SERGEY Y. GLAZIEV*
Prospects of Economic Recovery after Financial Crash
It is obvious that main social-economic problems Russia is currently facing in one way or another are related to the sharp decline in the production, which led to the corresponding contraction in the incomes of population and the state income. It is also obviously impossible to resolve these problems without turning Russian economy to the path of quick and stable growth. Neither overcoming the budgetary crisis, nor increase in the national income, nor increase in the effectiveness of the production are possible without getting over the depression and resuming growth of economic activity. However it is this essential problem of economic policy that as before remains unsolved.
Further decline in the production will mean stagnation of income of the population, one-third of which already has incomes less than subsistence minimum. It will also lead to the continuing sharp budgetary crisis. Coincidentally expenditures of the budget, less interest payment, create state demand, fall to a marginally low level of 10.2 percent of GDP, and that is substantially lower than the standards of developed countries and about two-times lower than minimum level necessary for survival of the country. The latter signifies the strengthening of the trends of further destruction of the national security system, further decline of social sphere, and economic disintegration of the country.
These facts indicate the insufficiency of government measures for overcoming the depression and turning to the path of sustainable economic growth. There remains former mechanical approach to determining the economic policy by the means of passive adaptation to the contraction of the production and decline in the budgetary capabilities. Measures to reduce public expenditures, tighten monetary
Doctor of Economic Sciences, Moscow.
Social Scientist, Vol. 29, Nos. 7- 8, July-August 2000