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Limits and prospects Limits and prospects of institutional liberalizationof institutional liberalization for S&T for S&T
research policiesresearch policies: : Russia caseRussia case
Svetlana KirdinaRussian Academy of
Sciences, Institute of Economics
Moscow Russia
India, Kanpur, February 4-6, 2009
Main parts of presentationMain parts of presentation
MethodologyMethodology
ResultsResults
ExplanationsExplanations
India, Kanpur, February 4-6, 2009
Institutional matrices theoryInstitutional matrices theory
Economy, politics and ideology in the society are Economy, politics and ideology in the society are strongly interrelated strongly interrelated
Economic, political and ideological institutions Economic, political and ideological institutions comprise comprise
the “institutional matrix” of the societythe “institutional matrix” of the society Two types of institutional matrices can be singled Two types of institutional matrices can be singled
out: an X-matrix and an Y-matrixout: an X-matrix and an Y-matrix (in details see Kirdina S. in (in details see Kirdina S. in Proceedings of Hawaii Proceedings of Hawaii
International Conference on Social Sciences, 2003 International Conference on Social Sciences, 2003 or or www.kirdina.ru) www.kirdina.ru)
India, Kanpur, February 4-6, 2009
X- and Y-matricesX- and Y-matrices
XY
redistribution economy
com
munit
ari
an
ideolo
gy
unitary-
centralize
d
political o
rder
feder
ativ
e-
subsi
dia
ry p
olit
ical
ord
er
ideolo
gy o
f
subsid
iarity
market economy
India, Kanpur, February 4-6, 2009
Combinations of X- and Y-matricesCombinations of X- and Y-matrices
Russia, China, the USA andRussia, China, the USA and most Asian and European most Asian and European Latin America countries countries Latin America countries countries
Y
X X
Y
India, Kanpur, February 4-6, 2009
X- and Y-institutions X- and Y-institutions in economyin economy and their functions and their functions Functions of institutions
X-institutions Y-institutions
Fixing of goods (property rights system)
Supreme conditional ownership
Private ownership
Transfer of goods Redistribution (accumulation-concordance-distribution)
Exchange (buying-selling)
Interactions between economic agents
Cooperation Competition
Labor system Employed labor Contract labor
Feed-back signals (effectiveness indexes)
Cost reduction (Х-efficiency)
Gaining profit (Y- efficiency)
India, Kanpur, February 4-6, 2009
Causes of economic reformsCauses of economic reforms By the middle 1980s on the eve of By the middle 1980s on the eve of
perestroikaperestroika (in terminology of the Soviet (in terminology of the Soviet Union) or Union) or transition economytransition economy (in terms of (in terms of world social sciences) Russia had the world social sciences) Russia had the unbalanced institutional economic structure. unbalanced institutional economic structure.
Only redistribution X-institutions Only redistribution X-institutions predominated. Necessary market Y-predominated. Necessary market Y-institutions were undeveloped and performed institutions were undeveloped and performed as latent, shadow or illegal forms. as latent, shadow or illegal forms.
Such disbalance resulted in the non-Such disbalance resulted in the non-efficiency of the social system and the deep efficiency of the social system and the deep decrease of its economic and social decrease of its economic and social parameters. parameters.
India, Kanpur, February 4-6, 2009
The first phase The first phase of institutional reforms-1of institutional reforms-1
In the middle of 1980s new political leadership In the middle of 1980s new political leadership began to develop the market Y-institutions on began to develop the market Y-institutions on the legislative basis:the legislative basis:
the privatization of the majority of the state the privatization of the majority of the state enterprises put into practice to create enterprises put into practice to create the the private propertyprivate property;;
the decentralization in the economic the decentralization in the economic governance system was realized to develop governance system was realized to develop the exchangethe exchange transactions instead of transactions instead of redistribution. The state planning system redistribution. The state planning system (“Gosplan”) was eliminated. The price (“Gosplan”) was eliminated. The price management was stopped;management was stopped;
India, Kanpur, February 4-6, 2009
The first phase The first phase of institutional reforms-2of institutional reforms-2
new laws about the creation and liquidation of new laws about the creation and liquidation of business in all branches of economy were passed business in all branches of economy were passed to promote to promote the competition;the competition;
the contract labor institutionthe contract labor institution substitutes for the substitutes for the employed labor because the state system of employed labor because the state system of manpower training and distribution was liquidated. manpower training and distribution was liquidated. The relationships between employees and The relationships between employees and employers became the subject of the contract. The employers became the subject of the contract. The state salary management was canceled;state salary management was canceled;
gaining profit (Y-efficiencygaining profit (Y-efficiency)) becomes the main becomes the main criteria for new enterprises and their owners acting criteria for new enterprises and their owners acting in open and competitive market environment. in open and competitive market environment.
India, Kanpur, February 4-6, 2009
The result of first phase of reformsThe result of first phase of reforms
The attempt to replace the redistribution The attempt to replace the redistribution institutions by the market ones was not institutions by the market ones was not very successful very successful
It was neither growth of the total efficiency It was neither growth of the total efficiency in economy nor expected efficiency in economy nor expected efficiency increase of the new companies increase of the new companies
In 1998 after In 1998 after the defaultthe default the state the state economic policy was turned to the search economic policy was turned to the search for the optimal and balanced combination for the optimal and balanced combination of related market and redistribution of related market and redistribution economic institutions.economic institutions.
India, Kanpur, February 4-6, 2009
The second phase The second phase of institutional reforms - 1 of institutional reforms - 1
Since late 1990s – early 2000s new political leaders Since late 1990s – early 2000s new political leaders paid more attention to the paid more attention to the modernization of modernization of redistribution X-institutionsredistribution X-institutions rather than to the rather than to the implementation of market Y-institution as it was implementation of market Y-institution as it was before: before:
the supreme conditional property the supreme conditional property - the creation - the creation of the large-scale joint-stock companies and holding of the large-scale joint-stock companies and holding structures under the management (or with control structures under the management (or with control share in capital) of federal or regional governments; share in capital) of federal or regional governments;
the redistributionthe redistribution - - new new National ProjectsNational Projects and and State CorporationsState Corporations under the federal governance and under the federal governance and supported by the federal budget. The centralized supported by the federal budget. The centralized structure of them on the new level puts the structure of them on the new level puts the redistribution scheme into life; redistribution scheme into life;
India, Kanpur, February 4-6, 2009
The second phase The second phase of institutional reforms - 2 of institutional reforms - 2
the cooperationthe cooperation - state bodies involve different - state bodies involve different business structures into the decision-making process business structures into the decision-making process of the development of the country (investment of the development of the country (investment participation including) and encourage the participation including) and encourage the establishment of different forms of cooperation with establishment of different forms of cooperation with business structures; business structures;
the employed labor institutionthe employed labor institution - the organization of - the organization of the industry specialists education system on the basis the industry specialists education system on the basis of private-and-state partnership with the state in of private-and-state partnership with the state in leading position and the growth of non-monetary social leading position and the growth of non-monetary social factors of labor reward;factors of labor reward;
cost reduction (X-efficiency)cost reduction (X-efficiency) - price and tariffs - price and tariffs regulation both on federal and regional levels. The main regulation both on federal and regional levels. The main objective of the corresponding commissions is not the objective of the corresponding commissions is not the revenue of the companies but the decrease of general revenue of the companies but the decrease of general resources use as well as national product expenditure.resources use as well as national product expenditure.
India, Kanpur, February 4-6, 2009
Picture of the institutional dynamics Picture of the institutional dynamics
0
t
1
1985
1998 (default) X
Redistribution institutions
YMarket
institutions
2007
India, Kanpur, February 4-6, 2009
Actual result of Russian reformsActual result of Russian reforms The new balance of redistribution and The new balance of redistribution and
market institutions is being created in market institutions is being created in Russia in favor of the former. Russia in favor of the former.
It goes along with the recent growth It goes along with the recent growth of economic and social development of economic and social development indexes in Russia. In 2006 Russia indexes in Russia. In 2006 Russia occupied the 10-th(compare to the 18-occupied the 10-th(compare to the 18-th in 2005) place on the GDP index in th in 2005) place on the GDP index in the world.the world.
India, Kanpur, February 4-6, 2009
Why the redistribution model Why the redistribution model dominates?dominates?
The prevailing of redistribution The prevailing of redistribution institutions in Russian economy is not institutions in Russian economy is not the result of the malicious intent of the result of the malicious intent of some political forces or the some political forces or the consequence of traditional and consequence of traditional and undeveloped Russian society. undeveloped Russian society.
Marshall’ marginal approach explains Marshall’ marginal approach explains the objective and pragmatic reasons for the objective and pragmatic reasons for the redistribution model dominating. the redistribution model dominating.
India, Kanpur, February 4-6, 2009
Equilibrium of supply and demand Equilibrium of supply and demand for branches for branches
with increasing marginal returnswith increasing marginal returns
S
OQ
P
D
E
Qe
Pe
India, Kanpur, February 4-6, 2009
Equilibrium of supply and demand Equilibrium of supply and demand for branches for branches
with diminishing marginal returnswith diminishing marginal returns
S
OQ
P
DE
Qe
Pe
P1
Q1
C
G
India, Kanpur, February 4-6, 2009
The conclusionThe conclusion
In Russia the share of branches with In Russia the share of branches with diminishing marginal returns such as diminishing marginal returns such as transportation, energetic complex, housing transportation, energetic complex, housing and social spheres is more than a half and social spheres is more than a half (57 per cent of fixed assets in 2006). (57 per cent of fixed assets in 2006).
According to the marginal costs theory here According to the marginal costs theory here the redistribution institutional structure is the redistribution institutional structure is more preferable than the market one. more preferable than the market one.
New balance of redistribution and market New balance of redistribution and market institutions in modern Russian economy institutions in modern Russian economy confirms it.confirms it.
India, Kanpur, February 4-6, 2009
Thank you for your attention.Thank you for your attention.
www.kirdina.ruwww.kirdina.ru