The efficiency of the economy is directly affected by the institutional environment in which its development is carried out. What is meant by it? The institutional environment of the economy is a combination of fundamental legal, social, political and economic rules that define the framework of human behavior. Thanks to them, the basis for production, distribution and exchange is formed.
general information
The subject of the article we are considering implies the existence of a clear, ordered set of institutions that determine the framework conditions for the functioning and development of economic entities. To conduct an adequate analysis of the institutional environment, it is necessary to deal with the accurate interpretation of non-shadow structures. For example, something illegitimate may not contradict the current law and be open.
A very famous special case is the optimization of tax payments. It is supposed to use tools (intermediaries) that contribute to reducing the debt of the organization to budgets of all levels. This is completely legal, it is considered as a component of the functioning of the institution of entrepreneurship.
It should be noted that one part of the toolkit may be shadow and the other transparent. In the first case, the non-criminal component is additionally isolated. In other words, there are relations that are not regulated in any way (for example, the use of intermediaries) and those that contradict the norms (for example, various tax evasion schemes).
Why resort to their services? The fact is that the imperfection of informal, but completely legal institutions entails the emergence of relations bordering on a dangerous line or even criminal schemes. What solution can be offered in this case? It is necessary to ensure that the development of the institutional environment in the interests of ensuring efficiency transforms all developments into legal schemes with the subsequent adoption or rejection of them by society as those that contradict collective interests.
On the development of a common position
The economic institutional environment can be considered favorable only if the interests of entities and agents that are directly related to this area are coordinated. If contradictions arise inside, this is an impetus for improvement of the situation and can be resolved at various levels. For example, in the case of revealing the specific interests of agents or the formation of discrepancies, within the framework of the overall development of the business (business), special and unusual methods of carrying out economic interactions are removed.
As an alternative, they stand out in other groups. At the second level, it is possible to expedite the consolidation of new norms and rules within a separate community of economic relations. After that, there are two options to resolve the contradictions:
- Norms and rules are rejected that have demonstrated their failure in the testing process.
- Finally, new developments are consolidated that can provide effective interconnections between economic entities. They receive the status of formal rules. In this case, the third level is additionally distinguished - the formation of a new institution and the opposition of the parties.
Other developmental features
Various methods and approaches for resolving internal contradictions and promoting interaction form the basis for the formation of an institutional mechanism. It ensures the reproduction of rules adequate to the external environment. All this allows us to establish an order that contributes to the stabilization of the economic structure and controls the observance of general norms of behavior.
If the conditions in which the business is carried out change, then the contracts and agreements must be reviewed. Indeed, the institutional mechanism acts as a process of continuous creation, development and transformation. As a functional subsystem, it forms the organizational and regulatory conditions that ensure the stability of the subjects of the economy, legislatively consolidates the existing relations, contributes to the effective achievement of goals and solving tasks.
The level of development depends on the quantitative and qualitative characteristics of existing institutions. Therefore, in the process of formation, the search for the answer to the optimization question is relevant and necessary. When drawing up the situation, it is necessary to analyze the totality that allows us to adequately understand the content and essence of the economic system, as well as the number of entities that must be achieved in order to ensure the production process.
About creating and modifying
Important in this matter is the issue of costs. In other words, you need to understand what valuable resources you need to devote to creating an institutional environment and its use. This is important when changes in the nature and direction of the impact on the behavior of economic entities occur. The creation of institutions involves their conscious design (formation) based on existing real needs.
This is one of the functions of the state. It can form the institutional prerequisites, create a progressive ownership structure, an attractive investment climate, the necessary conditions for the development of innovative activities and all that is needed. But the creation is not limited.
The institutional environment is constantly changing. This is due to a mismatch between the terms of business and the adopted provisions. Technologies are involved in this, contributing to the change or creation and dissemination of new provisions that can reduce costs in the functioning of the economic system.
Another important point is distribution. In the case of a successful state of affairs for a relatively short period, a positive adaptation occurs. Then the institutional environment of the business continues to perform its functions with greater efficiency.
Exploring opportunities
It is always necessary to conduct a thorough check of the benefits and losses resulting from the introduction of the replacement of the old with the new. Consider the basis on which the formation of the institutional environment. In this case, it is necessary to provide for the following main steps:
- The goals and objectives are determined.
- A preliminary calculation is made of the benefits and losses that various social groups will have from the introduction of something new.
- Searches for analogues in the past country or other government entities.
- Implementation strategies are being created.
- Line up (if necessary) the goals of related institutions.
- A set of adaptation measures is being developed that should minimize costs from individual groups.
- The final calculation of the benefits and losses from the introduction of the new institution is being carried out. Data is compared with available financial security. It should be borne in mind that any ongoing reforms should have support to compensate for losses incurred by individual social groups.
How the institutional environment is developing in Russia
Domestic and foreign experience has clearly demonstrated that the dissemination of the developments of developed countries in transition economies is very difficult and is accompanied by a complex of negative consequences. This is due to the presence of differences in the structural environment.
As a rule, this process is accompanied by a whole range of negative consequences. For example, the mechanical copying of foreign experience in our conditions turned into complications of the social and economic situation in the country. Therefore, the main criterion for evaluating institutions should be their effectiveness. In a market system, this means building a foundation on individualistic values and the ability to mutually beneficial personal interests.
If not very effective developments were implemented, then this situation is called the "institutional trap." This means that the system was not chosen the best development path, which turned into all kinds of losses and losses. Moreover, over time, access to the optimal development path can be considered as an insufficiently effective solution.
Features of operating time
The institutional environment of the business should work not only on the creation, design and dissemination, but also pay attention to diagnosing the maturity of best practices and their suitability for use at the current level of development of economic relations. Particularly relevant in this regard is the formation of a mechanism for monitoring effectiveness, the consolidation of the created tools in the daily activities of business entities, the timely replacement of obsolete elements with newer ones.
An essential contribution to this is provided by an analysis of the institutional environment. After all, it allows you to consider various proposals from the standpoint of practical experience. For example, if a new law is introduced into economic life, this does not mean that it will be respected. Evidence of this is the fact that even in the current legislative framework, business structures often ignore formal rules.
In this regard, the process of institutionalization is distinguished. It is formed in the form of a unity of two components in the short and long term. In the first case, the declaration of certain rules and norms at the legislative level is carried out. The long-term period takes on legitimization, public recognition and consolidation.
About the development methodology
As a theoretical foundation, the concepts of various economic schools are often used, as well as the works of domestic and foreign scientists. Although a common situation is when they are repelled from the practical developments of individual commercial structures. In assessing the situation, dialectical, deductive, inductive, abstract-logical, evolutionary, historical, functional and psychological methods and approaches are used.
The object of research for them are the factors and conditions of transformation, the system of public authorities, as well as enterprises. In this case, contradictions are identified and classified, a detailed characterization of the situation is given, an analysis of the operating conditions is carried out. All this is necessary to consider important issues.
The situation in the Russian economy
Consider the features of the domestic economy. The institutional environment of Russia is interesting due to ongoing processes throughout the country. A special role in this matter is played by the analysis of property rights. After all, the Soviet Union still existed recently. In those days, the issue of ownership of the income of enterprises was considered resolved. Everything was ruled by the state (in fact, the nomenclature that represented it).
At that time, natural resources were not actually valued. The price of products created, which were produced with their use, was underestimated. In this case, the company benefited directly. The earned profit was mainly spent on the reproduction of the mineral resource base.
During the transition to a market economy, new property relations formed that differently govern the distribution and appropriation of natural resources. Now the greatest attention is paid to the problems of financial stabilization. Although there were some problems, for example, the mechanism of formation of natural rent became opaque. Ownership of natural resources is uncertain. This creates conditions and opportunities for the appropriation of income by individuals. Instead of a vacuum, insufficiently effective structures were formed.
To say that this problem was successfully overcome is impossible even now. However, there is hope that in the future the situation will be completely resolved. One cannot be limited to one national level. There is also an institutional regional environment. It is one of the tools to influence locally.
