ri ml I ql PI # [ y 1 NeWS

ISSN 2 3 1 2 - 2 7 7 3

ECONOMIC SCIENCE

GOVERNANCE

MEDICINE

ECOLOGY

CHEMISTRY AND CHEMICAL

TECHNOLOGY

№17 (4 1

)

2016

,\>h* o f Science and Education

Editor in chief: SERG1Y YEK.IMOV

Editorial board: Technical editor: p ro f Vaclav Helus. CSc.

prof. Jan Kuchar, CSc. Mgr. Helena Krzyzankova pro f Karel Hajek. CSc.

prof. AJcna Svarcova, CSc.

pro f Jiri Cisar, CSc. Editorial address:

p ro f Vcr* Winterova. CSc.

doc PKDr. David Novotny, Ph.D. _{OFFICE 1, VELOCITY TOWER,} doc. PhDr. Zdenek Sa!ac, Ph.D _{10 ST. MARY’S GATE SHEFFIELD. S} prof. Pave! Suchaoek, CSc. _{YORKSHIRE. ENGLAND. S) 4LR} prof. Katarzyna Hof'mannova, CSc.

prof. Vaclav Gryjeir. CSc. prof. Zuzana Syilova. CSc. prof. Alena Sandcrova. CSc. prof Marek Jerabek, CSc. prof. Vera Perinova. CSc.

prof. Ing. Karel MarsaJck. M.A., Ph.D. prof. tag. Jiri Sinolik. M.A., Ph.D.

e-mail: p ra h a 'a rusnauka.com

Date signed for printing, 25.04.2016 Publisher: Science and education L TD

Registered Number: 0S878542

M a rk o v y ch I. B.

PO LITIC A L AND E C O N O M IC IN ST IT U T IO N S -

BASIS AND C O N SEQ U EN C E

The use o f the term in stitu tio n has b eco m e w id e sp re a d in th e so cial sc ien c es in the last decades. T his term b eco m e u su a l n o t on ly fo r eco n o m ic scien ces, b u t f o r the philosophy, sociology, p o litics, and g e o g ra p h y as w ell.

Institutionalism attracts the a tte n tio n o f m an y re sea rc h e rs, su ch as R. C o a se . D. North. E. O strum , A. V ily am so n , W eber, John. M a rsh etc.

A characteristic featu re o f in stitu tio n a lism is its in te rd isc ip lin a ry an d im p re ss iv e set o f options research o b jects, a ttrac tin g th e a tte n tio n o f m a n y re se a rc h e rs an d s c ie n ­ tists. A lso intensive d isc u ssio n s are co n n e c te d w ith n o t o n ly form al b u t a lso in fo rm a l institutions w hich has so m e tim es c o n tro v e rsial im p a c t ort e c o n o m ic g ro w th o f the state.

The link betw een e co n o m ic an d p o litica l in stitu tio n s is q u ite a m b ig u o u s. S o m e authors argue th at the b a sis o f the fo rm atio n o f e ffe c tiv e e co n o m ic in stitu tio n s are alw ays political in stitutions.

M echanism o f the re la tio n s h ip b e tw een ele m en ts o f th e in stitu tio n a l e n v iro n m e n t and their consequences is sh o w n on th e f i g . l .

political institutions, distribution of resource^ d e ju re political power» k d e facto political powers econom ic institutions!. political tn3titlltionSfr4.| e c o n o m i c perform ance* & d is trib u tio n o f 1 eSOUrceSf+ 1

Figure 1. R ela tio n sh ip b etw een e le m e n ts o f th e in s titu tio n a l e n v ir o n m e n t and th e ir c o n se q u e n c e s

Source: [1, p .6]

The tw o state v ariab les are p o litica l in stitu tio n s a n d th e d is trib u tio n o f re s o u rc e s , and the know ledge o f th es e tw o v a ria b le s a t tim e t is s u ffic ie n t to d e te rm in e all th e o'.her variables in the system . W h ile p o litic a l in stitu tio n s d e te rm in e th e d is trib u tio n o f de ju re political po w er in so ciety , the d is trib u tio n o f re s o u rc e s in flu e n c e s th e d is tr ib u ­ tion o f de facto political p o w er at tim e t. T h ese tw o s o u rc e s o f p o litic a l p o w e r, in tu rn , affect the choice o f eco n o m ic in stitu tio n s a n d in flu e n c e th e fu tu re e v o lu tio n o f p o litic a l

1 0

News o f Science and Education _{1 7}

₍

_{41)2016 ❖}

in s titu tio n s . E c o n o m ic institu tio n s determ ine economic outcomes, including the aggre­ g a te g ro w th ra te o f th e econom y and the distribution o f resources at time t + 1. A lt­ h o u g h e c o n o m ic in stitu tio n s are the essential factor shaping economic outcomes, they a re th e m s e lv e s e n d o g e n o u s and determ ined by political institutions and distribution of re s o u rc e s in s o c ie ty [1, p .8].

T h u s , th e re la tio n s h ip betw een political and economic institutions are usually c o n s is te n t, th a t c o n firm s the idea that the econom y traditional is a derivative o f policy.

U s u a lly , th e in stitu tio n s are the consequences o f previous stages o f social d e v e lo p m e n t an d c a n b e co n sid ere d largely inertia and «outdated» comparable to the p r e s e n t tim e . F o rm e d in th is w ay, institutions, on the one hand, constrain excessive and u n ju s tifie d in n o v a tio n o f in d iv id u a l subjects, on the other - are stabilizers o f economic a n d so c ia l c o n tra d ic tio n s .

P o litic al institu tio n s are stable enough and we can d earie see features o f conserva ive effect, ie d iffic u lties in changing the m ain direction o f development. Such inertia of p olitical in stitu tio n s som etim es can be a m ajor obstacle to dynamic economic growth state.

S tro n g fo rm a l in stitu tio n s are one o f the elem ents o f the system o f public c o n fid e n c e in th e sta te o f possib le action in the case o f deterioration in the quality of life. In th e fa c e o f ex tre m e ly in ert institutions or the low level o f efficiency in order to c o n firm th e s ta tu s o f a p ate rn alistic society can be triggered by arrangements aimed at im p ro v in g liv in g sta n d a rd s by increasin g the tax burden on businesses and extensive re p le n is h m e n t.

A s a re s u lt o f in efficien cy o f the state strengthen manifestations o f so-called « m a rk e t fa ilu re s » . T h e m ain « m ark et failure» requiring state correction, are as follows:

- in c o m p le te c o m p e titio n :

- c o o rd in a tio n fa ilu res (c o m p a n ies in th eir decisions m ay be guided solely by their o w n in te re s ts , « fo rg e ttin g » ab o u t the social aspect o f work);

- in fo rm a tio n asy m m e try ;

- th e d iffic u lty a sse ss in g the value o f public goods, etc.

It is c le a r th a t its im p o ssib le com pletely eliminate these signs o f social d e v e lo p m e n t, b u t th e state h as at its disposal som e balancing and control instruments p e r fo r m th e ir fu n c tio n s.

H o w e v e r to e lim in a te n eg ativ e aspects o f states activities, there is importance o f fo llo w in g th e n o n -in c re a s e w ith o u t the need o f its functions. This principle K. Popper c a lls « ra z o r lib e ra lis m .»

F o r th e s u c c e s s o f th e state is n e ce ssa ty to obtain power, that is bigger than citi­ z e n s o r o th e r in s titu tio n s an d org an izatio n s obtain, in addition to that price for the pro­ te c tio n o f c itiz e n s tu rn ed o u t to be not too large [2, p. 510-513].

❖ 1 7

(

4 1 ) 2 0 1 6

Economic science

s a a a a s a a s a i i i M i

Nowadays, institutions are the weakest spot o f the competitiveness

o f U k r a in ia n

economy. This result is one of the worst not only in relation to the

E U

and other

d e v e l ­

oped economies, but also in comparison with the closest neighbors (Figure 2).

t Oth pillar M a rte l s ire j):S 5»r; M fctf.it: and jj?ynar* eoticsixw* 9th piihr Techn o lo g ic •MdtaMrS 5th HiQhs*r ed u c atio n and training 8th pillar Financial market development 6th pillar. Goods market efficiency 12th pillar: innovation

/

X

11thpULir saphi'$&3tm ■s! pj-lar ir-in-UElCHS 8rct pifo r Mac-ueccnurntc {jrwcnment 7th pillar; La&cr rr-aM'-it ef?;c:ency

Fig. 2 Reviews o f components the Global Competitiveness Index 2015-2016,

Ukraine

Source: [3]

The influence o f institutions on the economy

l a r g e l y d e p e n d s o n th e s ta g e o f e c o ­

nomic development is the country. WEF identifies three

s t a g e s o f e c o n o m i c d e v e lo p ­

ment: first - focus factor, the second - focus on

e f f i c i e n c y , t h e t h i r d - th e f o c u s on

innovation. Countries whose economies are between

t w o o f t h e t h r e e s t a g e s , a c c o rd in g

to the definition WEF, are the «country o f transition».

On the first stage of economic development (factor orientation)

e c o n o m ic g ro w th de­

pends on the basic factors that united into such four components:

p u b l ic a n d p riv a te institu­

tions; infrastructure; the macroeconomic environment; health

a n d p r im a r y e d u ca tio n .

One o f the determinants o f institutional quality is efficiency

in th e p u b lic sector,

which has two aspects: efficient administrative services and

a s t a b l e p o lic y e n v iro n ­

ment. Administrative efficiency implies a lack o f unnecessary red

t a p e i n b u s in e s s p ro ­

cesses such as the collection o f taxes, compliance with regulations,

o b t a i n i n g p e rm its,

and the judicial system; there is empirical evidence that: burdensome

b u r e a u c r a c y de­

creases investments and firms’ efficiency [3].

-/V eit's o £ S c i e ^ e ^ a n d ^ E d u c a t i o n ^ 1 7 (4 1 ) 2 0 1 b ❖

Jt is also n ecessary to clearly understand the importance o f social institutions in eco n o m ic d ev elo p m en t. In the relationship o f government and business structures a p o w e rfu l p u b lic tak es an interm ediate position, which can become a strong driving fo rc e to d ra m a tic ch an g es in all society.

I n d e v elo p ed dem ocracies the public has leverage both public institutions and on th e p rin c ip le s o f fo rm in g business processes.

T h e p ro b lem o f interaction o f public authorities with civil society is m u ltid im e n sio n al in nature. Q uite often you can hear about the efficiency o f the trip a rtite p artn e rsh ip «govem m ent-public-business». M embers partnership can be c o n sid ere d as sep arate institutional units that have similar economic objectives, fu n c tio n s and b ehavior.

A ish a G h a u s-P ash a allow s that th e civil society sector falls in a conceptually com­ p le x so c ia l terra in th at lies m ostly outside the market and the state. For much o f the re c e n t h isto ry , social and political discourse has been dominated by the ‘twosector m o d e l’ th a t ack n o w le d g es the existence o f only two actors - the market (for profit p riv ate se c to r) a n d the state [4, p.2].

T he state's role in the process o f developing an effective partnership is reduced to form ing legal and regulatory framework that will enable businesses and the public most actively u se the opportunities offered by their socio-economic environment. O f course, this is on ly possible i f w illingness to innovation «radicalism» o f all partnership members.

Literature:

1 . A c em o g lu D. Institutions as the Fundamental Cause o f Long-Run Growth / D .A c em o g lu , S. Johnson. J. Robinson. NBER W orking Paper No. 10481 M a y 2 0 0 4 ,- 111 p.

2 . P o p p e r K .R . C on jectu res et Refutations / K.R. Popper // La Croissance du S a v o ir S cien tifiq u e, V olum e 4 N um ero 1, 1985, 610 p.

3. W o rld E co n o m ic Forum [Electronic resource] h ttp ://reports.w eforum .org/global-com petiti veness-report-2015-2016 4. G h a u s-P a s h a A isha. R ole o f Civil Society Organizations in Governance /