Published since September 1958

№ 2/2020

Ekon Ukr. 2020 (2): 24–44https://doi.org/10.15407/economyukr.2020.02.024

ECONOMIC MANAGEMENT: THEORY AND PRACTICE

УДК 338.24.021.8

JEL:

¹Cherkasy State Business College, Research ID : http://www.researcherid.com/rid/
OrcID ID : https://orcid.org/https://orcid.org/0000-0003-0188-2677
²Cherkasy State Business College, Research ID : http://www.researcherid.com/rid/
OrcID ID : https://orcid.org/https://orcid.org/0000-0001-6904-3496

THE IMPACT OF INSTITUTIONAL FACTORS AND RISKS OF POLITICAL INSTABILITY ON THE STATE ECONOMY

The economies of states are examined in terms of factors that minimize the risks of political instability and the impact of formal and informal institutions. At the same time, the circumstances of the formation of the institutional quality of countries as a consequence of the state and effectiveness of the main factors of the institutional environment in the priority of economic development are analyzed. It is indicated that the main reasons for the convincing results of the economic development of the studied countries are the introduction of effective institutions in the economy and the creation of conditions to minimize the risks of political instability. Attention is focused on the fact that the quality of the institutional environment, as measured by an integrated indicator of institutional factors, is a key prerequisite for sustainable economic development and GDP growth dynamics. At the same time, arguments based on political uncertainty and the transition costs of institutional transformation suggest a positive correlation, but the impact of institutional instability on economic development must take into account the diversity of consequences. To do this, the multidimensionality of institutional quality is investigated and it is proved that the consequences of economic instability can vary depending on institutional trends and political risks, and institutional quality determines the ambiguous effects of institutional changes in different countries.
So, for the countries of Central and Eastern Europe that are members of the European Union, the rule of law is indicated by the fundamental institutional factor of economic growth, and for the poor countries of Europe, including Ukraine, the primary task is to combat corruption, which primarily determines success or failure to stabilize the political sphere and institutional reforms.
The article provides and analyzes studies of the correlation and regression relationship between Ukraine and selected countries of Central and Eastern Europe between the final indicator of institutions and GDP per capita, as well as the correlation matrix “GDP per capita, selected indicators of the Fragile States Index and the level of corruption in these countries.”
Based on the foregoing, recommendations are suggested for the modernization of the institutional environment in Ukraine in the context of the modern methodological paradigm for finding common ground between government, business and society.

Keywords:institutional theory; formal and informal institutions; political instability; Fragile States Index; competitiveness of countries; corruption

Article original in Russian (pp. 24 - 44)

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The article was received by the Editorial staff on November 18 , 2019

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