INSTITUTIONAL TRANSFORMATION OF UKRAINIAN ECONOMIC SYSTEM IN THE CONTEXT OF PROPERTY, POWER, COMPETITION, INNOVATIONS, AND VALUES

Abstract

The article is devoted to research on the peculiarities of an institutional transformation path of the Ukrainian economic system. It stresses the importance of differences between officially declared and actual matter-of-fact institutions, as well as formal and informal norms in the economy. The aim of the paper implies clarifying the factors that hinder Ukraine’s economic system from attaining higher welfare levels and implementing effective economic reforms. The author offers its own approach of analyzing the transformation and evolution of Ukrainian economics based on the institutions of property, power, competition, innovations, and values. The paper investigates these five groups of institutions, because they substantially influence the decision-making process of economic actors, as well as impact the general pace of economic development, both separately and conjointly. In particular, property plays a crucial role for individuals and state as a fundamental economic, law and philosophic category; power regulates the organization of political processes and leadership inside the state and economics; competition stands for a major market economy driver; innovations express potential progress opportunities; values incorporate mentality and a way of thinking that determines the behavior of economic subjects. Ukraine’s specific institutional pathway involves certain discrepancies between real and officially declared state of things; synergy of power and property, associated with monopolism and, as a consequence, weakened competitive and innovative environments; the prevalence of selfish particular interests over public ones, dominance of financial-industrial groups; respect for status, power and material values, while negatively perceiving any authorities, as well as willing to shift responsibilities for one's own life, economy or state to someone else. Nevertheless, the Ukrainian economic system still possesses the potential for successful institutional development, embodied in intelligent and hardworking people who regularly tend to cope with life difficulties and economic circumstances. Besides, Ukraine gradually advances (with rises and falls) in some of world institutional rankings, which also indicates certain positive changes. In total, the five-component approach developed within the article could serve as a basic framework for analyzing the institutional transformation of economic systems. Keywords : formal rules, informal rules, enforcement mechanisms, “rules of the game”, institutional transformation, transformational economy, posttransformational economy.