Model of economic growth and the state of the economy crisis-ecology-society

The article discusses the abilities to predict crisis conditions of the ECONOMY - ENVIRONMENT -SOCIETY system on the basis of modifications to Solow’s growth model. The state of the system represents a combination of economic, social and environmental indicators. The interconnection of the demographic process and ecological economic development is reflected in the concept of an “ecological niche”. The connection between the concept of an ecological niche and models of economic growth allows the Cobb-Douglas function to be setup. The notion of a generalized saving rate allows for expenditures on reproducing natural and human capital to be connected to indicators of economic growth. Economic, environmental and social indicators have been combined into a single model of economic growth that provides the opportunity to explore their mutual influence under certain assumptions. In the case of Russia, scenarios have been developed for economic development. On the basis of statistical data, including the period of the 2008 crisis, statistically significant production functions have been built. Despite the fact that this period was characterized by significant economic upheaval, the factors used in the model retain their meaning for the entire period. These production functions were then used to model and predict a few catastrophic situations. Some critical characteristics of the macroeconomic indicators that entail a crisis condition in all subsystems are investigated in the article. Fixed capital is included in the production function in a negative degree, which is evidence of the lack of use of fixed assets, or their physical and moral ageing. According to statistical data, this trend has continued in Russia for the last 10 years. The modeled data defines the impact of the share of gross domestic product that can be used for long-term investment in natural and human capital on macroeconomic indicators. When examining scenarios with a negative growth rate for the number of people employed in the economy, at first gross domestic product and fixed assets continue to grow, and then degradation begins. The employment rate is an intrinsic factor in the growth of GDP. The simulation did not take into account technological changes, since changes requiring long-term investments have not made a significant contribution to the Russian economy. The results of the simulation confirm the negative impact that the existing levels of capital exports have on the overall economic situation in the country, and on the implementation of plans for the transition to a new technological level. The article justifies the necessity of a repeated increase of investment in new technologies, and in the preservation and development of human capital, which will eliminate the technology gap and ensure the development of new science-intensive industries. The models looked at in the work may not be used for precise distant predictions, but they reveal the development trends for the ECONOMY-ENVIRONMENT-SOCIETY system, and identify some of the threshold values of macroeconomic indicators that entail catastrophic consequences.

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