop and stagnation will occur.

This means the tissues will not receive the necessary nutrients and oxygen. Cells will begin to die and tissue necrosis will develop. A living, healthy part of the body will after some time turn into a rotting piece of flesh, spreading toxins into other tissues of the body.

At the same time, unjustified stimulation of blood flow also causes harm to the body - to understand this, just look at people suffering from high blood pressure.

In economics, it is very important to maintain balance, especially in the long term. Obviously, we all have to learn this art in the near future.

Stagnation means a decrease in the growth rate of the country's economy as a whole or its individual segments to a value equal to zero.

The beginning of stagnation is evidenced by a decrease in GDP growth to 2–3% compared to the previous period. The growth rate of a healthy economy should be at least 3–5%. Stagnation is considered a phenomenon that precedes the development of a crisis or is protracted. We can talk about stagnation only when there are no changes in all areas of the economy for several years.

The term “stagnation”: what is it in simple words

Stagnation (literally from Latin - “stagnant water”) is a state of the economy that is accompanied by stagnation in the sphere of production and trade. It is characterized by the following symptoms:

GDP growth rates are equal to zero or close to this value, as a result the country becomes uncompetitive;
decrease in the growth of nominal wages - the standard of living is falling gradually, but it is almost impossible to stop this decline;
rising prices for essential products;
layoffs at enterprises and an increase in the number of unemployed - there is an outflow of capital, organizations are less wealthy;
stagnation is long-lasting.

During the period of stagnation, the economic structure remains unchanged, there is no implementation in the field of scientific and technological progress. It is very important to distinguish stagnation from a crisis state of the economy, when GDP growth declines sharply. Stagnation is characterized by lack of growth or slight growth in the areas of production or trade, but not a strong decline.

If stagnation is accompanied by a high level of inflation, then this phenomenon is called stagflation(increasing unemployment and prices at the same time).

In simple words, stagnation is a period in which there are no changes in the economy, no growth in production, and ultimately this state will lead to decline.

Types of stagnation

Stagnation manifestations are divided into two variations: monopolistic and transitional. Each species has its own characteristics and origin.

Monopolistic

The development of this type of stagnation is associated with numerous organizations that are not interested in competition. Such monopolists cease to produce products or provide services of the required quality. As a result, a large number of goods or services of poor quality appear on the market, and the economy stagnates.

Measures that can be taken to overcome this situation:

transfer of capital outside the country, since as a result of overproduction it is impossible to use the capital generated as a result of the activities of enterprises;
direct available funds to the development of scientific activities, technological progress or the implementation of public programs;
reduce production costs;
increase the purchasing power of the population;
the emergence of competitive enterprises on the market capable of fighting monopolists.

As a result, corporations will not be able to turn a blind eye to the quality of their products.

Transitional

This type of stagnation occurs when the economy gradually moves to another level. Mistakes made in governing the country during this period will undoubtedly lead to stagnation. There is a sharp decline in production, investment activity is declining, and capital outflow is increasing. The reasons for the development of transitional stagnation can be called:

non-compliance by enterprises with market principles;
decline in economic growth due to lack of resources for development;
lack of a competitive product, entry into the world market becomes impossible.

The next stage after transitional stagnation is recession(a drop in GDP growth to zero or negative compared to the previous period).

Causes

Economic stagnation is accompanied by a decline in growth in manufacturing, investment and trade. This leads to an increase in the number of unemployed and a decrease in their standard of living. The reasons for this are:

slowdown of economic processes due to the high level of bureaucracy among officials;
insufficient level of qualifications among management personnel and the country's leadership, which reduces the possibility of making correct and timely decisions on economic issues;
inability to analyze the situation of past years, an incorrectly formed plan and strategy for the development of the state;
underfunding of scientific and technical areas reduces the competitiveness of goods on the world market and production potential;
lack of modern approaches to the development of the country;
resource-oriented economy of the country;
depreciation of fixed assets at industrial enterprises, reluctance of the management of large organizations to change production equipment to modern ones.

Breaking out of stagnation

The fight against stagnation should be aimed at the following activities:

introduction of new technologies, investments in efficient production projects. This approach will reduce production costs, increase labor productivity and the competitiveness of the product. Increase sales volumes;
encouragement of entrepreneurial activity, development of market conditions;
provision of financial and legal assistance from the state to enterprises to create competition for monopolies;
increasing the role of the household in the economy;
development of the country's microeconomics - increasing the standard of living of the population and its purchasing power;
reduction of tariffs for services of natural monopolies;
attracting foreign investment.

Consequences for the country's economy and business

As a result of a decline in the level of the country's economy, the population may become dissatisfied, even leading to rallies and riots. The discrepancy between real income and the constant rise in prices for essential goods and reductions in enterprises lead to poverty. People's purchasing power is decreasing and they are forced to give up many goods. As a result, sales volume decreases, trade turnover and production volume decrease.

The economy enters a closed cycle, which leads to an even greater decline and the recession stage. Investments are moving to other countries with more successful economies. Often there is an increase in taxes and tougher penalties. As additional control, the country's leadership may introduce food cards or a curfew.

Another consequence of stagnation (although not necessary) is inflation. When prices for goods and services increase, and money depreciates.

How to conduct business correctly during stagnation

The task of a businessman is not only to stay afloat during a period of stagnation, but also to take his enterprise to a new level and strengthen his position.

The main problem during the period of stagnation will be attracting new financial resources. An entrepreneur can obtain cheap borrowed funds in foreign countries.
It is recommended to suspend investing in long-term financial projects, and also not to take risks and not take part in new programs.
Enterprises that do not have loans will find themselves in a favorable situation. Those who have borrowed funds should proactively seek new sources of financing. Perhaps the new loan will have higher interest rates, but without working capital the company faces bankruptcy.
Optimize costs. Think in advance which employees can be fired without harm to the business.
Reduce advertising costs; in a downturn in the economy, it does not bring the necessary results.
Actively search for your client.
Focus your business on paying customers. At a time of crisis, it is not worth dealing with debtors. This approach will allow you to stay afloat and survive stagnation. Develop a loyalty program for key customers.

The actions taken will allow the entrepreneur to strengthen and develop new relationships and improve the quality of services provided. In crisis conditions, the quality of goods or services becomes the main criterion that will allow the enterprise to function. To do this, you need to identify all the shortcomings in your activities.

Is it possible to earn money during such a period?

Entrepreneurship depends on the purchasing power of the population. Therefore, if you occupy a niche that is inextricably linked with people’s daily lives, you can earn money even during a downturn in the economy. For example, mini-cafes, bakeries that do not require large initial capital. The greatest success will be achieved by those entrepreneurs who introduce a new product to the market, non-standard ideas and are looking for new connections.

What should you pay attention to when doing business during a period of stagnation?

When doing business during periods of stagnation and decline in production, it is worth paying attention to long-term mutually beneficial relationships with your clients. In such difficult times, you need to be especially customer-oriented. Come personally and ask whether customers are satisfied with your services and in what form they would like to receive these services. This will help not only strengthen relationships with existing clients, but also find a new circle of customers.

The company may reconsider the specifics of its activities for compliance with the criteria that serve as the basis for receiving regional benefits for corporate income or property taxes. Many enterprises, in order to optimize taxes, transfer their activities to other regions.

At this time, it is especially important to increase internal efficiency in the enterprise. The period after a crisis or stagnation is the best time for investment, so it is necessary to have funds in the organization.

An enterprise should carefully monitor demand in the market: if yesterday a product was not in demand due to the fact that a more expensive product from competitors was popular, then in conditions of stagnation the offer of this cheaper product may turn out to be profitable.

It is important to establish relationships with the government in order to receive government support at the right time.

Stagnation is a stagnant phenomenon, but this does not mean that it is impossible to conduct business during this time. Yes, many enterprises will close without having time to adapt to the new conditions for doing business. Others, with the right approach, will stay afloat, attract new clients and come out of the crisis period.

Stagnation is an economic process that gets its name from the Latin word for “to stop.” The essence of stagnation is that the economy goes from a progressive state to a stagnant one, and 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 KPIs to evaluate efficiency. Read more 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;
transitional stagnation.

In accordance with the name, monopolistic stagnation occurs when the economy begins to dominate monopoly organizations. The consequences of a monopoly are obvious and known even to people who are not particularly knowledgeable in economics: competition comes to naught, thereby eliminating the natural stimulus of the economy for development.

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 a crisis of overproduction, which took place in the 1930s. When “everything was too good,” eventually “things got very bad.”

The dominance of large monopolists, family businesses and state-backed corporations has strangled small and medium-sized businesses, leading the economy to stagnation.

According to the Western theory of stagnation, developed by economists Stendle, Sweezy and Baran, monopolistic 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 monopoly income as useful as possible.

After all, the crisis of overproduction is 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 can also be actively introduced into scientific and technological progress and social programs.

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

As for transitional stagnation, it is much less studied, although it occurred 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 being rebuilt to market standards, but still remained planned.

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

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

Real investors know that if you invest money correctly, you can save kaitpal and even make money in times of stagnation and crisis. Read where you can invest money, which describes different options from bank deposits to mutual funds and shares.

Stagnation theory does not offer any generally accepted solution to problems with 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 models change, a state of chaos can always set in, and no economic laws can be confidently stated that they will operate. That is why transitional stagnation in the economy foreshadows crisis and decline, which are almost impossible to prevent.

In the economy, stagnation in production, trade, etc. It is expressed in zero or insignificant growth rates, an unchanged structure of the economy, its immunity to innovation, scientific and technological progress. A state of stagnation was typical for the US economy in the 1930s, and for the Soviet economy in the mid-1970s - late 80s.

Modern encyclopedia. 2000 .

Synonyms:

See what "STAGNATION" is in other dictionaries:

Stagnation- – long-term stagnation in the economy. It is expressed in low (or zero) GDP growth rates, high unemployment, and a decline in the standard of living of the population. During the period of stagnation, the structure of the economy remains unchanged, there are no significant... Banking Encyclopedia

In economics, a phenomenon in the country's economy that represents stagnation, a lack of growth in industrial and agricultural production, and in trade turnover. In English: Stagnation See also: Economic cycles Financial Dictionary of Finam... ... Financial Dictionary

- (French stagnation, from Latin stagno I make motionless, stop; Latin stagnum standing water): Stagnation (economics) stagnation in production, trade, etc. Stagnation (ecology) stagnation leading to ... ... Wikipedia

- [Dictionary of foreign words of the Russian language

Timelessness, stagflation, stagnation, recession, depression Dictionary of Russian synonyms. stagnation see stagnation Dictionary of synonyms of the Russian language. Practical guide. M.: Russian language. Z. E. Alexandrova. 2011… Synonym dictionary

- (stagnation) A situation where there is no or very little change in technology or income levels. This situation is the opposite of development, when the first one changes and incomes grow. Economy. Dictionary. M.: INFRA M, Ves Mir Publishing House... Economic dictionary

STAGNATION, stagnation, many. no, female (lat. stagnatio immobility from stagnum standing water) (econ.). Stagnation, lack of development. Stagnation in production is a common phenomenon for monopoly capitalism. Ushakov's explanatory dictionary. D.N. Ushakov... ... Ushakov's Explanatory Dictionary

stagnation- The state of an economic object or area in which there is no growth in production for a long time, much less its development. Syn.: economic stagnation; stagnation... Dictionary of Geography

A state of the economy characterized by stagnation of production and trade over a long period. S. is accompanied by an increase in the number of unemployed, a decrease in wages and the standard of living of the population. Dictionary of business terms. Academician... Dictionary of business terms

- (from Latin stagno I make motionless) in the economy there is stagnation in production, trade, etc... Big Encyclopedic Dictionary

Books

Lucy, stop! , Lyudmila Gurchenko. New life. New values. New prices. New words. Populism, pluralism, management, electorate, consensus, image, mentality, inauguration, stagnation, presentation... It’s somehow been a few years here...
Berlin and surroundings, Joseph Roth. The collection of essays and articles by the Austrian writer and journalist, compiled by the famous translator and Germanist M. L. Rudnitsky, includes texts written by Joseph Roth for Berlin newspapers in...

Stagnation is a state of the economy that gets its name from the Latin “stagnatio” (stillness, stop). The essence of this term is that the economy, after a progressive state, enters a period of stagnation in which significant changes do not occur. This period of time can last from a month to several years. It is accompanied by rising unemployment, a decline in living standards and business activity.

Stagnation - what is it in simple words?

Nowadays, each of us has heard about stagnation at least once. Many people, due to ignorance of this term, may not fully understand the meaning of an article or news. Explaining the essence of the concept in simple words is not so difficult. After certain events, the economy seems to “sleep,” which leads to crisis phenomena.

This term is also found in other industries. In psychology, stagnation means a slowdown in the cultural development of society or the deliberate infringement of a certain class of people who wish to expand their horizons. Such actions are typical of authoritarian regimes.

In the field of ecology, stagnation means difficulties in the supply of oxygen to water bodies. But still, this concept is more often found in an economic context. Stagnation will never give positive results, since the economy must develop and move to a new stage.

Types of stagnation

Modern economists distinguish two types of stagnation.

Monopolistic

Monopoly is characterized by the pressure of sellers or producers in the market of a certain country, who unite to suppress competing organizations and establish control over pricing. As a result, the lack of competitors leads to a slowdown and then to a stop in development. Manufacturers do not focus on the quality of their product, trying to increase turnover and increase its quantity - the client will already buy the offered assortment.

One of the most striking examples of monopolistic stagnation is the Great Depression of the US economy in the 30s of the last century. Overproduction slowed down development and led to the decline of the economic system, and poverty and poverty reigned in the country. Monopolists were in power and received full government support.

Transitional

The consequences of incorrect management decisions, from which no government is immune, add up over time and develop into transitional stagnation. It is identified with capital outflow and minimizing production rates. After the collapse of the USSR, almost no state (former member of this association) managed to avoid such an unpleasant phenomenon. Stagnation of large production capacities, a halt in scientific development, the outflow of specialists abroad, a decrease in business activity - these and other negative consequences spread across all former countries of the Union. Previous logistics connections between production sectors were disrupted, and as a result, the products produced were of low quality and uncompetitive.

Advice: whatever the period of stagnation, when looking for solutions to overcome it, the specifics of the region must be taken into account.

Causes

It is important to predict a crisis in development, but stagnation is one of those phenomena for which one cannot prepare. It is impossible to name 2-3 reasons for stagnation in simple language, or to determine its approach based on news reports or government decrees. Unfortunately, you can only see it when it has already arrived.

Circumstances that may affect economic development and lead to stagnation:

bureaucracy;
corruption;
conservatism when making management decisions;
lack of funding for the scientific field;
work in government bodies of persons with insufficient qualifications;
insufficient regulation of the country's regulatory framework;
wear and tear of production facilities;
deterioration of international trade relations;
wrong political course.

Consequences

The results of stagnation are obvious - a decrease in household incomes, unemployment, and lack of innovative development. This situation leads to discontent, which develops into revolutions, strikes, and changes in power.

By minimizing production processes, the cost of natural resources decreases. The only area that remains virtually unchanged is the entertainment industry. This trend is not surprising - against the backdrop of financial difficulties, people are trying to somehow “not lose heart.”

How to deal with stagnation in the economy?

To overcome the serious consequences of stagnation in Russia and bring the economy to a new level, the government must develop a new development program, revise the business strategy, find the causes of stagnation in the economy and carry out restructuring.

As a rule, to eliminate the causes that led to stagnation, the following measures are taken:

fight against corruption in all echelons of power;
simplification of management structures to reduce bureaucratic delays;
acquisition of new technologies;
search for new markets;
development of the scientific sphere;
intensification of foreign economic activity.

Important: The authorities of a certain state, which is in stagnation mode, must conduct a deep analysis and find the only effective strategy based on all economic components.

Save the article in 2 clicks:

Stagnation is a phenomenon that is characterized by a low rate or lack of growth in production and trade activities, a decrease in business activity and the standard of living of the population. These processes are difficult to stop, they can lead the country into a deep crisis, therefore, even at the moment such a situation is determined, the government must take measures to eliminate negative phenomena.

In contact with