Abstract
This article presents comprehensive typology of all possible relationships among inputs of an economic system, their productivity, and output. Each situation is given an exact name explaining how intensive and extensive factors contributes to the system development. The exact contributions of the factors can be counted by so-called dynamic intensity and extensity parameters. The article describes logic of the parameters, discusses their advantages and problems and assigns their values to the presented nomenclature of the developments. The parameters are further compared with growth accounting methods and their use is demonstrated on the development of macroeconomic system on the national economy level when it is counted how intensive and extensive parameters contribute to the Czech and German GDP development in the period 1991–2017. The analysis confirms that the parameters can be used as an alternative methods to growth accounting and that managers of any economic system should pay attention whether a system achieves positive value of the dynamic intensive parameters in long run.
Highlights
Every active system uses certain inputs and produces certain outputs
The initial expression of our analysis describes the relation between the system output (Y) as a product of the total factor productivity (TFP) and the total input factor (TIF), where TIF represents combination of a system input and TFP represents inputs productivity [5,17,18,19,20,21,22]
The article presents a complex typology of relationships between the development of total factor productivity (TFP) and total input factor (TIF) of any system on the one hand and output development on the other
Summary
Every active system uses certain inputs and produces certain outputs. If it wants to be efficient, it strives either at minimizing the inputs used to produce the relevant outputs, or at maximizing the outputs from the relevant inputs, or at some combination of those optimization processes, as appropriate. There are essentially two basic paths for satisfying more needs that can be followed—purely extensive or purely intensive development. The former means extending the inputs without increasing their productivity. The latter is based on improving the quality and, the productivity of the existing inputs without changing their quantity. The former will, sooner or later, inevitably run against the law of diminishing marginal productivity [2]—at some point in time, the additional units of input will produce insufficient value of output. [3], the number of needs met has been increasing
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