Institutional conditions of the economic mechanism formation of industry development
Розглянуто інституційні умови формування економічного механізму розвитку промислового сектору економіки. Досліджено поняття економічного механізму, його структуру, елементи, а також найбільш важливі характеристики. Показано вплив інституційних умов на інноваційний розвиток економіки. Виділено наслід...
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| Date: | 2013 |
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| Language: | English |
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Інститут економіки промисловості НАН України
2013
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| Cite this: | Institutional conditions of the economic mechanism formation of industry development / N.V. Shemiakina, G.S. Gorinenko // Економіка пром-сті. — 2013. — № 1-2 (61-62). — С. 209-218. — Бібліогр.: 22 назв. — англ. |
Institution
Digital Library of Periodicals of National Academy of Sciences of Ukraine| _version_ | 1859843841728708608 |
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| author | Shemiakina, N.V. Gorinenko, G.S. |
| author_facet | Shemiakina, N.V. Gorinenko, G.S. |
| citation_txt | Institutional conditions of the economic mechanism formation of industry development / N.V. Shemiakina, G.S. Gorinenko // Економіка пром-сті. — 2013. — № 1-2 (61-62). — С. 209-218. — Бібліогр.: 22 назв. — англ. |
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| container_title | Економіка промисловості |
| description | Розглянуто інституційні умови формування економічного механізму розвитку промислового сектору економіки. Досліджено поняття економічного механізму, його структуру, елементи, а також найбільш важливі характеристики. Показано вплив інституційних умов на інноваційний розвиток економіки. Виділено наслідки недостатнього рівня технічного розвитку промисловості. Визначено основні перспективи створення ефективного економічного механізму розвитку промисловості.
Ключові слова: економічний механізм, економічний розвиток, інституційні умови, інституційне середовище.
Рассматриваются институциональные условия формирования экономического механизма развития промышленного сектора экономики. Исследуется понятие экономического механизма, его структура, элементы, а также наиболее важные характеристики. Показано влияние институциональных условий на инновационное развитие экономики. Выделяются последствия недостаточного уровня технического развития промышленности. Определяются основные перспективы создания эффективного экономического механизма развития промышленности.
Ключевые слова: экономический механизм, экономическое развитие, институциональные условия, институциональная среда.
Technical development of the industrial sector is one of the main conditions of creating a modern Ukrainian industrial complex, which can be a powerful engine of long-term economic growth of the state and respond to changes in the world market conditions. The technical development of Ukrainian industrial sector does not meet the current requirements and is characterized by unhealthy tendencies because of the low activity of industrial enterprises creating the advanced manufacturing technologies. The appearance of such a situation is caused by many factors, ranging from the lack of financial resources for innovation to the imperfection of the legislative base. It is necessary to identify factors which contribute to the process of technological development of the industry in order to provide innovative industrial development.
The purpose of this article is to research the institutional conditions of economic mechanism functioning of the technical development of industry and innovative development of economy.
The classic conditions and fundamental investigation of foreign and domestic scholars, statistical data and results of author's research of the problems of economic mechanism in industry has formed the basis of the article. The scientific abstraction, generalization of scientific experience of modern theoretical studies, comprehensive approach methods have been used.
The paper reviewed the concept of the economic mechanism, its structure, elements, and also the most important characteristics. It also considered institutional conditions of its formation. The main problems of the domestic industry on the path to innovation were singled out.
The theoretical positions of institutional conditions of the economic mechanism formation ground the methodological basis for the formation of economic mechanism of technical development that could enhance the investment process in industry.
The research shows that in the modern condition of Ukrainian economy development, there is an exigency in formation of the implementation mechanisms of innovative type of development by the use of an effective set of institutions. Currently, the institutional organizations demonstrate ineffective work. The search of financing the development issues have not yet solved and require further research. To sum up, an important component of the economic stabilization situation in Ukraine needs to be radically changed in the view of existed principles of modern production, as well as the formation of an effective mechanism of development of industry.
Keywords: economic mechanism, economic development, institutional conditions, institutional environment.
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| first_indexed | 2025-12-07T15:38:16Z |
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–––––––––––––––––––––– Економіка промисловості Экономика промышленности ––––––––––––––––––––––
ISSN 1562-109X 209
2013, № 1-2 (61-62)
УДК 330.341.2 Natalia Volodymyrivna Shemiakina,
candidate of economic sciences, associate professor,
GannaSergiyivnaGorinenko,
Institute of Industrial Economics, Donetsk
INSTITUTIONAL CONDITIONS OF THE ECONOMIC MECHANISM
FORMATION OF INDUSTRY DEVELOPMENT
One of the most striking trends in the
modern development of the world economy at
the beginning of the XXI century is a revival of
an active interest in the industrial sector, the
purposeful formation of its progressive structure
(technological and industrial), a significant in-
crease in efficiency and competitiveness [1,
p. 3].
Technical development of the industrial
sector is one of the main conditions of creating a
modern Ukrainian industrial complex, which
can be a powerful engine of long-term economic
growth of the state and respond to changes in the
world market conditions. The technical devel-
opment of Ukrainian industrial sector does not
meet the current requirements and is characte-
rized by unhealthy tendencies because of the
low activity of industrial enterprises creating the
advanced manufacturing technologies.
The appearance of such situation is
caused by many factors ranging from the lack of
financial resources for innovation to the imper-
fection of the legislative base. It is necessary to
identify factors which contribute to the process
of technical development of the industry in order
to provide innovative industrial development.
Traditionally, technical and technological
level of industrial production is characterized by
the state, dynamics and efficiency of fixed as-
sets, including high-tech and innovative equip-
ment, as well as the level and trend of invest-
ment in fixed assets. The positive dynamics of
assets is the main factor of increasing the tech-
nological level of production. The replacement
rate of fixed assets in industry does not meet its
contributions to the overall trend. The technical
and technological level of industry has been de-
creasing since Ukraine gained independence.
The investment of the capital was directed to
equipment maintenance and to partial moderni-
zation of existing equipment and technology.
Thus, the strategic issues of technical develop-
ment of domestic production fade for a long
time into the background to the current prob-
lems. In general, the problem of technical devel-
opment of enterprises received little attention
both on the enterprises level and at the state one.
The dynamics of basic indices of industri-
al development, one of which is an industry val-
ue added (current US$), clearly illustrates the
sad condition of the Ukrainian economy in com-
parison to European and Asian countries (Figure
1).
The World Bank has lowered expecta-
tions of growth in gross domestic product (GDP)
of Ukraine to 1% this year to 3.2% in 2014 and
to 3.5% in 2015 [2]. It was stated in the analyti-
cal review of the Economic Institute of the glob-
al economic prospects, that the growth of
Ukraine's GDP in 2012 is estimated at 0.5%
compared to 5.2% a year earlier.
Heritage Foundation in cooperation with
experts from Wall Street Journal made an annual
ranking of countries according to degree of eco-
nomic freedom, where Ukraine has scored only
161 line rating in 2013.
It should be mentioned that the new data
from the World Bank is much worse than esti-
mates its previous given in July last year, where
GDP growth was expected at 1% in 2012, 3.5%
in 2013 and at 4% in 2014 [2].
The analysis of the development and im-
pact of science and technology on the produc-
tion shows that the production assets of enter-
prises are the main "backbone" of production
and determine the further development of the
Ukrainian economy. A technical modernization
should become the entrance admission to the
world positions of a developed economy. The
regularity of technical development denominates
the necessity of moving towards the new genera-
tions of machines and is the basic cause of the
mass renovation of the technology.
©N.V. Shemiakina, A.S. Gorinenko, 2013
–––––––––––––––––––––––––– Економіка промисловості Economy of Industry ––––––––––––––––––––––––––
210 ISSN 1562-109X
2013, № 1-2 (61-62)
Source: World Development Indicators (The World Bank)
Figure 1. Industry, value added (current US$)
The analysis of contemporary institutional
research showed a comprehensive approach to
modern economic models, in coordination with
the social and political aspects of society. In the
works of Ukrainian scientists L. Fedulova [3],
V. Vishnevsky[4, 5], V. Dementiev[4, 5], and
Russian scientists V. Polterovich [6], A. Sukha-
rev [7], M. Malkina[8] shown that the state
plays the leading role in institutional changes.
Particularly L. Fedulova and M. Pashuta defined
the role of the national innovation system in the
innovation development, reviewed some of its
components, determined the conditions of state
regulation of innovation process, and proposed
the measures of the state innovation policy. For-
eign authors R. Nelson [9], D. North [10], Ha-
Joon Chang[11], Thorsten Beck and Ross Le-
vine[12],Gerard Roland[13], Avner Greif [14],
pay more attention to the market mechanisms
and institutions in the development of innova-
tive processes.
However, despite a large number of pub-
lications devoted to the problem of technical
development, the existing scientific approaches
require the development and further improve-
ment taking into account the changing condi-
tions of the market environment and the global
processes of economic integration and globaliza-
tion. The necessity to development and imple-
mentation of effective measures directed at
comprehensive stimulation of the technological
development of industry based on innovative
renewal of material and technical base of pro-
duction gains urgency in the modern conditions
[15, p. 231].
The purpose of this article is to research
the institutional conditions of economic mechan-
ism of the technical development of industry and
their impact on the innovative development of
the economy.
The institutional approach considers the
functioning of market economy in conditions of
a stable, fair, organized system of state and mar-
ket management. Otherwise, the markets will
become the expanded spheres of political com-
petition.
Institutional support for innovation
represents a set of measures, the used assets, the
creation of conditions promoting to the normal
course of the innovation process, the implemen-
tation of programs and projects, as well as main-
taining the stable functioning of innovation sub-
system economy and economic institutions.
Any system which operates in a context
of limited resources, under the influence of cer-
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United Kingdom
Germany
China
Russian Federation
Ukraine
–––––––––––––––––––––– Економіка промисловості Экономика промышленности ––––––––––––––––––––––
ISSN 1562-109X 211
2013, № 1-2 (61-62)
tain environmental factors, creates it`s owns op-
eration mechanism.
The concept of "mechanism", "economic
mechanism", and "organizational economic me-
chanism" is often used in studies of different
phenomena, especially economic ones.Any ac-
tivity of business entities and the interaction be-
tween them, state and other business entities is
implemented thanks to a certain mechanism.
Knowledge of structure, components, communi-
cation and characteristics of this mechanism al-
lows regulating the activity of entities, improv-
ing both this activity and the existing economic
relations.
Analysis of the publications devoted to
the various mechanisms shows that there is no
uniform methodology for their study and forma-
tion. Mechanism is a historical category. The
structure and content of mechanisms change
during the development of social production. At
different stages of historical development of so-
ciety it is necessary to have an appropriate me-
chanism. The question of finding the concept of
"mechanism" is not entirely new. In the Soviet
Union the concept of "economic mechanism"
began to form in the 60's. In the 70's and 80's its
content was determined by the transformation
process in the economy. In the 90`s the creation
of mechanism was associated with various as-
pects of the macro- and micro-economic model
for a separate company.
The main content of the economic me-
chanism is the economic relationship, as a result
of which have formed demand, supply and price.
The concept of "economic mechanism" includes
not only economic relations, but also a special
section - management of the economy, i.e., the
management of economic objects and processes.
This combination is most clearly seen in the
concept of "resource management" and their
transformation into an economic product that is
used in the process of social life.
The economic mechanism is a production
and economic activity, regardless of its form,
which have a universal mark, universal property:
it is always the transformation of economic re-
sources in a certain economic product.
The economic mechanisms contribute to
the further solution of the problem of identifying
the most effective ways to control the produc-
tion and achieve economic balance.
The purpose of the economic mechanism
is to create conditions for the achievement of
economic activity by economic means, which, in
turn, are composed of the relevant leverages.
Considering the economic mechanism as
a "system", we should then understand that the
"system" is an organized compound whole or
aggregate of sets of objects with the organized
specific ties between them, which are designed
to address specific problems. The rhythmic
functioning of the economic mechanism is cha-
racterized by a predominance of interrelation-
ships component of system between themselves
and to factors of external influence. This me-
chanism exerts a very active influence on the
other factors of production and adapts them to
perform their tasks as much as possible. Thus,
many links of holistic economic mechanism
transition to a new qualitative state, there are
new functions and properties appear in the sys-
tem. The mechanism is formed by means of de-
finition of methods effects on certain factors of
internal and external environment depending on
the factor nature and its sensitivity to the me-
thods applied.
Revealing the content of the concept of
"economic mechanism", it is necessary to men-
tion that it is a specific set of interconnected and
interdependent functional elements united by the
common objective of functioning and able to be
reproduced at a qualitatively new level at the
expense of its own financial resources.
The economic mechanism offers a unity
of objective and subjective sides. The objective
side means the objective economic laws and the
subjective side means related activities of all
elements of the mechanism built on the basis of
their needs, interests, and goals.
Considering the structure of the mechan-
ism, it is possible to identify the following ele-
ments:
subjects are the participants of directional
movement or media material and practical activ-
ities (individual or group of individuals) partici-
pating in the mechanism;
object is a "mechanism" characterizing
the subject orientation of influence on a lot of-
subjects or center;
center is a main body coordinating the ac-
tivities of the subjects (the definitions of the
center of the economic mechanism and the sub-
–––––––––––––––––––––––––– Економіка промисловості Economy of Industry ––––––––––––––––––––––––––
212 ISSN 1562-109X
2013, № 1-2 (61-62)
jects were first offered by Leo Hurwicz) [16,
p. 4];
direct communications of the center and
the subjects and feedback center.
The object of the economic mechanism
can be a variety of economic processes and phe-
nomena, for example, monetary circulation, in-
flation, the process of reproduction of capital,
and also groups of people. The essential feature
of any system is the backbone factor, which
must include the interests of the subjects and the
center. Thus, in case of collateral subordination
of ties the interests of the center is dominated in
the organization of the object, which is caused
by, for example, the mechanisms of state regula-
tion of the economy and corporate governance,
and in case of equal treatment the basis for regu-
lating relations will serve the interests of the
subjects, implemented, for example, in the form
of contractual arrangements etc.
Considering the economic mechanism as
a comprehensive whole, it is necessary to con-
sider it’s the most important features, which in-
clude:
the algorithm of mechanism "function-
ing", which presents a set of management func-
tions or interactions with different methods and
ways of achieving goals;
the results of training which characterize
the stage of development of an object of the ob-
jective function, for realization of which the me-
chanism is created;
the conditions which promote or hinder
the action of the mechanism, or factors which
could change the algorithm of mechanism "func-
tioning";
the assumptions and limitations of the
mechanism taken to the analysis and those it is
possible to achieve the target performance with;
the characteristics of the optimality and of
the effectiveness, which determine the amount
of resource support of implementation process
of the economic mechanism in practice on con-
dition of the planned target results achievement.
Among the backbone elements of the
economic mechanism an instrument for stabili-
zation management is singled out. All these are
the means used to achieve certain goals, and
may include a combination of methods and lev-
ers.
The results of the operation are largely
determined by the level of quality and mutual
coordination of the independent links of the
economic mechanism, including optimality and
completeness of financial techniques usage, as
well as instruments and tools, and the quality of
chosen indicators.
The methods are the specific means of the
action to achieve the goals. Along with tradi-
tional financial methods, such as accounting,
planning, forecasting, regulation and control, the
financial methods of economic mechanisms in-
clude trend analysis of the general criteria and
indicators, the analysis of break-even point, the
methods of restructuring the assets and liabilities
of the company, balance readjustment, discrimi-
nant analysis, analysis of strengths and weak-
nesses, and also analysis of integrated indica-
tors.
A system of planning is of great impor-
tance to the economic mechanism, because the
actual figures are compared with the plan and
the degree of deviation, which it causes. Plan-
ning should be undertaken with the necessary
level of detail and continuously adjusted.
The financial levers, which operate within
the economic mechanism, include: certain types
of budgets and financial plans of the manage-
ment subject, the direct and indirect measures of
state regulatory impact on the formation of mar-
ket prices, the rate of income tax, VAT, the de-
preciation rates, the rate of penalty provision,
certification, accreditation, licensing, insurance,
benefits, etc.
The important tools of the financial me-
chanism of the management stabilization include
the constant monitoring of indicators, the system
of early notice and response, a fundamental di-
agnosis, the factor and discriminant models of
diagnosis, etc.
In order to assess the actual state of the
object research the certain indicators are used,
which can perform the function of financial ra-
tios (e.g., liquidity, profitability and sustainabili-
ty), which allow us to assess the effectiveness of
financial activities.
The application of methods, instruments,
tools and indicators depends on the institutional
environment financial solutions where are per-
mitted, accepted and implemented. Nowadays,
the diversification of institutional conditions is
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ISSN 1562-109X 213
2013, № 1-2 (61-62)
determined by the characteristic of the model of
the institutional environment, which reflects the
level of economic, scientific, social, cultural and
historical features.
The processes of interaction of structural
elements are based on the rules and regulations,
which are implemented with the help of organi-
zational mechanisms. The institutional environ-
ment forms all of these conditions, which should
be regarded as a basic component of an innova-
tive type of industry development.
The inadequacy of the institutional envi-
ronment is one of the weak points of the national
economy. The institutional environment deter-
mines the set of opportunities, which derive the
greatest benefit from the historically developed
circumstances of the country. This environment
can encourage the skills and knowledge, which
should be developed in order to receive the ben-
efits from the transfer of income (rent extrac-
tion), or the skills and knowledge which are re-
quired for the development of innovative pro-
duction [17, p. 77-101].
The institutional environment of devel-
opment formation are influenced by economic,
political, social, environmental, financial, legis-
lative, management, organizational, information,
and humanitarian factors. The main factors are
presented in Figure 2.
Figure 2. The scheme of the institutional environment influence on the industry development
Ukraine needs to reverse the declining
role of industry in the 21st century. This is the
only way to promote sustainable growth, create
high-value jobs and solve the societal challenges
that we face. To achieve this, a comprehensive
vision is needed, focusing on investment and
innovation, but also mobilising all the levers
available in the country, notably the trade, com-
petition, environmental and research policy in
favour of Ukrainiancompanies’ competitiveness.
When financial problems persist, Ukrainian real
economy needs to underpin the recovery of eco-
nomic growth and employment more than ever
[18].
The transition to the innovative type of
economic development will increase the activa-
Institutionalenvironment
Formal institutions:
- Economic institutions;
- Social institutions
Informal institutions:
- Self-regulatory institutions
Infrastructure of the industry development innovation
Influence:
- Innovation factor
- Market factors
- Institutional factor
Influence:
- Economic factors - Legislative factors
- Management factors - Organizational factors
- Information factors - Humanitarian factors
- Environmental factors - Political factors
- Financial factors - Social factors
–––––––––––––––––––––––––– Економіка промисловості Economy of Industry ––––––––––––––––––––––––––
214 ISSN 1562-109X
2013, № 1-2 (61-62)
tion of innovative activity of enterprises, which
will restructure the economy; it will also allow
developing high-tech manufacturing, which is
one of the key factors for economic growth. The
study of the economic growth trends based on
the development of science and industrial tech-
nology have shown that it is built on the tech-
nological revolution, which resulted in the for-
mation of the new industrial technological mode
of production [19]. The innovative component
of any process, implemented in the condition of
new technical developments or decisions is a
major catalyst for economic growth. It is neces-
sary to use the institutional approach by consi-
dering the process of the technical development
of the industry.
The process of the institutional sectors
formation of the Ukrainian economy has long
been under the influence of a centrally planned
economy. That is why the formation of the ef-
fective institutional sectors is currently difficult.
The transition to innovative development
of industry and modernization of the national
economy are complicated due to several factors:
- the high level of material technical base;
- the contradiction of financing and activi-
ty scales;
- the low degree of receptivity of econo-
my to innovation;
- the dominance of personal financial
profit due to the formation of fictitious capital,
and detriment of investment in productive ac-
tivities.
All these problems specify on the backlog
of Ukrainian economy from the most developed
countries in a number of indicators which cha-
racterize the development of innovation sphere
in condition of inadequate institutional environ-
ment. Therefore, there is an exigency of forma-
tion of the implementation mechanisms of inno-
vative type of development by the use of an ef-
fective set of institutions. Currently, the institu-
tional organizations demonstrate ineffective
work, which is connected with the rate of appli-
cation for reforms, and copying institutional
structure from Western countries, without regard
to the national economy specific.
The 20thcentury world experience of
economy development allows us to identify the
three models of its industrial development orien-
tation: export, national (domestic market devel-
opment) and strategic associated with the pur-
poseful limitation of usage of own nonrenewa-
ble resources (oil, gas, timber, etc.). South Ko-
rea and China represent an example of the first
model, which nowadays combines the first two
models, the second model is presented by
France and Japan in the last quarter of the 20th
century, and finally the third model is connected
with the USA and OPEC countries.
The economic mechanism formation of
each country is a complex process that is ac-
companied by sharp struggle between national
interests and transnational capital for control
over the institutions of the government. There
are different conflicting interest, different values
and economic tools.
Nowadays, European (Germany, UK) and
Asian (Russia, China) vector is traced in build-
ing the economic mechanism of the technical
development. The question about the prevailing
vector of the economic mechanism formation
and its institutional support is unsettled for
Ukraine at the moment.
The experience of the economic mechan-
ism formation of the industry development in
China as an example of effective state building
and harmonious economic development is of a
great interest for Ukraine. China is pursuing ag-
gressive policies by developing its own high-
tech production and global market penetration
with the tools of active state support, encourag-
ing foreign investment inflows as well as sup-
porting their own research sector.
The feature of the Chinese model of eco-
nomic mechanism is the solution of the question
of the primacy of the economic development
goals and the secondary of the transformation
goals. Comparing the economic development
transformation with the institutional transforma-
tion, it is possible to mention that the institu-
tional transformation is not less difficult, but
more gradual process. This is due to the fact that
the transformation of economic development is
an evolutionary process while the institutional
transformation is the reform process. The reform
process faces a large number of artificial bar-
riers, mainly ideological, and barriers associated
with the possibility to receive the benefits by
officers [20, p.130].
Chinese reformers have initiated a num-
ber of institutional transformations for achieving
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ISSN 1562-109X 215
2013, № 1-2 (61-62)
the goal of the effective mechanism formation of
the industry development. This distinguishes
China from other countries, which have chosen
a radical reform according to which following
the plan of the World Bank clearly knew every
next step in the transformation of the system
after planned economy elimination. China has
carried out the careful redistribution and ordered
power and resources; the government at the head
of The Chinese Communist Party is the basis of
maintaining the political and economic stability
in the whole society. Thus, considering Chinese
experience of effective economic mechanism
formation, Ukraine should bet on the instru-
ments and leverages of the development of the
real sector of economy, the development of pro-
ductive capital on conditions of existence of a
single reform stable center as well as observance
of new elements introduction to the economic
mechanism in gradual manner taking into ac-
count national identity and national interests.
In modern conditions it seems notable for
Ukraine to study the features of the economic
mechanism of the Germany, as at the same time
with the policy of economic order an important
role is assigned to government regulation of
economic processes. The special attention is
given to the sectoral structural policy, consider-
ing the industrial policy as a part of a shtandort
policy.
The results of a shtandort policy include
the changes in institutional conditions of indus-
try development and the emergence of the
process of clustering. The regional cluster is a
set companies of grouped geographically, con-
nected with each other on the base of coopera-
tion and division of labor, which gives them the
opportunity to enhance their own and additional
competitive advantages. In the German regions
so-called network and competence centers were
set up on the basis of clusters, which represent
the attempt of the business communities to get
other additional benefits [21, p.152-153].
The experience of clustering is very inter-
esting for Ukraine as an instrument of economic
mechanism of development, because institution-
ally and economically expedient in the imple-
mentation of a modern industrial policy of
Ukraine requires a shift of emphasis from the
centralized sectoral management to the decentra-
lized territorial management. This goal is possi-
ble to achieve through strategic alliances be-
tween regional leaders and business groups,
formation of complexes of interrelated enter-
prises and organizations with complementary
competences – scientific and eco-industrial
parks, industrial and other clusters applying spe-
cial modes of economic management both ap-
proved in practice and new ones. This requires
the development and implementation of special
government programs of clusters identification
and joint financing (from state and local budg-
ets) of chosen cluster initiatives [1, p.28]. The
cluster approach to economic mechanism forma-
tion of industrial policy of Ukraine is not only
the means of achieving structural changes, tech-
nological development of the economy, streng-
thening the innovation focus, but also a power-
ful tool for regional development.
In Germany in addition to providing the
industry structural policy, the basis and the driv-
ing force of the structural transformations in the
economy are the financial and monetary poli-
cies. First of all, they include a variety of finan-
cial incentives, the transfer of funds from the
state budget for the training and retraining of
personnel, the financing for the productive po-
tential modernization, the tax reduction or tax
exemption, the reduction of excess capacities by
providing with appropriate compensation [21,
p.151]. The investment banking in Germany
initially dealt with venture capital. Banks lent
the money to perspective companies and
enriched by selling their shares when these
companies appeared on stock exchange with the
initial public placement of their shares (IPO)
[11, p.3]. Thus, the financial system is the main
institutional element of the market economy,
because the allocation of resources follows the
allocation of capital, so the level of development
and the effectiveness of the financial market
(monetary, foreign exchange, stock) provides
even greater determines the level of economic
development of the state.
The UK experience in terms of institution
building, the union of the tax and customs ser-
vices, which is considered the most successful
and best in Europe, comes in useful for Ukraine
in some aspects. Considering the institutional
conditions of the UK industry, it should be noted
that the strict competition rules ensure the dy-
namics of the market, as well as strong govern-
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216 ISSN 1562-109X
2013, № 1-2 (61-62)
ment support for the industry. In particular, dif-
ferent methods like fiscal, monetary and budge-
tary policy are used in order to improve the in-
frastructure of the industry. The promotion of
high-tech sector is made through innovation and
investment policies, as well as subsidies to stra-
tegic industries. The customs policy is used as a
tool to protect the vulnerable national produc-
tions. The export promotion tools are the state
insurance of foreign trade and preferential loans
for exporters.
The priority areas of improvement the
economic mechanism of industry development
in Russia is defined as the creation of large
state-owned enterprises and vertically integrated
holding companies.The aim of this transforma-
tion is to preserve the scientific and industrial
capacity through consolidation and centraliza-
tion [22].Currently, the internal resources for
improving the economic mechanism in Russian
would be found in the use of income of the pri-
mary sector for general economic goals by in-
creasing the rent payments, introducing of a
progressive scale of income taxation, saving
public funds, as well as more active involving
the population funds in the real economy. It is
necessary to change the system of commercial
law, taxation, as well as increase the government
regulation of social development. An important
prerequisite for technological development is an
increase of government funding for fundamental
and applied research and experimental develop-
ment.
Despite the multi-vector orientation the
experience of China, Germany, the UK andRus-
sia shows that the establishment of an effective
economic mechanism is possible in the first
place only under a common favorable institu-
tional environment in the state, moderate taxa-
tion, developed credit system, high-quality edu-
cation system, etc. Ukrainian state should work
on the creation of such an environment condi-
tion.
The research shows that in case of a sig-
nificant technological backlog it is necessary to
focus on the implementation of imported tech-
nologies alongside with the support of the na-
tional innovation activity for enhancing the effi-
ciency of the economic mechanism of the indus-
try development. In this case the issue of man-
agement at the level of a single economic sub-
ject is of prime importance. It is known that in-
novation is connected with such human proper-
ties such as inclination to risk, business, adven-
ture, with an active lifestyle and aggression.
However, some scholars have noted that in a
similar institutional environment the aggressive
strategy in the modern market economy in Rus-
sia, Ukraine and other countries did not get on
innovative orientation. V. Vishnevsky and
V. Dementiev affirmed that the reason for the
backlog in innovation development consists in
"a specific value scale on local entrepreneurs"
[3, p.46]. The current institutional environment
cultivates the values of selfishness and aggres-
siveness, corresponded to the strategy of the in-
dividual seizure of economic power in terms of
evolutionary survival, while the innovative en-
trepreneurship is based on cooperation and part-
nership relations as well as organizational iden-
tification [3, p.43-44].
The creation of favorable institutional en-
vironment for economic mechanism in Ukraine,
in the long run is impossible without formation
of the basic conditions for the development of
entrepreneurship, property rights enforcement,
fair competition support, struggle with bureau-
cracy, bribery and incompetence, improving
innovation infrastructure and international coop-
eration in the area of innovation. The complex
of economic policy measures aimed at the effec-
tive economic mechanism formation of the in-
dustry development should become the elements
of the new institutional framework [8, p.59].
The theoretical researches and applied
developments of foreign scholars are not always
associated with the specifics of the national
economy, according to many economists,
Ukraine should seek for new ways of building
the economic mechanism of the industry devel-
opment, do not blindly follow the European me-
chanisms [1, p.27]. But in the Ukrainian scien-
tific literature the problems of technical devel-
opment of enterprises have fragmentary charac-
ter and occur mainly in the framework of the
innovation research and effective usage of pro-
duction capacity. Nowadays, technical devel-
opment of the industrial sector of Ukraine does
not meet the requirements and is characterized
by unhealthy trends due to the low activity of
industrial enterprises in creation of advanced
manufacturing technologies. An important pre-
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ISSN 1562-109X 217
2013, № 1-2 (61-62)
requisite for technological development as im-
plementation of scientific knowledge is the ac-
celeration of capital renewals of industries.
The development of the general theory of
economic mechanism formation of industry de-
velopment based on the study of international
and domestic experience of the modernization
and restructuring of the economy, which will
contribute to the choice of the optimal model of
the economic mechanism formation and tech-
nical development of Ukrainian economy. It is
also advisable to allocate the extensive and in-
tensive innovations, as well as to identify the
institutional conditions, characteristics and fac-
tors in order to select the most effective eco-
nomic mechanisms in different countries. The
development of principles and laws of the gen-
eral theory of the economic mechanism allows
to create a methodological basis for effective
modernization and restructuring of the Ukrai-
nian economy.
In addition, Ukraine should take into ac-
count that the modernization of the institutional
infrastructure should have an evolutionary cha-
racter with the development of the economic
structure. The state should focus on the systemic
effects on the formation of missing or underde-
veloped elements of the existing infrastructure
(public-private partnership, the network of na-
tional and regional specialized information sys-
tems, public framework program for research,
etc.).
According to the fact, that Ukraine has
taken the path of European integration it would
be useful to apply the following measures pro-
posed by the European Commission [18].
Ukraine must provide the right framework
conditions to stimulate new investments, speed
up the adoption of new technologies and boost
resource efficiency. These include technical
regulations and Internal Market rules, as well as
accompanying measures such as infrastructure
and R&D/innovation projects.
Urgent improvements in the functioning
of the Internal Market are needed.
Investment and innovation are not possi-
ble without adequate access to finance. Public
resources have already been mobilized to sustain
investment in innovation. Improving access to
capital markets is therefore another crucial chal-
lenge to increase our competitiveness.
Finally, accompanying measures to in-
crease investment in human capital and skills are
key to the success of industrial policy. Policies
aimed at job creation and tools to anticipate
skills needs are necessary to equip the labour
force for industrial transformations.
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Receivedon 15.05.2013.
|
| id | nasplib_isofts_kiev_ua-123456789-51333 |
| institution | Digital Library of Periodicals of National Academy of Sciences of Ukraine |
| issn | 1562-109Х |
| language | English |
| last_indexed | 2025-12-07T15:38:16Z |
| publishDate | 2013 |
| publisher | Інститут економіки промисловості НАН України |
| record_format | dspace |
| spelling | Shemiakina, N.V. Gorinenko, G.S. 2013-11-24T22:04:05Z 2013-11-24T22:04:05Z 2013 Institutional conditions of the economic mechanism formation of industry development / N.V. Shemiakina, G.S. Gorinenko // Економіка пром-сті. — 2013. — № 1-2 (61-62). — С. 209-218. — Бібліогр.: 22 назв. — англ. 1562-109Х https://nasplib.isofts.kiev.ua/handle/123456789/51333 330.341.2 Розглянуто інституційні умови формування економічного механізму розвитку промислового сектору економіки. Досліджено поняття економічного механізму, його структуру, елементи, а також найбільш важливі характеристики. Показано вплив інституційних умов на інноваційний розвиток економіки. Виділено наслідки недостатнього рівня технічного розвитку промисловості. Визначено основні перспективи створення ефективного економічного механізму розвитку промисловості. Ключові слова: економічний механізм, економічний розвиток, інституційні умови, інституційне середовище. Рассматриваются институциональные условия формирования экономического механизма развития промышленного сектора экономики. Исследуется понятие экономического механизма, его структура, элементы, а также наиболее важные характеристики. Показано влияние институциональных условий на инновационное развитие экономики. Выделяются последствия недостаточного уровня технического развития промышленности. Определяются основные перспективы создания эффективного экономического механизма развития промышленности. Ключевые слова: экономический механизм, экономическое развитие, институциональные условия, институциональная среда. Technical development of the industrial sector is one of the main conditions of creating a modern Ukrainian industrial complex, which can be a powerful engine of long-term economic growth of the state and respond to changes in the world market conditions. The technical development of Ukrainian industrial sector does not meet the current requirements and is characterized by unhealthy tendencies because of the low activity of industrial enterprises creating the advanced manufacturing technologies. The appearance of such a situation is caused by many factors, ranging from the lack of financial resources for innovation to the imperfection of the legislative base. It is necessary to identify factors which contribute to the process of technological development of the industry in order to provide innovative industrial development. The purpose of this article is to research the institutional conditions of economic mechanism functioning of the technical development of industry and innovative development of economy. The classic conditions and fundamental investigation of foreign and domestic scholars, statistical data and results of author's research of the problems of economic mechanism in industry has formed the basis of the article. The scientific abstraction, generalization of scientific experience of modern theoretical studies, comprehensive approach methods have been used. The paper reviewed the concept of the economic mechanism, its structure, elements, and also the most important characteristics. It also considered institutional conditions of its formation. The main problems of the domestic industry on the path to innovation were singled out. The theoretical positions of institutional conditions of the economic mechanism formation ground the methodological basis for the formation of economic mechanism of technical development that could enhance the investment process in industry. The research shows that in the modern condition of Ukrainian economy development, there is an exigency in formation of the implementation mechanisms of innovative type of development by the use of an effective set of institutions. Currently, the institutional organizations demonstrate ineffective work. The search of financing the development issues have not yet solved and require further research. To sum up, an important component of the economic stabilization situation in Ukraine needs to be radically changed in the view of existed principles of modern production, as well as the formation of an effective mechanism of development of industry. Keywords: economic mechanism, economic development, institutional conditions, institutional environment. en Інститут економіки промисловості НАН України Економіка промисловості Макроекономічні та регіональні проблеми розвитку промисловості Institutional conditions of the economic mechanism formation of industry development Інституціональні умови формування економічного механізму розвитку промисловості Институциональные условия формирования экономического механизма развития промышленности Article published earlier |
| spellingShingle | Institutional conditions of the economic mechanism formation of industry development Shemiakina, N.V. Gorinenko, G.S. Макроекономічні та регіональні проблеми розвитку промисловості |
| title | Institutional conditions of the economic mechanism formation of industry development |
| title_alt | Інституціональні умови формування економічного механізму розвитку промисловості Институциональные условия формирования экономического механизма развития промышленности |
| title_full | Institutional conditions of the economic mechanism formation of industry development |
| title_fullStr | Institutional conditions of the economic mechanism formation of industry development |
| title_full_unstemmed | Institutional conditions of the economic mechanism formation of industry development |
| title_short | Institutional conditions of the economic mechanism formation of industry development |
| title_sort | institutional conditions of the economic mechanism formation of industry development |
| topic | Макроекономічні та регіональні проблеми розвитку промисловості |
| topic_facet | Макроекономічні та регіональні проблеми розвитку промисловості |
| url | https://nasplib.isofts.kiev.ua/handle/123456789/51333 |
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