Opportunities to Promote Economic Growth in Russia at a Rate Not Lower Than the World Average

• Main Authors: Baranov Sergey V., Skufina Tatiana P.
• Format: Article
• Language: English
• Published: Russian Academy of Sciences, Vologda Research Center 2018-11-01
• Series: Economic and Social Changes: Facts, Trends, Forecast
• Subjects: russia; economic growth; labor; modeling; gross domestic product; capital; optimal ratios
• Online Access: http://esc.vscc.ac.ru/article/2804/full?_lang=en

The article considers economic growth in Russia in the context of fundamental concepts that include the formalization of the mechanisms of economic development from the standpoint of determining the relationship and substantiating the optimal ratio of production factors for Russia’s GDP. In the framework of the study, we address four problems. First, we substantiate the model of production of Russia’s GDP, expressing the functional relationship between the volume of GDP, on the one hand, and the production factors such as labor (number of people employed in the Russian economy) and capital (investment in fixed capital). The model is consistent with the initial statistical data, so that the coefficient of determination between the model data and real data is more than 99%. Second, we substantiate the optimal ratio between investment and employment for the purpose of increasing Russia’s GDP. Third, we analyze in detail how these optimal ratios correspond to the real processes of GDP production. On this basis, we identify the fundamental problems and possibilities of economic growth in the current economic model, taking into account the impact of the pension reform. We prove that the increase in GDP in Russia, given the current structure of the economy, is possible mainly due to the growth of investment. Fourth, on the basis of modeling, we consider the possibility of increasing Russia’s GDP through investment (compliance of the model with the initial data is good, the coefficient of determination is more than 98%). Our assessment shows that in order to provide GDP growth at the level not lower than 3% per year, which is set out in the May 2018 Decree of the President, the growth of investments in fixed capital should be at least 5.4% per year