What is an Economy of Scale?

Economies of scale development. The economy of scale is a comprehensive benefit index that reflects the degree of economic development of an economy, as opposed to an economy scale index that reflects the mode of GDP growth. Macroeconomically, economies of scale refer to the degree of economic development that an economy (usually a country) uses the Human Development Index, Social Development Index, Social Welfare Index, and People's Happiness Index to measure comprehensively. On the micro level, economies of scale refer to development indexes measured by products, enterprises, industrial added value, and comprehensive benefits. Economies of scale also refer to the benefits of economies of scale, that is, the increase in the marginal benefits of the enterprise brought by the improvement of the integrity of the industrial chain formed by a certain economic scale, resource allocation and regeneration efficiency. Micro-scale economies are inseparable from macro-scale economies, and macro-scale economy constraints improve and guide micro-scale economies. Regardless of whether it is a macro economy or a micro economy, the scale of the economy is not equal to the economy of scale. The scale of the economy that can bring about the scale economy is the indicator, goal and path of economic development. ^[1]

Scale effect

Economies of scale development. The economy of scale is a comprehensive benefit index that reflects the degree of economic development of an economy, as opposed to an economy scale index that reflects the mode of GDP growth. ^[1]

Macroeconomically, economies of scale refer to the degree of economic development that an economy (usually a country) uses the Human Development Index, Social Development Index, Social Welfare Index, and People's Happiness Index to measure comprehensively. On the micro level, economies of scale refer to development indexes measured by products, enterprises, industrial added value, and comprehensive benefits. Economies of scale also refer to the benefits of economies of scale, that is, the increase in the marginal benefits of the enterprise brought by the improvement of the integrity of the industrial chain formed by a certain economic scale, resource allocation and regeneration efficiency. Micro-scale economies are inseparable from macro-scale economies, and macro-scale economy constraints improve and guide micro-scale economies. Regardless of whether it is a macro economy or a micro economy, the scale of the economy is not equal to the economy of scale. The scale of the economy that can bring about the scale economy is the indicator, goal and path of economic development. ^[1]

Scale effect

This question actually depends on many factors, so that we tend to analyze the size of the enterprise as a "result" like "gross domestic product" rather than asking it as a "problem".

Adam Smith described his visit to a needle factory in his famous book, A Study of the Nature and Causes of National Wealth. Between the workers as Smith saw

Scale effect

1. Scale effect refers to the fact that most products of modern industry must reach a certain level of scale in order to produce economically reasonable output. The third characteristic is that the technology of modern industry usually belongs to labor-saving type.

Prominence of scale effect

Since the reform and opening up, China's economy has continued to develop rapidly at an average annual growth rate of more than 9%, and China's rise is an indisputable fact. So how do you look at the global impact of China's rise? In my opinion, from a global perspective, the impact of China's rise on the world can be summarized as the scale effect in the following aspects. The first is the effect of population size.

We can see that the take-off of the United States economy was 42 million in 1870, and it only accounted for 3.16% of the world s population. When the Japanese economy took off in 1950, it was 83 million, accounting for only 3.3% of the world s population, but In fact, when China's economy took off in 1978, the total population reached 960 million. At that time, it accounted for more than 22% of the world's total population. In the future, since not only China but also India, the rise of such a large-scale population will itself create a new golden period for the development of the world. From the perspective of the world, from 1870 to 1913 was the world s first golden development period, when the world s economic growth rate was roughly 2.12%; from 1950 to 1973 was the world s second golden development period, when the world s economy The growth rate is roughly 4.2%; since 1990, if the rise of India and China is taken into account, the global economic growth rate has reached 3%. This is calculated according to World Bank data. In the future, there may be a third golden development period in the world. That is, the period from 1990 to 30 years in 2020 will create a period similar to the first and second golden development. This period of development has a lot to do with the effect of population size.

The second is the scale effect of job creation.

Let s look at some data. In 1960, the total labor force of OECD (Organization for Economic Co-operation and Development) high-income countries accounted for about 20% of the world s total labor force. By 2002, it had fallen to 15%. Has always maintained a quarter of the world's total. But if we deduct the agricultural labor force and only count it as non-agricultural labor force, then we can find that China s non-agricultural employment labor force accounted for only 6.5% of the world s total labor force in 1980, but by 2002 it had nearly doubled, exceeding 12 %. According to the development trend, if the proportion of OECD countries labor force continues to decline and China s non-agricultural labor force ratio continues to rise, then we estimate that China s total non-agricultural labor force from 2010 to 2015 will be equivalent to that of OECD high-income countries All labor. This shows that if we can still maintain a relatively high investment in human capital and relatively low labor prices, it is inevitable that jobs in the world will move to China.

Scale effect or offsetting cost risk

The third is the effect of large economic scale.

According to the latest forecast made by Madison: China's economic aggregate can surpass the United States around 2015, and believes that China's share of the world's economic aggregate can reach 23.1%. Of course, not only China, but also India, will rapidly expand the proportion of the global economic aggregate. This huge economic scale will create great opportunities for the world. Fourth, the scale effect of opening markets and expanding trade.

When the United States took off its economy, trade accounted for a rapid increase in the world's total trade. We can look at such data: China's total export trade accounted for only 0.8% of the world's total in 1978, and has reached 7.2% in 2006. By 2010, it should probably be close to 10%. Of course, the impact of this export on the world is multifaceted, both positive and negative, but in general, the increase in our exports has also led to an increase in our overall imports. It can be said that China's trade has considerable growth potential in the long run.

However, there are always two aspects to things. We should also see the negative in China's economic growth. This is the scale effect of resource consumption and environmental pollution. With the changes in the regional and national distribution of the world s economic aggregates, as well as the large-scale shift in industrial layout, including changes in the proportion of exports, we can see that the proportion of primary energy consumption in the United States and the European Union as a percentage of the world s total is rapidly decreasing. A recent report from the IEA (International Energy Agency) shows that it is likely that China will not have to use 2015, and China's energy consumption will replace the US Of course, after 2030, they may change their order. This is from the perspective of primary energy consumption.

Let's look at the marginal resource consumption impact of China's rise. According to BP (British Petroleum Corporation) data, from 1994 to 2004, China s energy, coal, oil, and steel greatly affected the world market, not only the consumption of resources themselves, but also the world s resource prices. . We have also calculated that according to the World Bank's database to calculate the economic losses of Sino-US natural assets, we see that the US's GDP in it has fallen, and we have risen. From the above analysis, we can see that China has become the largest stakeholder in the world's three major economies, including Europe, the United States, Japan, and Japan. Therefore, China needs not only an independent rise but also an open rise; not only a rapid rise, but also " Green Rise. "