Solution to Economic Difficulties

Economic Development, Advancements and Innovations

Preamble

“Less Prominent Industries”, or “Less Considered Industries” are used interchangeably. In the case of Russia, this mainly includes any industry excluding mineral products, metal and chemical products. These industries include agriculture, industrial machinery and such.

Analysis

In the investment in diverse means of income, the security of the Russian GDP is ensured. The Russian ministry of natural resources and environment estimates that industries concerning natural resources (particularly oil and coal) contribute to 60% of the Russian GDP of $1.578 trillion. In placing such strains on oil and coal industries to sustain the economy, in the event of a significant depreciation of the price of natural resources, the Russian economy has little to manage the damage. However, the investment of less prominent industries (as above)in Russia will help supplement export quotas when other industries depreciate. In preventing a nation wide economic collapse due to the failure of one industry (namely oil), the investment of the proposed $15.78 billion will be used in developing less significant export industries of industrial and agricultural machinery and electronics to reduce the economic dependence on a singular industry to perform to grow. Further, in developing less considered industries (as above), more jobs are made available in increasing export capacity, therefore decreasing unemployment, ultimately building the economy further through expenditure.

This injection of funds into the Russian economy can stimulate small and medium companies to flourish, ultimately resulting in a more prosperous and diverse economy. These small companies will have a high degree of competition within their sectors, and can be used to overwhelm large monopolies in various categories, namely oil and gas. This competitive market will lead to innovations to the economy, which will cause the economy to be better off overall. 

Short-term effects of the investment will mostly be the influx of capital to various sectors of the economy, which is cause a significant increase in GDP for that year and thereafter. This will cause many small and medium enterprises to be created. The capital will be used to purchase industrial machinery, equipment, software and infrastructure. This will modernise the Russian economy, and competition in the sectors will be increased. As a result, the short term results of the investment can be realised very quickly and with large returns.

Long-term effects of this investment will be predominantly in the form of competition and the steady development of the Russian economy. Many of the aforementioned small and medium enterprises will be eliminated by others, but overall, the growth of the economy is guaranteed. By creating a more competitive market, various developments and innovations in the company’s respective sectors is ensured.

By investing in the healthcare and education system, the problem of the shortage of human capital can be resolved. Investing in healthcare will massively lower the death rates in the country, where its short-term impacts will include a lowered death rate, higher healthcare rating, while in the long run, the population will grow to a more substantial size, fuelling the workforce. This can be done in two ways, hospitals and maternity packages. Investing in hospitals directly will decrease the death rates, and increase life expectancy. Meanwhile, investing in maternity incentives such as maternity packages, longer subsidised maternity leaves and financial funding can deter the rampant use of birth control, and increase the fertility rate. Both solutions can be used in tandem, compounding the effects of the other. Russia, currently, has a program for mothers, a voucher with an equivalent value of 6000 Euros for every child after the first child. The investment can be used to increase the value of said voucher, and be used to provide free childcare, as an example. 

Investing in the education system in hopes of modernising the schooling in Russia can better prepare more of the Russian population for work, especially skilled work. This influx of skilled workers will improve the economy, and overall efficiency and TFP (total factor production) of the economy. This will stimulate the economy, and when considering the benefits and employment opportunities in the investment into small industries, will massively improve the economy in both the short and long term. The investment into small industries will help fuel small and medium enterprises, which will need skilled workers in order to succeed.

These short and long term positive impacts will guarantee your investment’s returns, and large returns at that. The short term effects can be recognised immediately, but the long term effects can generate a stable return on your investment.