Some Aspects of Today’s Economic Growth Economy Near Us (L)
We include in the conceptual framework of economic growth, in a broader sense, the individual, the society, the institutional performance, the investment, geopolitical situation, but also issues of natural resource management and the current state of technological development. In this context, we can look at individuals both in terms of their own cultural evolution, in terms of the evolution of the society of which they are part, but also in terms of the environment in which they operate.
The personal preferences of individuals are passed on genetically, from generation to generation, through education with changes depending on the historical period, geographic area, economic and social context. By integrating into the discussion the individual’s motivation to achieve, the desire to have goals that bring them results, we assume that economic growth can be a main driver of cultural evolution because the needs of individuals can be better met under conditions of economic growth. The set of values and attitudes at the basis of the actions of individuals and their interactions with each other are the ideals and norms of behaviour to which society attaches importance and the way in which individuals learn to respond to facts, circumstances, and problems (Harrison). Thus, both individual and social values are necessary to and influence economic growth, with the claim that 80% of a country’s prosperity is due to individual virtues, while 20% is due to social virtues (Fukuyama).
Certain values of individual freedom can also be associated with the concept of economic growth. I will mention here just two of the views on freedom. The first belongs to Isaac Berlin, who outlined two categories of freedom, positive freedom (answering the question “What is the area within which the subject - a person or a group of persons - is or should be allowed to do or be what he or she is capable of doing or being, without the intervention of others?” or “What am I free to do or be?”) and negative freedom (“What or who is the source of control or interference that can cause one to do, or be, this instead of that?”). The second belongs to Friedrich Hayek who defines individual freedom as a state independent of “the arbitrary will of another or others” provided that the individual has a secure private sphere and in his environment there is a set of circumstances over which others cannot interfere.
Last but not least, the environment in which the individual evolves is also important; according to some authors (Dinga) it is represented by the cultural geodesic of the economic/social system to which he belongs; from the behavioural point of view, it represents a complex system of constraints/incentives, formal and informal, characterizing, from a general point of view, the economic system in question. The individual’s intellectual capacity to think and innovate, his desire for wealth, is the engine of economic growth. The assertion that the resources available to a society are limited and cannot be expanded even in times of technological boom is not favourable to economic growth because it leaves individuals with only two options, to take on extreme behaviour, i.e., accepting/surrendering to the distribution of wealth and/or trying to improve their own situation at the expense of other individuals through actions that lack responsibility, loyalty, and honesty.
The phenomenon of economic growth today
Viewed as an economic event that is actualized in geo-socio-historical conditions, it can be said that economic growth is dependent on the context in which it occurs and is therefore analysed. We thus define economic growth as “a geo-socio-historical contextualized economic process whose defining parameter varies dimensionally” (Dinga). In enumerating the most important characteristics of economic growth, we begin by saying that it is a purely quantitative phenomenon, it is a means and not an end. Economic growth refers to the variation (either increase or decrease) in the numerical value of the quantitative defining parameter established for a given economic system. It is significant only at macroeconomic level, it has no structural or qualitative effects on the economic system in question but only quantitative effects. Also, it is reversible (after a period of economic growth there may follow a period of stagnation – zero growth – or even economic decline – negative growth). It is important to point out that economic growth tends to produce those structural changes in the economy that are likely to increase the resources for economic growth in the next cycle, which is an auto-catalytic tendency of economic growth, which justifies treating economic systems as logically living systems.
Based on the theoretical above considerations, if we look at the phenomenon of economic growth in recent times, we see that the global economy lost momentum at the end of last year, with the COVID-19 pandemic being the most shocking event with permanent consequences on our daily lives. Against the background of the Omicron wave, the blockages of international supply chains, the economic activities that are difficult to carry out because of the interruption of production and transport of goods, because of the isolation and quarantine of people affected by the virus, the economic recovery is slowed, and the overall forecast remains subject to risks of negative evolutions. On top of this, particularly in Europe, economic activity is hampered by the high level of uncertainty surrounding the evolution of the Russia-Ukraine conflict, which could lead to higher oil and gas prices and lower foreign investment in the area. With the long-awaited decline in the pandemic and the lifting of most of the restrictions on social life, we all expect the onset of a global economic recovery, with slight growth rates in gross domestic product but with higher-than-expected inflation rates. there is a situation in which supply constraints will last longer and wage increases that will exceed labour productivity growth will have an impact on consumer prices. For a long time, the period of low inflation rates will have ended, at least until the phasing out of fiscal facilities and the normalization of global supply chains.
The EU’s support to Member States through the NextGenerationEU – NGEU, a temporary instrument designed to stimulate recovery, will in the short term help a reconstruction that is intended to be greener, more digitalized, and more resilient, and will stimulate investment in the medium term.
Although the National Recovery and Resilience Program will play an important role in stimulating public and private investment, the concrete reality of the current period shows that the growth rate is hampered by energy and gas prices that are well above pre-pandemic levels.
An analysis of the labour market situation shows that there have been some significant improvements due to the easing of restrictions on economic activity, however there are areas of labour shortages especially in sectors where economic activity is growing. We note that although its impact on economic activity has diminished considerably, the COVID-19 pandemic has not yet been defeated and recovery depends to a large extent on its evolution, both within and outside the EU Member States.
Thus, economic growth forecasts for the coming period remain moderate.