Extensive growth
Encyclopedia
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
.
Reliance on extensive growth can be undesirable in the long-run because it exhausts resources. To maintain economic growth in the long-run, especially on a per-capita basis, it is good for an economy to grow intensively; for example, by improvements in technology or organisation, thereby increasing the production possibilities frontier of the economy.
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, 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
Diminishing returns
In economics, diminishing returns is the decrease in the marginal output of a production process as the amount of a single factor of production is increased, while the amounts of all other factors of production stay constant.The law of diminishing returns In economics, diminishing returns (also...
. It is therefore often viewed as having no effect on per-capita magnitudes in the long-run
Long-run
In macroeconomics, the long run is the conceptual time period in which there are no fixed factors of production as to changing the output level by changing the capital stock or by entering or leaving an industry. The long run contrasts with the short run, in which some factors are variable and...
.
Reliance on extensive growth can be undesirable in the long-run because it exhausts resources. To maintain economic growth in the long-run, especially on a per-capita basis, it is good for an economy to grow intensively; for example, by improvements in technology or organisation, thereby increasing the production possibilities frontier of the economy.