Investment as a Factor of Economic Growth

Aleksandr V Menshikov,Sergey A Zverev,Yelena V Kalabashkina

doi:10.5901/mjss.2015.v6n3s7p259

Aleksandr V Menshikov, Sergey A Zverev + Show 1 more

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https://doi.org/10.5901/mjss.2015.v6n3s7p259

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Abstract

Investment is an important factor of economic growth. It defines the process of expanded reprocessing. Accumulation of social capital is possible due to investments. Investments contribute to additional revenue, which is determined by the state of general economic activity. Fluctuations in output affect the dynamics of investment over the business cycles. Theory and dynamics of investments are based on the principle of a “multiplier”. The activity of investment resources as an economic factor is determined by its multiplying property. Its essence is that investment resources increase the equilibrium level of national output by an amount greater than the investment resources themselves. Modern economic growth theory was formed based on the ideas of optimality of the market system considered as a perfect self-regulating mechanism. Significant contribution to the development of economic growth theory was introduced by R. Solow. He developed two models: the model of factor analysis of economic growth sources and the model which reveals the relationship of savings, capital accumulation, investment and economic growth. Research investments as a factor of economic growth resulted in two ways out on the economic growth in Russia formulated in the article. DOI: 10.5901/mjss.2015.v6n3s7p259

Highlights

Investments represent one of the most important economic categories, one of the components of GNP, the most variable and at the same time determining the development of the economy
The activity of investment resources as an economic factor is determined by their multiplying property, which essence is that investment resources increase the equilibrium level of national output by an amount greater than the investment resources
Let’s formulate a way out to economic growth in the Russian context taking into account general terms: 1. Focus on decline in inflation will change the mechanism of money supply, increase the tendency for long-term savings and investment as well as will reduce the economy dependence on external markets

Summary

Introduction

Investments represent one of the most important economic categories, one of the components of GNP, the most variable and at the same time determining the development of the economy. The amount of investment is very difficult to predict at the macro level if consumption is functionally related to the income, government spending and net export are fairly predictable. They can boost or drop sharply and suddenly. The volume of investments shrank by 100% during the Great depression in the United States. It reduced more than three times in Russia during the perestroika period (1992 to 1998). It was determined by several reasons, but the main one was that the savers lacked economic reasons to convert their funds into investments

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