
81
82
59
98
91
116
109,5
107,1
Source: the State Statistics Committee ofRussia
The trends and structure of the capitalgoods output by machine building sectors reflect the Russian businesses promptreaction to the changing situating in the domestic market. However, despite anintensive output growth, the outdated material and technical base as well as alow investment activity in machine building proper act as the factors holdingback the restoration of a sustainable trend in economic growth.
The reproductivestructure of investments in fixed capital
A trend to increased major overhaulexpenditures also exerts a negative influence on the fixed asset reproduction.Calculations reveal that expenditure on major overhauls in 1999-2001, on theaverage, made up about 20 percent of investments in fixed capital. The highshare of expenditure on overhauls bears out the fact that the investmentprocess is geared toward inexpensive and short-term ways of renovating theproduction apparatus. This results in a demand for technical equipmentcomponents which can be easily replaced without long-term investments in fixedcapital, that is for the account of operating capital – a specific feature of theinvestment process in the Russian economy. However, such practices lead toeconomic and technological stagnation in the long run. The production apparatuscreated in the previous decades is geared towards production for a closedeconomy without competition. The issue of renovating the active part of thefixed assets, qualitatively changing the technological level of production andenhancing its efficiency have become highly topical today.
Analysis of production capacity utilizationreveals that most equipment, due to its physical and moral wear and tear cannotbe employed in production. Capacity utilization varies substantially. Equipmentutilization in the raw materials sectors, characterized by a low share of addedvalue, is significantly higher than in the processing sectors. Even within onesector, but at different production facilities, the extent of equipmentutilization varies. Despite the fact that active engagement of reservecapacities determined restoration of economic growth in 1999-2001, however,there is a certain limit to equipment utilization.
An increased demand in raw material sectorscan overall be met by engaging the available facilities, however, the reservesfor expanded output in the processing and especially high tech sectors aredetermined by the quality of the equipment and the technologies applied.Substantial wear of fixed capital in the processing sectors is the cause of thelow utilization level as well as a factor limiting potentialities for furtherproduction growth.
Table 22
Utilization level of year-average capacityfor producing individual industrial products, in percent
Oil primary refining | 87 | 62 | 61 | 65 | 60 | 64 | 68 |
Coal | 93 | 72 | 72 | 70 | 66 | 73 | 84 |
Cast iron | 94 | 70 | 70 | 73 | 71 | 84 | 86 |
Steel | 94 | 67 | 68 | 68 | 63 | 71 | 77 |
Finished non-ferrous rolling | 92 | 66 | 65 | 67 | 59 | 63 | 72 |
Commercial iron ore | 98 | 84 | 81 | 81 | 81 | 90 | 92 |
Mineral fertilizers | 75 | 50 | 46 | 49 | 47 | 58 | 63 |
Synthetic resins andplastics | 84 | 45 | 36 | 40 | 45 | 55 | 62 |
Paint and varnishmaterials | 74 | 20 | 17 | 17 | 15 | 20 | 24 |
Car tires | 91 | 43 | 52 | 62 | 59 | 69 | 71 |
Machine tools | 81 | 24 | 18 | 16 | 13 | 14 | 17 |
Forge and press machines | 83 | 13 | 7,8 | 7,8 | 10 | 10 | 13 |
Tractors | 81 | 11 | 10 | 9,7 | 8,4 | 14 | 19 |
Household refrigerators andfreezers | 98 | 37 | 24 | 27 | 25 | 31 | 39 |
Electrical vacuumcleaners | 82 | 19 | 13 | 14 | 12 | 21 | 20 |
Households clocks | 98 | 40 | 22 | 16 | 18 | 28 | 55 |
Lumber | 69 | 31 | 28 | 27 | 29 | 34 | 39 |
Laminated plywood | 88 | 52 | 53 | 53 | 67 | 76 | 82 |
Splint-slabs | 92 | 39 | 27 | 30 | 36 | 47 | 55 |
Cardboard | 87 | 41 | 29 | 35 | 38 | 52 | 63 |
Source: Goscomstat
With a continuing trend for declining realsavings, production growth is of a temporary nature, determined, as a rule, bya higher utilization level of the operational capacities and active engagementof reserve capacities in production due to upgrading and overhauling theaccumulated potential. The sector average capacity utilization in oil refiningstood at 68 percent in 2000, while the economically efficient level is 80-85percent. The capacity utilization factor amounted to 53 percent against 43percent in 1998 in chemical and petrochemical industry due to the favorableconditions in the international market and a higher domestic consumer demandfor the sector products. In machine building and metal working the processes ofproduction capacity optimization, improved quality characteristics ofindividual types of machines and equipment, implementation of advancedscientific and technological developments and new highly efficient technologiessupported the positive trends. However, the capacity utilization both in thesectors and in individual production facilities is characterized by criticallylow values.
The ratio between the wear and the agestructure of fixed assets vividly illustrates a dire need to step up revampingprocesses. Machine building remains in one of the last places among theindustry sectors with respect to the capacity utilization level. The situationis aggravated by the fact that, failing to meet the market quality criteria,machine building is unable to reach a requisite sales volume which wouldgenerate funds for massive investments in revamping own productioncapacities.
The technologicalstructure of investments in fixed capital.
A declining ratio of fixed asset renewal isaccompanied by changes in the technological structure of investments in fixedcapital. The first stages of the reform witnessed a increasing share ofexpenditure on construction and assembly works, but since 1995 a growing shareof expenditure on machine and equipment purchases has been noted. Increasedexpenditure on plant and equipment is determined by shifts in the reproductivestructure of investments. Expansion of work in enterprise retrofits andoverhauls was characteristic of 1999-2001. Spending on plant and equipment wentup to 37.4 percent in the total investment volume in 2001 against an average of22 percent during the 1992-1998 period.
Table 23
The structure of investments in fixedcapital by type, in percent of the total
Investments in fixed capital– total | 100 | 100 | 100 | 100 |
Includinginvestments in: | ![]() |