Machinery and Equipment as National Wealth of Russia: Institutional Aspects, “Statistical Illusions” and Forecasting Problems

Abstract

In the context of development of import substitution policy authors focus on capacity utilization rate as a target of the government regulation. The paper states statistical indicators national wealth of Russia with the emphasis on machinery and equipment. Authors stress the importance of the fact that after 2004 Rosstat ceased to publish data concerning average age of equipment. The dependency of low capacity utilization rate on high degree of wear and tear has been emphasized. The papers offers hypothesis that low capacity utilization rate contributes to current inflation via a lack of many key goods and resources. In turn, the high degree of wear and tear on the fixed assets, especially, machinery and equipment, is explained by means of fixed capital investment collapse in the 1990s. The paper pays special attention to the institutional causes of this collapse. Authors conclude that such high degree of wear and tear is the barrier to the success of the government regulation of capacity utilization rate in the medium-run and in the longrun. There is a critique of the methodology of the contemporary foresight researches in Russia. The problem is that such researches exclude machinery and equipment as an object of long-term forecasting from the state priority model titled “Development of Science, Technology and Industry”. The paper concludes that classification of machinery and equipment by depreciation groups in the Russian economy should make for largescale renewal together with import substitution support in the both industrial and regional aspects.

Keywords

• equipment
• fixed capital
• institutions
• capacity utilization rate
• inflation
• foresight
• strategic planning
• import substitution