Institutional Formalization of Economic Freedom

Abstract

Review. Economic freedom in a market economy is a fundamental prerequisite for fair distribution of wealth and the citizens' confidence in public institutions. The sequence of formation of steady, transparent and secure mechanisms ensuring implementation of rights and freedoms of business activity creates an "economic freedom" public good that acts as an imperative of optimizing the balance of interests. Benefits and costs arising in the process of economic freedom specification form the institutional environment of interactions between economic agents. The aim of the research is to apply an interdisciplinary approach to the institutionalization of economic environment for the period 2000-2014 in terms of theoretical, econometric, statistical and legal interpretation. The accepted economic theory that traditionally extends epistemological and axiological aspects focuses on essentially homogeneous normative judgements. However, provided such an approach is necessary, it is associated with a rather broad intuitive perception of the category of economic freedom. Thus, to clarify the category subordinate characteristics and principles of a free market are added. In the absence of a generally accepted universal definition the difficulties of measuring economic freedom escalate. While the content of the category, definition and concept are being discussed, scientific and research centers offer applying empirical mathematical modeling procedures of indicators. Formal differences between measurement techniques are limited to the number of parameters being monitored, grouping indicators, integral index components, dimension of the measurement scale and differentiation of countries in accordance with the quality of their institutional conditions. The author gives a forecast of the dynamics of the index of economic freedom for the economy of the Russian Federation until 2020. In the course of the analysis the author concludes that economic freedom status, even though it creates favorable environment for business, it is not a sufficient condition for the growth of the national economy. An assumption with regard to the dependence of per capita GDP upon the size of "market" taxes and the level of economic freedom has been statistically confirmed in 2006, 2007 and 2014. The paper examines the standards that can be attributed to the support of freedom of economic relations and legally enshrined in the new Russian legislation governing the freedom of entrepreneurship and development of competition. The author considers in detail legal rules and norms that guarantee the right to property as a relatively new standard in legislation and "weak" point in the structure of economic freedom components. The author's unique analytical approach that provides for structuring institutional aspects of economic freedom gives reason to identify theoretically important findings and to evaluate barriers to the development of the market.