Academic journal article Asian Social Science

The Problems of Development of Economic Institutions in Russia

Academic journal article Asian Social Science

The Problems of Development of Economic Institutions in Russia

Article excerpt

Abstract

Delayed payments of wages, defaults, hostile takeovers of privatized companies and similar actions caused a lot of problems in economic system of Russia. Notwithstanding the every effort taken by the government, the new model of economic management was inefficient until a cluster of complementary institutions was formed. Analysis of transformation processes in the Russian economy shows that the evolution of economic institutions has since the early 90s been a complicated, often inconsistent process, mainly directed towards internalization of informal institutions, import of institutions and restoration of institutions.

The paper examines the evolution of economic institutions in Russia since the beginning of market reforms. The authors reveled the close relationship and direct correlation between the effectiveness of Russian economic reforms and forming the new economic institutions.

Keywords: economic institutions, economic development, reestablishment, internalization of informal institutions, import of institutions, restoration of institutions

1. Introduction

Over the last twenty years, like in other former socialist countries the import of economic institutions into the real sector of the Russian economy has been heavy and had the most severe consequences.

Since the early 1990s, the institutional principles of domestic economy in Russia have undergone revolutionary change. However, the processes ran quite spontaneously. Thus the pre-existing economic ties severed, which led to coercive (noneconomic) demolishing of the once established "rules", consequently creating chaos in the national economy. The government was unable to propose any viable alternative, leaving reconstruction of the ruined-by-reform institutions to their spontaneous reestablishment on the new ideology base. In the long run the existent economic processes may result in various changes in the economic systems, including functional modifications of the existing economic institutions, with the old institutions withering away and new ones emerging. That depends on entrepreneurs' awareness of the change and of the depth in the actual contradictions. As this occurs, awareness and will are realized via economic interests, which generally constitute the basics of the mechanism for functioning and reformation of economic systems.

2. Theoretical and Methodological Background

2.1 The Theory

The research is based on the foreign and Russian researchers' theoretical theses in the fields of the institutional theory (Ben-Ner & Putterman, 2000; Engerman & Sokoloff, 2008; Chang, 2007). The problems of anomie and institutional vacuum were discussed by Émile Durkheim (Durkheim, 1993). The fundamental approaches to the analysis of institutions are contained in the research of J. Aron (2000), G. Caravale (1995), G. Hodgson (2009), D. North (1990, 1995), E. Ostrom (1990, 2007), S. Pejovich (1972) and others (Bergstrom, 2002; Chakravarti, 2012).

The questions of neo-liberal theory in institutionalist political economy are analyzed by H. J. Chang (Chang, 2002), M. Cimoli, G. Dosi and J. Stiglitz (Cimoli, Dosi, & Stiglitz, 2009) and others.

The overview of evolutionary theories of institutions in biology, sociology, anthropology and economics made in the works by J. C. J. M. Van den Bergh (Vrije University Amsterdam, Faculty of Economics and Business Administration and Institute for Environmental Studies, Amsterdam, Netherlands) and S. Stagl (School of the Environment, University of Leeds, United Kingdom) (Van den Bergh & Stagl, 2003). They compared the non-evolutionary theories of institutions and co-evolutionary theories of institutions and they developed the co-evolution approach for analysis of institutions.

The research of M. K. Nabli (World Bank, South Africa) and J. B. Nugent (University of Southern California, Los Angeles, United States) (Nabli & Nugent, 1989) identifies the potential complementarities between the important components of new institutional economics and illustrates their applicability to various problems and policies in the long-term development of developing countries. …

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