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Published: August 15th, 2016

A similar idea, in one form or another, has been been expressed by serious Russian economists and practitioners, in particular, Viktor Gerashchenko ...

We already wrote about the option of structural reforms, which, in our view, is most preferrable. It is massive construction in the country of low-storey private housing of economy class for the long-term bank loans (see. "NG" on the 23.12.11, 03.09.14, 10.21.15). Thanks to an extended housing the effective demand will switch from imported high-tech products to domestic with, albeit not as high technology, but vital for the population.

A similar idea, in one form or another, has been expressed by serious Russian economists and practitioners, in particular, Viktor Gerashchenko, Oleg Deripaska, Yevgeny Yasin. Unfortunately, these considerations are reasonable, neither then nor later did not receive further development and study, though, in our opinion, such a structural reform option meets all the necessary conditions.

Multiplying effect

A comprehensive revitalization of consumer and investment demand lies, as you know, at the heart of economic growth. Good and relatively inexpensive housing with individual yard enjoys and will enjoy in our country with unlimited demand, and in a significant part of its solvent. According to official data and expert estimates, the citizens has over 30 trillion rubles on their hands and in banks. With appropriate banking credit support in low-rise building can involve trillions of free sums.

Once again it should be emphasized that in this case the demand will grow not for imported goods, but for Russian products, and sources of financing of this demand is quite cost-correct - it is our own citizens savings and their bank loans.

The mass construction of housing, roads to it, the appropriate infrastructure can be a powerful activator of investment demand and creating a significant multiplier effect in the economy (when each ruble invested in this sector, brings tens and hundreds of rubles extra income throughout the economy). Construction is a consumer product virtually all industries. Multiplier effect of construction - one of the most important, the decisive advantages of the conversion option.

Construction of low-storey private housing can become a true engine of development and economic restructuring. Indeed, in the first place will grow and develop manufacturing industries.

The pace of economic growth in the case of implementation of the proposed model of reform due to the multiplier effect of growth and the revenue base of businesses and citizens are able to rise to at least 3-4% per year. Due to the increasing mass of commodities the real (not monetary) background of reducing inflation will finally be created. With the increasing volume of tax payments to stabilize the budget, employment, small business and agriculture will receive an additional boost.

A major reason for the choice is in favor of low-storey buildings (rather than multi-storey town houses) is the proximity of man to the ground, the presence of a small infield with a minimum of outbuildings.

With the massive construction of individual housing hundreds of thousands of families will have a solid foundation for healthy living, the necessary degree of freedom to select the main work. My Own Home - is not only economic growth, but also the shortest and most direct path to a social
market.

The whole world lives like this, at least the most advanced part of it. Russia, which for the development of individual housing construction has everything you need - land, unemployed population, lack of jobs, an excess of natural resources, a huge pent-up demand for housing - is still the only unreasonable exception.

Where to begin?

We often associate reforms with innovation, the development of IT-technologies, electronics, recreating aviation, manufacturing, machine tools - in short, with the transition to the so-called knowledge economy, post-industrial development. Simple enough, extensive basically an extended version of the housing, strengthening of infrastructure, small-scale agricultural production is usually considered as an abstract, not very modern and not very effective.

This is totally unfair. Fundamental changes in the economy, industry, high technology, import substitution, etc. You can wait a long time, but did not wait. Russia does not have the necessary funds for large corporate investments at the lower levels of industry lack the motivation complex and multifactorial changes. We do not have a large number of motivated private owners, much equity is blurred, and hired managers, obviously, these functions are not carrieing out and unlikely to be, because the risks of investment in innovation are great and require constant work and attention.

The problem of executive motivation, social movers structural reforms is the key. Without it, any decision, even a well-secured financial reform are hardly feasible. You can probably borrow or come up with new technology (an example would be the "Skolkovo"), but how and by what means in the real economy these innovations will be carried out, new technology be introduced? The structural reform (in the conventional sense), in our opinion, because today and is stalling, that it is not clear how to get there, where to start.

In the present embodiment, the construction of housing reforms, the original motivation of all the actuators are clear and strong: ordinary citizens, developers, banks, lenders, construction companies - all are interested in the rapid implementation of such reforms, and are ready to make their financial participation feasible.

Perhaps we should start not with the most complex and capital-intensive options transformations - attempts to radicaly change the economic structure based on massive and large investment, but with a more simple, but at the same time an effective and organic variations thereof, capable besides drastically strengthened in the long term material and financial base for further more complex and knowledge-based structural adjustment? As a result of the proposed reform of housing finance and material basis of the economy in three to four years will increase at least 1.5 times, as well as economic growth.

Mass individual housing construction, willl begin regardless of any variant of economic policy. It is an objective requirement of the development, this is the world experience. And, perhaps, it is advisable to start with the reform is such an option changes, use it as a springboard for further deeper restructuring.

The sponsoring State

With regard to such widely discussed aspects of the reform, as the expected improvement of market institutions, pension system, tax cuts, the introduction of investment tax incentives, a sharp change in monetary policy, etc., then, from our point of view, their implementation would be no more than facelift and nothing in the long run will change. Most of these shortcomings are only a consequence of the crisis, not its cause. With early lending to the economy, we have always been bad and gentle key CBR rate. Inadequate domestic institutions - also the result of a long delay in the reforms. As the beginning of a dynamic and effective reforms, all these obstacles and shortcomings gradually disappear. No reason to spend time and energy on them.

It is crucial that in the proposed version of the reform of individual housing construction will be financed mainly from decentralized sources - by the citizens, developers and lending institutions. Decentralized investment - a characteristic sign and a major advantage of the proposed reform options.

Budget funds will also be needed, and a lot. According to our estimates, the total capital cost of the state are able to make six to eight years, more than 12 trillion rubles. Money is great, but after eight or ten years they will return to the budget due to improved foreign trade balance, the accelerated development of small businesses, increase taxes, the emergence of serious economic multiplier effect, covering most industries, on the products of which there are no demand today.

The state should fully take on issues such as assistance in the establishment in the regions the necessary number of domestic construction companies, enterprises producing construction materials, financing the creation of well-developed transport and engineering infrastructure in the areas of low-storey buildings, to organize the involvement of foreign manufacturers and experts to develop a standard low-cost individual projects housing, to subsidize interest rates on loans.

The cost of a typical project of individual housing should not exceed 3.5-4 million rubles. It is quite possible in view of the fact that construction materials and labor will be domestic, and the state will help with the financing of infrastructure. Bank credit provided by credit institutions authorized developer for 20-25 years, should almost cover the cost of housing being built. It would be advisable to establish in a transitional period the specialized credit and financial institution to finance the construction of low-storey housing. The interest rate on housing loans should also be subsidized by the state.

This is exactly the case when the centralized expenditures and external borrowing is justified. It's not just the cost of the budget, and the necessary investments in structural reforms, reduction of inflation, in the social sphere and in human capital in the future of Russia.

Modern industrial production, industry and the military industrial complex will be developed with this version of reform, but according to the actual financial resources and the concentration of resources on the creation of the most advanced innovative industrial world level, which will be models for the industry and the entire economy. We need to create high-tech industry by the best world standards, but gradually, step by step. This is better than to expect a new rise in world prices of natural raw materials.

Source: Independed newspaper