Recovery of the country’s economy from recession to stable growth

Abstract

Since 2008 the economies of highly developed countries have not been able to get out of the financial crisis in twelve years, and have been in a state of depression and teetered on the brink of deflation. This crisis coincided in 2020 with the onset of the global recession in real gross domestic product (GDP) caused by the Covid-19 pandemic. The state of the economy in Ukraine requires looking for ways and tools to overcome the crisis in the decline in GDP in the face of population decline and the ongoing global crisis. The growth of the Ukrainian economy is constrained by the tax burden, external debt and insufficient investment in productive capital. To ensure the stable development of the country’s economy, government regulation of the expanded reproduction of capital, which is available and which works in the manufacturing sector, is necessary. The main source of investment in the manufacturing sector is depreciation deductions from capital involved in production. With investments that are less than depreciation, only a narrowed reproduction of capital is possible, that is, capital is consumed. Anyone who uses depreciation deductions for other purposes destroys their own production. Investments in excess of depreciation charges are possible if there is a net investment. The government should regulate net investment at the rate of net income through incentive taxation. The capital that operates in the manufacturing sector can be regulated by the coefficient of consumer demand through existing incentives. With expanded reproduction of capital, inflationary self-regulation of market equilibrium through the central bank’s money circulation system and the rate of tax on production income, which is not more than the optimal rate, ensure constant growth of real GDP. Achieving the goal of overcoming the recession with the subsequent stable growth of GDP is possible with a state policy based on the current laws of the economy and private property rights.