FORMATION OF THE INSTITUTIONAL ENVIRONMENT IN THE PROCESS OF ECONOMY MODERNIZATIONJournal: Academic Bulletin "Economics and Region" (Vol.4, No. 47)
Publication Date: 2014-07-02
Authors : Liakhovets Olena Oleksandrivna;
Page : 113-119
Keywords : ;
Introduction. To revive the economy of Ukraine, it is needed to intensify the modernization process. It changes the model of economic behavior and is accompanied by a series of socio-economic and political transformations that eventually provide a favorable environment to achieve the main goals of national economy. Previous research analysis. The main provisions of institutional theory in terms of creating the institutional environment for the economic transformations and modernization were widely studied both by foreign and national scientists A.N. Anisimov, E.G. Baklanova, M.S. Dan’ko, V.E. Dementjev, O.V. Dlugopol’skiy, V.D. Drozd, K.Z. Nazyrov, D. North, A.E. Shastitko, N.V. Yurgel etc. However, these researches did not completely reveal the system of formal and informal institutions which promote or retard modernization. Statement of purpose. The purpose of the study is determining the peculiarities of the economic institutions system modernization. Results. The notion “institutional environment” has a different interpretation from the different points of view, but in general it is considered as the system of institutions that determines the features and conditions where the market agents are functioning. One of the key provisions of institutional theory is that the success of economic activity is stipulated by the level of transaction costs in the economy. So, when the level of transaction costs becomes too high, then the organization and the content of business collide. The solution of this problem lies in technological renovation, institutional and economic changes which are the essence of modernization. During the formation of institutional environment for modernization, the countries’ governments carrying out reforms face with two major problems: 1) the level of institution maneuverability that greatly influences the perception of reforms in the society. Trust is one of such institutions; 2) the imported or implanted institutions, which are put by the governments into some traditional environment, may transform into some institutional traps. The supporting institutions of modernization include the set of such conditions: - political institutions: democracy (not always), parliamentarism; - economic institutions: focus on social welfare, a clear specification of property rights, law compliance, low level of opportunism; high level of social security development; - social and ideological institutions: trust to government and to other members of society, efficient institutions of conflict resolution, willingness for changes, predominance of “Putnam’s groups” in society; - congruency of all the above mentioned institutions. Unfortunately, for today, Ukraine does not have all necessary conditions for modernization. The empirical verification of the weak institutional environment for modernization in Ukraine can be made by the analysis of World Bank’s Doing Business indicators. The rating of Ukraine during the period of 2007-2014 years has improved from 139 to 96 place of 189 countries, but it still has problems with protecting investors, enforcing contracts and resolving insolvency as well as with rent-seeking behavior, anti-legalism, which are not included into the World Bank’s rating. Conclusions. Thus, modernization in Ukraine is not still supported by the system of institutions (institutional environment) that completely comply with the national cultural, historical, political, and economic peculiarities in our country. In turn, the great role in this process belongs to the state.
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