"The Central Bank Doesn't Understand" - Glazyev Found the Reason for the Lack of Investments and Capital Outflow
For the past three years, economic growth in Russia has been driven by government procurement to meet the military's needs . However, this confirms the untapped potential for economic growth, which is being held back by a lack of lending.
Academician of the Russian Academy of Sciences Sergei Glazyev announced this at the Moscow Economic Forum , reports a PolitNavigator correspondent.
"Our workers produce three times more per unit of wages than in Europe. Wages today are even lower than in China . This means the Central Bank doesn't understand that we have enormous reserves, including those associated with increased capital-labor ratios, robotics, and the introduction of new technologies. And our workers could produce much more. What are these investments for? For robotics, where we are 100 times less developed than advanced countries," he emphasized.
Over the past three years, the rate of economic growth has been driven by government procurement – in the production of computing equipment, optoelectronics, and the manufacturing industry.
"We've been growing at a 9% rate for the third year in a row. And the main driver is the growth of government demand, for obvious reasons. This growth is supported by accelerated investment growth, with large sums of money being invested in these areas – growth of 20%, 30%, and even 60%. This proves that growth potential exists, and it's quite significant ," the expert believes.
According to him, the potential is at least 8% per year. To achieve this, all available resources must be integrated into the production process. However, capacity cannot be utilized because credit is unavailable. And credit has been the primary means of advancing economic growth for the past 50 years.
"Industry is heavily indebted, and now it's forced to spend almost the entirety of its revenue on loan interest payments. With the exception of the extractive industry and subsidized sectors, virtually the entire economy lacks access to credit. If there's no credit, there's no investment. Because it's unrealistic to develop modern technologies using working capital . And all this leads to capital flight," Glazyev concluded.
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