Model of interaction between the government and business towards legalization of unorganized imports

Abstract

Ukraine’s economy quickly integrated into the system of shadow financial flows and used standard tools to manipulate export and import prices and financial instruments. In terms of cumulative outflows of shadow capital, Ukraine is among the top twenty countries. The research relevance is predefined by the main directions of legalization of economic processes, including in the segment of shadow imports, which involve the formation of optimal institutional strategies for the behaviour of social agents (government and business). The research aims to select the Government’s strategy for legalizing unorganized imports, which will allow the establishment of effective interaction between social agents on mutually beneficial terms. Research methods include mathematical analysis and game theory, used to build mathematical models, which reveal the intrinsic rationality of individual interactions, aggregating a set of social situations into several options and reducing the uncertainty of a set of behavioural options to a clear and stable pattern of regular interaction. The results showed that the level of employees’ salaries is not crucial for overcoming shadow imports, but the level of integrity of customs officers is a more important indicator. The article shows that the mechanism of legalization of shadow operations (in particular, unorganized imports) should be based not only on economic but also on social parameters: the level of moral and professional principles of customs officers. The practical value of the research results is to improve the mechanisms of legalization of unorganized imports in Ukraine.