Analyzing the Causes of the Slowdown in Economic Growth--From the Perspective of the Economic System

Following the conclusion of the Second Cold War, the economic landscape of the Soviet Union experienced a significant decline, in stark contrast to the rapid growth observed in its competitor, the United States. Even Russia, which implemented reforms via "shock therapy," not only failed to reverse the economic downturn during that period but also faced adverse effects from international lobbying due to the hasty liberalization of its capital account. In essence, Russia's current economic system still favors the extractive approach, which is reflected in the government's control of the main distribution of resources, small and medium-sized enterprises (SMEs) account for a small proportion of output, which in turn inhibits the enthusiasm and creativity of the labor force. Conversely, the United States, Japan, and Singapore safeguard private property rights via the judicial system and foster the growth of private enterprises through strategic policies or government-driven initiatives. By comparing the impact of countries adopting extractive and inclusive economic systems on their economic situation, this paper argues that developing countries need to ensure the independence of legislation when switching to an inclusive economic system so that private property rights can be protected from a legal perspective. Simultaneously, it is essential to restrict government involvement in the market via the state-owned sector to maximize the preeminence of the private economy.