INSTITUTIONAL TRAPS OF UKRAINE'S ECONOMY MARKET-ORIENTED REFORMING

Abstract

Institutional traps that emerge as sustainable, self-supporting, ineffective institutions that have a destructive effect on the relations among economic entities within and outside the economic system are one of the manifestations of the institutional dysfunctions of market reform in post-socialist countries. Therefore, securing the exit of transformational economies from institutional traps is an important precondition for improving state regulation of market-oriented institutional transformations. The article describes the nature and peculiarities of institutional traps, outlines the basic prerequisites for their emergence and consolidation in the process of post-soviet development of Ukraine. The destructive impact of institutional traps on the national economy, which refers to increase in transactional costs, the deterioration of the investment climate, the growth of the shadow sector of the economy, the decrease in the level of competitiveness of economic entities and the reduce of public welfare have been proved. Several agendas for institutional reform of national economy that designed to release country from institutional trap are characterized including evolutionary scenario, which is based on gradual institutional development, and revolutionary scenario that refers to active institutional reform. The authors hypothesized about negative impact of low quality of social capital, insecurity of property rights, lack of transparency in public finance, the inefficiency of the judicial system on Ukrainian economy is elaborated. In order to confirm this hypothesis, a theoretical and econometric study of the main factors of corruption as an institutional trap of the market-oriented reform of Ukrainian economy were conducted. Policy implications related to exit from the specified institutional trap are formulated including implementation of effective state policy aimed at accumulation and extended reproduction of social capital, clear specification and protection of property rights etc.