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Concentration of production: causes and indicators

The division and socialization of labor are expressed directly in production processes in the form of differentiation and concentration of manufacturing operations, and at the level of social production as a whole - in industry differentiation and concentration


Concentration is expressed in the creation and development of large enterprises and enterprises, in the concentration of most of the products of each industry in specialized enterprises. Concentration of production creates opportunities for more efficient use of modern high-performance equipment and the growth of productivity of social labor.

Industry differentiation is expressed in an increase in the number of industries, and concentration is in the concentration of production at large enterprises both within each industry and within wider boundaries, including production processes in different industries.

Concentration, as a rational form of industrial organization of production, has four varieties: enlargement of enterprises, specialization, cooperation and combination.

• The enlargement of enterprises — the concentration of production at large enterprises, is determined by scientific and technological progress, the growth of productivity of unit capacities of machines, assemblies, apparatuses, the improvement of control technology and the growth of output.

• Specialization - the concentration (concentration) of homogeneous production, which by its type is mass or large-scale.

• Cooperation - direct production relations between enterprises (associations) involved in the joint manufacture of certain products.

• Combination - a combination of different industries, which are successive stages of processing raw materials, complex processing of raw materials or the use of industrial waste in one enterprise (plant).

Concentration of production has its advantages and disadvantages. Advantages - this is mainly the ability to concentrate funds for the development of production and the social sphere; disadvantages - inability to quickly restructure production to produce new equipment.

The concentration level in the industry is influenced by internal and external factors.

Internal factors are determined by the optimal size of production and enterprises in terms of maximum use of production resources.

External factors include transport, the size of the raw material base, the presence or possibility of attracting labor, water resources, climatic conditions, etc.

The main factors of concentration of production:

? design and technological features of products. For example, in ferrous metallurgy, electric power industry, and some other industries, the size of enterprises depends on the size of the main units, as well as their quantity, which ensures the integrated use of all factors of production and management. In the textile and shoe industries, the size of production and the concentration of enterprises are determined by the optimal combination of certain complexes of machines and equipment.

? natural conditions and consumption of minerals (a significant factor for the mining industry).
Based on the mineral reserves in the field, the service life of surface and underground structures (quarries, mines, etc.), consumption volumes, production volumes and, therefore, the size of enterprises are also determined.

? transportability of products (agriculture, construction, processing of certain types of products). For example, in industries processing agricultural raw materials, such a factor as the density of raw materials and the acceptable radius of its supply is important.

? geographic location of enterprise consumers and suppliers of raw materials, the availability of labor resources in the region, etc.

When planning and analyzing concentration processes in an industry, it is necessary to use concentration indicators.

The most important indicators of industry concentration include:

• annual production output;

• average annual number of employees;

• average annual value of fixed assets;

• electricity consumption per year;

• the share of large enterprises in the output of products by the entire industry;

• average size of the enterprise in the industry.

To characterize the level of concentration of production in industries,

manufacturing one type of product, natural indicators are used. For example, in the electric power industry - the average installed capacity of power plants (in kW); annual electricity generation per power plant; the share of electricity generated by large and largest power plants in the total amount of electricity generated by all stations for the year.

In industries manufacturing different types of products, the concentration level can be determined in terms of value. For example, the specific gravity of large industries in the total output for the year for commodity (sold) products at constant prices.

The average annual number of industrial and production personnel characterizes the size of the enterprise (the amount of employed labor). The value of industrial assets characterizes the size of enterprises in terms of applied social labor.

When planning the development of individual sectors of the national economy, the optimal size of enterprises and the most effective forms of concentration in this industry are taken into account.

The main criteria for concentration efficiency in the industry are:

• intensity of use of factors of production;

• management costs (in large enterprises, as a rule, relatively less than in smaller ones, as they increase disproportionately to the growth of production scale);

• adaptability to the restructuring of production to new types of products.

A high level of concentration does not always reflect the high economic efficiency of production. There is no direct connection between the indicators of concentration of production and its economic indicators. If enterprises are characterized only by large sizes, and their structure and scale of production are not optimal for this industry, then the level of concentration cannot serve as an indicator of production efficiency.
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