Framework conditions and institutional determinants of the corporate sector development of the national economy


The article dwells upon the study of framework conditions and institutional determinants of the corporate sector development of the national economy, which include: catch-up nature of the economy and accelerated institutionalization of the business environment; the lack of long historical evolution of market relations and the culture and forms of business communication; government protectionist policies as an active factor in the development of corporate forms of business; the influence of the external environment and the practice of the Western norms borrowing (import).

It is shown that the development of the corporate sector during the privatization process, which was characterized by asymmetry of information and market opportunities, aborted competitive environment has become, in fact, the bureaucratic redistribution of state property and its transformation into private. Under these circumstances, a merger of the political elite with the business elite took place, and the formation of private bureaucratic ownership, with the dominant feature of nomenclature component. The result of this process was the rapid concentration of share ownership and establishment of corporate governance insider model with the subsequent reorientation of corporate business by creating a more “investment closed” organizational forms and mechanisms of corporate control.

Under the conditions of underdevelopment of important market infrastructure institutions (stock market, registry and depository systems), which are designed to limit the negative effects of power and ownership monopolization in corporations, insider control becomes one of the most influential institutional barriers for the corporate entrepreneurship effectiveness. Feature of the insider control is its bureaucratic-nomenklative origin. Because of the the corporate sector institutional strains, the national economy functions as a shadow mechanism of capital redistribution and preserves insider control.

It is determined that significant institutional constraints for the effective development of the corporate sector are informal institutions, economic nihilism and majority absentism of minority shareholders; priderite as the willingness of smallholders to shift management control functions over to other persons; the lack of public confidence in the institutional reforms.

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