On the Dependence of Economic Growth on Government Intervention and Social Inequality

Abstract

On the basis of international statistics (WB, OECD, WEF) it is shown that the correlation between GDP per capita growth and government outlays is undergoing complex oscillations. The weak positive correlation of the 1970s gave way to a distinctly negative correlation of the 1980s. However, since the beginning of the 1990s the correlation has been subsiding. During the present decade the correlation has been at its lowest significance in the highly developed countries; in the countries similar to Russia it is, in fact, nil. The basic cause of it is the combination of the positive influence of the government support of R&D and the negative influence of high taxes together with financing non-effective enterprises. The correlation between economic growth and the degree of income discrepancy is also subject to the oscillations. At present the absence of correlation in highly developed countries and negative correlation in countries similar to Russia is noted. The decisive factor of correlation is the positive influence of human capital investment and, at the same time, differentiation of pay.