On Dynamics of Fixed Capital and Investments in the Russian Economy in Transition

The paper is devoted to the analysis of dynamic behavior of fixed assets andinvestments in fixed capital in the Russian economy in transition. It was shown, thatthe official Rosstat technique implementation of fixed assets and investments measurementsmay lead to the substantial understatement of fixed assets renovation andreplacement rates. The depth of the decline in investment spending during the transitionperiod might become overstated. The bias may be explained by severe difficultiesin measurement of price dynamics and capital replacements in first years oftransition.Alternative estimations of indices of physical volume of fixed assets and investmentsin fixed capital by 15 main industries and branches of industry in1991-2003 were obtained. Industry-specific features of investment and fixed assetsdynamics were discussed. Taking into account the alternative estimations of fixedassets and investments, conventional approaches to the investment behavior andcapital stock dynamics explanations in the Russian economy in transition need to berevised.