Economic Analysis: Theory and Practice
 

Exponential growth and the law of cyclic development of systems

Vol. 17, Iss. 11, NOVEMBER 2018

Received: 15 October 2018

Received in revised form: 31 October 2018

Accepted: 9 November 2018

Available online: 29 November 2018

Subject Heading: ECONOMIC ADVANCEMENT

JEL Classification: О12, Q01

Pages: 1996–2009

https://doi.org/10.24891/ea.17.11.1996

Babicheva N.E. Voronezh State University (VSU), Voronezh, Russian Federation
sigaeva@mail.ru

https://orcid.org/0000-0003-1933-1558

Lyubushin N.P. Voronezh State University (VSU), Voronezh, Russian Federation
lubushinnp@mail.ru

https://orcid.org/0000-0002-4493-2278

Lylov A.I. Voronezh State University (VSU), Voronezh, Russian Federation
lylov-vsu@rambler.ru

ORCID id: not available

Gurtovaya I.N. Federal State Institution of Advanced Finance Professional Training Federal Tax Service Training Institute (FTS of Russia Training Institute), Nizhny Novgorod, Russian Federation
cpp604@sinn.ru

ORCID id: not available

Subject The article analyzes the combination of exponential growth of economic entities and the fundamental law of decreasing efficiency of evolutionary perfection of systems, which effect is displayed by S-shaped curves.
Objectives The aim is to explore the conditions under which economic entities transfer to exponential growth and disclose the efficiency of the transition.
Methods The paper employs general scientific principles and methods of research, like analysis and synthesis, grouping and comparison, abstraction, generalization, etc.
Results We distinguish specific areas of change in the comparative efficiency of technological systems' development (S-curves) and link them with technological stages, modes and the Industry 1.0–4.0 concept. As a result, we get corresponding S-curves for each period, and reveal a significant increase in cost efficiency in the transition to more advanced technological modes.
Conclusions Investments in traditional technological systems are not economically feasible. It is crucial to introduce systems that are specific to the digital economy and rest on theoretical innovations. Economic actors cannot grow continuously. Exponential growth is provided within the law of decreasing efficiency of evolutionary perfection of systems despite the law of cyclic development effect. As a result, numerous models used in system development forecasting prove inefficient. New approaches to forecasting the development of economic entities are needed. These approaches should rely on interconnected models and consider the opportunities of exponential growth of their effectiveness.

Keywords: exponential growth, digital economy, law of cyclic development, S-curves, technological stage

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