Specific features of the Russian Economic Growth Model

Abstract

The article presents the study of the specific features of the Russian economic growth in 1998–2017. The study objective is to substantiate the growth and decline mechanism in business activity in the Russian economy. This mechanism is determined by the gap in the growth rates of wages and labor productivity in the open economy. Four hypotheses have been formulated: 1) significant cause and effect relationship between exchange rate and economic growth in Russia; 2) wage growth outrunning productivity has a depressing effect on the profitability of the commercial sector; 3) significant differences between the Russian economic growth in 1998–2009 and in 2009–2017, determined by the connection between the excess of the domestic interest rate over the world rate and investments; 4) substantial connection between the domestic interest rate and investment in 1998–2009 which disappeared in 2009–2017. The theoretical analysis and the hypotheses have been based on neoclassical synthesis models. Statistical testing of the hypotheses has been carried out by means of statistical and correlation analysis and methods of econometric analysis of time series. A problem related to wage growth outrunning labor productivity has been identified. Probable significant changes in the Russian growth model in 2018–2020 have been forecasted. They will be caused by the infrastructure development and housing construction. The major conclusion of the study is that there will be a positive effect of the ruble depreciation on labor productivity in the medium term. However, it will be over by the end of 2019 and beginning of 2020. Domestic currency strengthening and outrunning wage growth with the slowing labor productivity reduce the profitability of the commercial sector and put brakes on the economic growth.

Keywords

• the russian economic growth
• labor productivity
• wage growth
• exchange rate
• vector autoregression
• income
• investment