INSTITUTIONAL MODERNIZATION OF THE GLOBAL ECONOMY

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INSTITUTIONAL MODERNIZATION OF THE GLOBAL ECONOMY

Journal Title: Baltic Journal of Economic Studies - Year 2018, Vol 4, Issue 5

Abstract

The aim of the research is the improvement of the concept of the institutional structure of the economy in the conditions of corporatization on the basis of researching the international experience of development of stable basic institutions of the institutional environment. Methodology. The methodological basis of the study is the provisions of the institutional theory using the analysis methodology “institutional matrix”. Historical-logical and dialectical methods were also used to study the contradictions in the processes of formation and development of the international institutional environment. Results. Institutional dynamics is the result of the functioning of a global international and specific national institutional environment, a formed subclass, ideological, economic, nationalhistorical factors, essential values, ethnic characteristics and characteristics of the nation’s mentality that are formed under the influence of long-term cultural influence and as a result of social interaction. Forced creation of new structures and private-property relations, supported by a massive import of market institutions in the absence of adequate national formal institutions and informal corporate culture, has led to non-fulfilment of contracts, a low business culture, opportunistic behaviour and informal contracts. In the process of introducing economic agents to institutional changes, invent quasi-market mechanisms: the predatory use of all types of resources, barter, income concealment, shadow schemes of tax evasion, offshore, “under-the-counter” wages, raiding, corruption at all levels of government, wide scale and versatility opportunism, violation of contracts, and the consumption of fixed assets. These manifestations intensified the structural deformations of the market and the transformational risks of the national economy. It is revealed that the development of the corporate economy on an innovative basis under the influence of globalization and monopolization, changes the individual institutions of the basic Y- and X- matrices. A new concept is proposed for constructing an institutional matrix using two principles of economic distribution: the market economy and the distribution economy; on the corporate and individual sectors of the economy. Two types of institutional matrices – corporate K-matrices and individual I-matrices – function in basic X- and Y-matrices, dividing each of the economies into two unequal parts (in terms of effectiveness, influence and significance of consequences). Corporate transformations turn individual complementary institutions of the market economy into the basic institutions of the corporate part of the Y-economy. Continuing institutional displacement requires finding the optimal balance between basic and complementary institutions in the corporate and unincorporated sectors of the Ukrainian economy, based on the use of specific institutional matrices, which will allow for institutional construction and minimize the social costs of the country’s evolutionary development. The concept of the institutional-matrix structure of the economy has been improved taking into account the modern tendencies of corporatization. The economy is defined as a set of basic institutions of two types of matrices that are unequal in efficiency, influence and significance of consequences: the corporate K-matrix and the individual private ownership of the I-matrix. Practical implications. The distribution of the economy into the corporate and individualprivate ownership sectors was the result of institutional transformations of certain complementary institutions of the market economy into basic ones, reveals the ways and sustainable mechanisms of institutionalization for the effective transformation of local institutional environments. The creation of an effective institutional environment will be ensured through the cultivation of institutional changes. Value/originality. The ongoing institutional displacement due to the intensification of the processes of monopolization and internationalization requires the search for an optimal balance of basic and complementary institutions in the corporate and unincorporated sectors of the Ukrainian economy, based on the use of specific institutional matrices, which will allow for institutional construction and minimize the social costs of the country’s evolutionary development.

Authors and Affiliations

Maryna Radieva

Keywords

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EP ID EP663716
DOI 10.30525/2256-0742/2018-4-5-283-290
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