BSU Professor: Investing In the Belarusian Economy Is Useless

Any investment turns into a waste of resources.

The growth of the Belarusian economy is a senseless and useless waste of valuable resources to achieve false goals. Vasil Kamkou, a professor at the Belarusian State University, wrote about this in the Bankovskiy Vestnik magazine, writes Ezhednevnik.

In his article, the author proposes to assess the growth of the economy not from the point of view of “quantity” but from the point of view of “quality”: its contribution to the achievement of the true socio-economic goal - increasing the well-being of citizens. Calculations using the formula proposed by the author give an indicator of the quality of growth of the Belarusian economy equal to zero (0.00024).

The author argues that the growth of the economy in recent years was "production for the sake of production" and did not affect the welfare of citizens in any way. “The results of economic growth are not so attractive when the economy develops mainly on the basis of extensive capital accumulation,” Vasil Kamkou says.

Labor productivity should not be increased but decreased

The analysis presented in the material leads to a paradoxical conclusion: it is unprofitable to increase labor productivity in an inefficient economy, as Lukashenka constantly does.

"For the sake of maintaining a stable dynamics of accumulation, it is necessary to direct the entire increase in labor productivity to increase its capital-labor ratio, leaving no resources for improving the people's well-being," the professor is sure.

The increase in investment volumes only leads to a "senseless and useless waste of valuable resources."

“In conditions of zero growth, improving the level of well-being can only be achieved by decreasing rather than increasing labor productivity, although this conclusion may seem paradoxical,” the economist writes.

A more reasonable compromise for a zero quality economy is the use of resources for consumption. "This option of zero economic growth allows, abandoning the illusion, to increase welfare due to ineffective capital accumulation, to ensure the highest initial level of specific consumption and maintain it in the future."

The authorities themselves felt the benefits of stagnation

The author calls the strategy of abandoning growth "balanced stagnation." And, according to him, the economic authorities in Belarus have already, willy-nilly, started following this strategy.

If the average rate of capital accumulation in the five-year period of 2010–2014 was 35.2%, then already in the period 2015–2019, its average value dropped by 8 percentage points at once - to the level of 27.2%.

“It is difficult to say what considerations guided the management bodies when making such a decision, but they took a step in the right direction,” the author writes. “By the way, this decision alone, by saving the freed-up resources, provided favorable opportunities for increasing the people's well-being by about 12% (this is not difficult to estimate by calculating the ratio of the corresponding consumption rates) and thus made it possible to mitigate the negative socio-economic consequences of the decline in the efficiency of the Belarusian economy” Vasil Kamkou concluded.