Russian Investments: the Missing Intellectual Part

Abstract

Based on the article by B. L. Lavrovsky, E. A. Goryushkina and E. A. Shiltzin, “Investment resource of economic growth: not only quantity,” the viewpoint of modern Russian economists, who put in doubt the need to increase investment resources and consider it possible to develop Russia’s economy by improving its intellectual components and innovative development, is critically evaluated. Russia’s savings ratio, when compared to the worldwide price index, indicates the necessity of at least a twofold investment increase. While the world’s leading economies indicate that, from a long-term perspective, the rate of growth in capital surpasses the rate of GDP growth, the marginal capital coefficient also tends to increase and emphasizes the importance of capital as a factor in economic development. The influence of advances in technology and innovation within the investment process has been analyzed from the point of creative disruption by J. Schumpeter. According to this theory, technological advances, manifest in innovation, create a demand for new goods and require new material resources for their production and, ultimately, investments. Under these circumstances, demand for traditional goods goes down and existing facilities become obsolete. According to the creative disruption theory, there is no reason to consider innovation to be a factor restricting the need for investments.