Ensuring economic growth rates and national projects
The volume of investment and the prospects for market development depend on confidence in the authorities. Nevertheless, government authorities are concerned about other issues: national projects lack funds and the will to implement them.
Meanwhile, deposits of corporations and citizens of the Russian Federation exceeded 100 trillion rubles. Why are savings not transformed into investment? Perhaps the question is in the lack of trust: this includes the national projects and the authorities.
Economic and social life implies trust or lack thereof in the rules that regulate the activities of these or those institutions. And also to those who enforce the rules.
Over the past 20 years, respect for the banking system has grown dramatically. If in 1991 the vast majority kept their savings at home, now people see that banks are reliable even in times of crisis. The deposit insurance system has an impact on this.
What institutions still need trust and how to achieve it?
Ensuring the pace of economic growth: confidence that investments will turn into profits
When the growth of public and private investment occurs, it will lead to a noticeable recovery of the economy. The belief that real funds will turn into profits in the future will be strengthened. But even more important is to build confidence in the institutions that regulate the investment process.
After the Central Bank began inspecting financial institutions, the world learned a lot. People learned about dubious schemes of money laundering, unrecoverable loans which were issued to firms of main beneficiaries, dubious deals. What, then, to invest in?Of course, the future lies in innovation and promising start-ups. But there is one eloquent example: U.S. tax officials are threatening to take Silicon Valley companies seriously because they have noticed a number of alleged violations by some leading companies. In 2016, Google Corporation was suspected of hiding revenues and failing to pay more than a billion dollars in taxes. In 2017, Sergey Brin and Larry Page won the trial, but the giant’s credibility was undermined.
Russian startups are promising, but their participants themselves do not know whether they will be able to realize their potential in their home country.
Nevertheless, it is obvious that high economic growth is directly related to the effectiveness of the institutional environment. Which, in turn, regulates social and economic relations. There is a need to reform all parts of the system, because if we leave even one point, it will level the capabilities of other institutions.
The level of confidence in business, in turn, should be managed. The IPO process is connected with full transparency of the company structure up to its beneficiaries. Of course, an open company runs the risk of getting on sanctions lists, but in the future this trend may change for the better.