Financial basis for the modern Russian economy

Abstract

Subject. The article investigates the financial basis of the economy of contemporary Russia. Objectives. The focus is on identifying the financial basis of the modern Russian economy, the limits of economic activity, and conditions for economic development. Methods. The study rests on the systems approach, using the methods of statistical, neural network, and cluster analysis. Results. The paper unveils the need to study the financial basis of the modern Russian economy, which is caused by the duration of the transition from the socialist to capitalist socio-economic formation. The assessment of the growth rate of a wide range of statistical data reveals the financial basis of the modern Russian economy, i.e. direct investment, debt instruments, securities other than shares included in broad money, international liquidity, aggregate reserves, money supply. The existing financial basis limits the growth of gross value added, the increase in gross capital formation, etc. It also determines conditions for economic development, like high price of WTI crude oil and low price of gold, high gold price and the strength of the United States dollar. In the current structure of the Russian economy, both options lead to lower final consumption expenditure of the private sector and to limitation of stocks. Conclusions. The understanding of intermediate results of the long transition from socialist to capitalist socio-economic formation enables to define the boundary of the existence of the modern Russian economy. This boundary is generated by its raw material structure and financial basis.