Growth theory and dynamics of the Russian economy

Using the endogenous growth model earlier proposed by the author, we study the interrelation between the growth rate and the investment rate as well as the connection of these variables with labor market institutions of the economy. The conditions leading to economic growth and to recession are found. It is shown that an increase in the investment rate is, generally speaking, neither necessary nor sufficient condition for an increase of the growth rate. Using the model, we discuss the dynamics of the Russian economy, in particular, the transformational recession of the 1990s and the economic recovery that followed the 1998 crisis.