Relationship between capital accumulation and production growth in the interpretation of the R. Solow's model of economic growth

Abstract

The study of economic growth factors is of greatest interest in modern economic science. The level of economic development is the key to solving social problems and improving the quality of life of the population. This study examines the impact of capital accumulation on economic growth. The author uses a neoclassical approach to the analysis of economic growth factors. Capital accumulation in the main sectors of the economy – mining, manufacturing, agriculture – is considered as a factor indicator. The main hypothesis of the study is that currently, the accumulation of fixed capital in important sectors of the Russian economy is not enough to significantly increase labor productivity and subsequent economic growth. This requires not only a qualitative, but also a quantitative assessment of the capital accumulation factor. Based on the results of the study, conclusions of practical importance were drawn. Firstly, an increase in capital per 1 worker by 1% leads to an increase in labor productivity by more than 1%, that is, the growth in labor productivity outpaces the growth in capital per 1 worker. Consequently, the capital-labor ratio can be considered as an important factor of economic growth. Secondly, a negative factor should be considered the lag in the pace of production renewal from the pace of withdrawal of fixed assets in industry and agriculture in some regions of Russia, which dictates the need to implement special programs in certain regions of Russia to intensify the development of manufacturing and agriculture. Thirdly, increasing the rate of capital growth per 1 worker for higher growth of labor productivity is advisable only in the manufacturing industry and agriculture, which is associated with the currently lower rates of capital growth per 1 worker in these industries compared to the mining industry.