Economy liberalization. Liberalization of the world economy

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:43

Economic growth is an important aspect of the development of each country, because it is a factor in improving the quality of life of its citizens. That is why the liberalization of the economy is relevant for dynamic evolution and is obvious to all countries, because in today's conditions it is extremely necessary to increase GDP. Since private economic entities are the main engine of economic development, it is obvious that obstacles to the implementation of their activities will negatively affect growth rates.

Private investment is the main force of the economy

It is common knowledge that private investment is the main driver of GDP growth. It is thanks to them that most countries are liberalizing the world economy. This means that the more investment, the higher the rate of economic growth. In Russia, since 1997, there has been an increase in investment in fixed assets, and economic growth since 2000 (except for the crisis year of 2009). In the non-crisis period, it was not just investments themselves that grew, but also their share in relation to GDP. It is important to note that a significant aspect in the investment process is its sources. The liberalization of the economy provides more than half of the capital investments that make upmeans of enterprises and organizations. At the same time, it may be promising to create conditions for increasing the use of such sources as funds from the state budget and foreign investors, bank loans and other loans. Thus, enterprises bear the largest investment costs, while the resources of the state, financial institutions and foreign entities are not fully used.

New economy

Theory analysis shows that at the moment the pace of economic growth has slowed down. This circumstance leads to the aggravation of a number of socio-economic problems, especially those associated with the redistribution of the national product, for example, the sphere of social payments and pensions. By redistributing a relatively small GDP, it is impossible to achieve large pensions or social benefits for a significant category of citizens. Attempting to do this at the expense of others can lead to unsatisfactory results in terms of tax collection and social tension. While economic liberalization does not provide immediate solutions to problems, it can help in the long run without causing other adverse effects. That is why it is worth taking advantage of the opportunities that arise at the beginning of the third millennium, when, thanks to the achievements of economic thought and modern global challenges, good prospects for economic growth open up for the country.

Attracting foreign private investment

In attracting foreign private investment lies the successful liberalization of the Russian economy, but difficult business conditions do not allow this direction to develop. This is the main reason for the low levels of investment in the economy from abroad, and it is the improvement of these conditions, and not numerous intergovernmental meetings and commercials abroad, that is the main reason for the increase in foreign investment. In addition, in addition to external, internal investments are important, which, in turn, are divided into private and public. To date, private investment opportunities have largely not been used due to the fact that citizens do not trust their savings to financial institutions or do not use their funds in various investment projects. This means that part of the funds earned by citizens is actually withdrawn from circulation, and this negatively affects the economy as a whole. The search for the necessary public funds should be carried out through measures of both fiscal and monetary policy. Expenses from the state budget for investment can be increased, because, firstly, the state does not always invest its funds in promising projects, and secondly, and more importantly, a significant part of the state budget expenditures is directed to objects that will not bring profit (such as housing repairs or government spending). In addition, it may be appropriate to use a small amount of emission funds as a sourcegovernment investment spending.

Economy: growth theory

In the last decades of the last century, when scientific and technological progress came to the aid of production, a breakthrough in many areas gave a new wave of growth in many indicators. It turned out that the phrase "economic liberalization" no longer scares off potential investors, the return on investment has become greater, and it was private injections that took place at a faster pace. Scientific discoveries entail new ways of production. They not only expand the range of products, but also open the way for new technologies that can be used to efficiently carry out work processes and use raw materials. In addition to increasing productivity and increasing knowledge, liberalization of the economy provides a monopoly rent to the owner of the invention through obtaining a patent, and also stimulates new discoveries. At the same time, it is important to note that the results of developments and research in the field of fundamental science are a public good that is not confiscated, and therefore is available to any interested person. Thus, technological change is an important factor in economic growth. So, we can conclude that the nature of private investment is very important - whether they go to high-tech production, or to upgrade outdated equipment.

Investment as a factor of economic growth

In the first case, the result of investingthere will be a production in which a qualitatively new product with innovative features is created, because it has not been created before. The cost of such a product will be an order of magnitude higher than goods from old industries. In addition, given the novelty, new markets appear, further production of this name is stimulated. In the second case, the usual continuation of the creation of old products will take place, the price of which, most likely, will differ slightly from the same indicator of earlier samples. The growth in the cost of production in this case is limited both quantitatively (through the relative saturation of markets) and qualitatively. In addition, it is worth noting that in the first case, investments stimulate the production of mainly final products, in the second case - finished products, raw materials, and semi-finished products. Thus, we have two qualitatively different aspects of investment, and the first stimulates economic growth to a greater extent than the second. Obviously, at the moment, investments in innovation and high-tech production are inferior to investments going to create capital in conventional production, however, trends indicate that economic liberalization has been gaining strength in Russia over the past decade, primarily due to private enterprises, and this gives the country significant perspectives, especially as the use of other sources of funds increases.

Development of economic liberalization

It is also worth considering as a development factor not only capital, but also labor. At the same time, we need to recall the theory of human capital, according to which peoplespend time gaining qualifications and experience. It should be noted that this theory is inextricably linked with the theory of innovation, because only qualified employees can effectively create and work with new technologies and products. Another important factor in economic development is, as mentioned above, the conditions for business development.

So, we have identified those aspects that shape the prospects for sustainable and long-term economic growth. It is important to understand that the liberalization of the economy will solve a number of socially significant problems, and therefore minimizing negative factors and promoting economic growth should become one of the highest priorities.