Internet sources and the optional list of electronic sources: 1-6 Theme of the lecture №13. Economic and social production efficiency

1. The nature and efficiency metrics

2. Liquidity and financial stability of production

3. Methods of study of economic efficiency of capital investments in production

4. The main directions of improving production efficiency

1.Efficiency in general describes the extent to which time or effort is well used for the intended task or purpose. It is often used with the specific purpose of relaying the capability of a specific application of effort to produce a specific outcome effectively with a minimum amount or quantity of waste, expense, or unnecessary effort.

In economics, the term economic efficiency refers to the use of resources so as to maximize the production of goods and services. An economic system is said to be more efficient than another (in relative terms) if it can provide more goods and services for society without using more resources. In absolute terms, a situation can be called economically efficient if:

• No one can be made better off without making someone else worse off (commonly referred to as Pareto efficiency).

• No additional output can be obtained without increasing the amount of inputs.

• Production proceeds at the lowest possible per-unit cost.

These definitions of efficiency are not exactly equivalent, but they are all encompassed by the idea that a system is efficient if nothing more can be achieved given the resources available.

2.The term Financial System Stability does not have universally accepted definition. Schinasi (2006a) defines financial stability as a situation in which the financial system is:

a. Allocating resources efficiently between activities and across time.

b. Assessing and managing financial risks.

c. Absorbing shocks.

In general, financial stability is financial system resilience against economic shocks, such that the intermediation function, payment system and risk distribution still perform accordingly. There are four interrelated factors that support the establishment of financial system stability: (i) stable macro economy; (ii) well-managed financial institutions and efficient financial market; (iii) sound framework of prudential supervision; and (iv) safe and reliable payment system.

3. Economic efficiency study of capital investments is an indicator that provides a picture of the planned connections and quantitative relations between the expenditures of society for expansion and simple reproduction of fixed capital stock and the results obtained. The direct result of capital investment is that production capacities and nonproduction facilities are put into operation; the eventual result is a growth in output and material services and, ultimately, a growth in national income. The theories and techniques devised by Soviet economists for determining the economic efficiency of capital investments provide a basis for selecting the optimal alternatives of capital investments when drawing up long-term and current (annual or quarterly) plans and plans for specific projects; they play a direct role in the management of enterprises (associations), branches of the economy, and integrated programs with particular goals for economic development. The effect (result) of capital investments in production for the national economy, branches of the economy, and subbranches that keep the appropriate records is manifested in the growth of the gross product, final product, and net product (national income), expressed in terms of value and in physical terms. Efficiency is measured, however, by the ratio of the result (output) to the expenditures (investments) needed to produce the result.

4.Classification of a big variety of factors of increase of efficiency (productivity) can be carried out on three signs:

1) to types of expenses and resources (increase sources);

2) to the directions of development and production improvement;

3) a realization place in a control system of production.

Grouping of factors on the first sign gives opportunity quite accurately to define sources of increase of efficiency: labor productivity increase (economy of expenses of live work), decrease in a capital intensity (capital intensity) and production material capacity, improvement of use of natural resources. The main directions of development and production improvement: acceleration of rates of scientific and technical and organizational progress (creation new and improvement of existing technologies, constructional materials, means of labor and end products; mechanization and automation of productions; introduction of progressive methods and forms of the organization of production and work; construction and regulation of a market mechanism of managing).

Basic literature: 1,2,3,4,5,6,7,8,9.

Additional literature: 10,11,12,13,14,15,16.

Periodicals: 17-60

Internet sources and the optional list of electronic sources: 1-6