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 economic liberalization is relevant for dynamic evolution and obvious to all countries, because in today's conditions it is extremely necessary to increase GDP. Since private business entities are the main engine of economic development, it is obvious that obstacles to the implementation of their activities will negatively affect growth.
Private investment is the main force of the economy
It is well known that private investment is the main driver of GDP growth. It is thanks to them that the liberalization of the world economy takes place in most countries. And this means that the more investment, the higher the rate of economic growth. Since 1997, an increase in investment in fixed assets has been observed in Russia , and economic growth since 2000 (except for the crisis year of 2009). In the non-crisis period, not only investments actually 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 up the funds 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, the largest investment costs are borne by enterprises, while the resources of the state, financial institutions and foreign entities are not fully utilized.
New economy
The theory of analysis suggests that at the moment, economic growth has slowed. This circumstance leads to aggravation of a number of socio-economic problems, especially those related to the redistribution of the national product, for example, the sphere of social payments and pension provision. Redistributing comparatively small in terms of GDP, it is impossible to achieve large in terms of pensions or social benefits for a significant category of citizens. Attempts to do this at the expense of others may lead to unsatisfactory results in terms of tax collection and social tensions. Although economic liberalization does not lead to instant 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, the country has good prospects for economic growth.
Attracting private foreign investment
In attracting private foreign investment lies the successful liberalization of the Russian economy, however, the difficult business environment does not allow this direction to develop. This is the main reason for low investment in the economy from abroad, and it is the improvement of these conditions, and not numerous intergovernmental meetings and commercials abroad, that are 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 not been used to a large extent 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 necessary state funds should be carried out through measures of both fiscal and monetary policies. Expenditures from the state budget for investments can be increased, because, firstly, the state does not always invest its money in promising projects, and secondly, and more importantly, a significant part of the state budget expenditures is directed to objects that will not be profitable ( e.g. housing repair costs or government costs). In addition, the insignificant use of equity funds as a source of state investment expenditures may also be appropriate.
Economics: growth theory
In the last decades of the last century, when scientific and technological progress came to the rescue, a breakthrough in many areas gave a new wave of growth in many respects. It turned out that the phrase "economic liberalization" no longer scares 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 methods of production. They not only expand the range of products, but also open the way to new technologies with which you can efficiently carry out work processes and use raw materials. In addition to increasing productivity and increasing the volume of knowledge, liberalization of the economy gives a monopoly rent to the owner of the invention by obtaining a patent, and also stimulates new discoveries. It is important to note that the results of development and research in the field of fundamental science are public goods that are not withdrawn, and therefore available to any interested parties. 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 obsolete equipment.
Investing as a factor of economic growth
In the first case, the investment will result in 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 that of goods from old industries. In addition, given the novelty, new markets appear, and the further production of this name is stimulated. In the second case, the usual continuation of the creation of old products will occur, the price of which, most likely, will slightly differ 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 predominantly final products, in the second case, both finished, and raw materials, and semi-finished products. Thus, we have two qualitatively different aspects of investing, the first stimulating economic growth to a greater extent than the second. It is obvious that at present investments in innovations and high-tech production are inferior to investments that are used to create capital in conventional production, but trends indicate that economic liberalization has been growing in Russia over the past decade, primarily thanks to private enterprises, and this gives the country significant prospects, especially with increased use of other sources of funds.
The 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 people spend time getting 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 form the prospects for sustainable and long-term economic growth. It is important to understand that economic liberalization will solve a number of socially significant problems, and therefore, minimizing negative factors and promoting economic growth should become one of the highest priorities.