The liberalization of the economy.

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

Private investment - the main strength of the economy

is well known that the main driving force of GDP growth are private investment.It is thanks to them in most countries, the liberalization of the world economy.This means that the larger the investment, the higher the rate of economic growth.In Russia in 1997, an increase in investment in fixed assets and economic growth - since 2000 (except for the crisis of 2009).I grew up in a non-crisis period, not just their own investments, but their share in relation to GDP.It is important to note that an important aspect of the investment process are its sources.Liberalization of the economy for more than half of capital investments that make up the funds of enterprises and organizations.At the same time promising may be creating the conditions for increased use of such sources as the state budget and foreign investors, bank loans and other loans.Thus, the greatest costs are investment companies, while the resources of the state, financial institutions and foreign entities are not used in full.

New Economy

theory analysis shows that at the moment economic growth slowed.This fact leads to the exacerbation of a number of socio-economic problems, particularly those associated with the redistribution of the national product, for example, the scope of social benefits and pensions.Redistributing a relatively small in terms of GDP, it is impossible to achieve great in terms of pensions and social benefits for a large category of citizens.Attempts to do so at the expense of others can lead to unsatisfactory results in terms of tax collection and social tensions.Although economic liberalization does not lead to an immediate solution of problems, it can help in the long term, without causing other adverse effects.That is why you should use opportunities arising at the beginning of the third millennium, when, thanks to the achievements of modern economic thought, and global challenges the country faces good prospects for economic growth.

attract foreign private investment

to attract foreign private investment lies the successful liberalization of the Russian economy, but challenging business conditions do not allow to develop this direction.This is the main reason for the low volume of investment in the economy from abroad, and that improvement in these conditions, rather than the many intergovernmental meetings and commercials abroad are the main cause of increasing the inflow of foreign investment.In addition to the external, are important internal attachment which, in turn, is divided into private and public.To date, the possibility of private investment to a large extent not used due to the fact that citizens do not trust their savings to financial institutions or employ their funds in various investment projects.This means that part of the funds earned by the citizens actually withdrawn from circulation, and this has a negative effect on the economy as a whole.Search the necessary public funds should be maintained through measures like fiscal and monetary policy.Expenditures from the state budget for investment can be increased, because, firstly, the state does not always invest in promising projects, and secondly, and more importantly, a significant portion of the state budget is directed to objects that are not profitable (such as the cost of repair of housing or public authorities).In addition, it may be appropriate, and minor use of equity funds as a source of investment costs of the state.

Economy: growth theory

In the last decades of the last century when the production has come to the aid of scientific and technical progress, the breakthrough of many areas has given a new wave of growth in many ways.It turned out that the phrase "economic liberalization" have not deterred potential investors, the return on investment has become more and that private infusion occurred at a higher rate.Scientific discoveries entail new ways of production.They not only expand the range of products, but the road was opened and new technologies, with which you can effectively implement workflows, and use of raw materials.In addition to improving productivity and increasing the volume of knowledge, economic liberalization gives monopoly rents at the expense of the owner of the invention, a patent, as well as stimulating new discoveries.It is important to note that the results of development and research in the field of basic science is a public good, which is not removed and therefore available to any interested parties.Thus, an important factor in economic growth is technological change.So, we can conclude that it is very important to the character of private investment - whether they go to high-tech production, or upgrade outdated equipment.

Investing as a factor of economic growth

In the first case, the result will be the production of investment, which creates a new product with innovative features, because he had not created.The cost of this product will be much higher than the products from old industries.In addition, given the novelty, new markets, stimulated by the further production of the denomination.In the second case will be the creation of a normal continuation of the old product, the price of which is likely to be slightly different from those of the same indicator earlier samples.The rising cost of production in this case is limited both quantitatively (in the relative saturation of the market) and in quality.In addition, it is worth noting that in the first case, the investment to stimulate the production of end products primarily in the second case - and finished and raw materials and semi-finished products.Thus, we have two qualitatively different aspects of investing, the first stimulates economic growth to a greater extent than the second.It is obvious that at the moment the investment in innovation and high-tech manufacturing yield investments, reaching to create capital in conventional production, but trends indicate that in Russia over the past decade is growing economic liberalization, due primarily to private companies, and this gives the country a considerableprospect, especially by increasing the use of other sources of funds.

development of economic liberalization

It should also be considered as a factor in the development of not only capital but also labor.Thus it is necessary to recall the theory of human capital, according to which people spend time to obtain qualifications and experience.It should be noted that this theory is inextricably linked with the theory of innovation, after all, and create and work with new technologies and products can effectively only by qualified staff.Another important factor of economic development is, as mentioned above, the conditions for business development.

So, we have identified those aspects that shape the prospects for a sustainable and long-term economic growth.It is important to understand that economic liberalization would solve a number of social problems, and therefore minimizing the negative factors and the promotion of economic growth should be among the highest priorities.