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MAIN MECHANISMS OF THE GOVERNMENT INTERVENTION IN THE ECONOMICAL SYSTEM

Автор Доклада: 
Batchenko L.V., Naumenko S. N., Dуatlova Y.V
Награда: 
MAIN MECHANISMS OF THE GOVERNMENT INTERVENTION IN THE ECONOMICAL SYSTEM

УДК 35.075.5

MAIN MECHANISMS OF THE GOVERNMENT INTERVENTION
IN THE ECONOMICAL SYSTEM


Batchenko L.V., Professor, Doctor of Economics,
Naumenko S. N.,  Doctor of Philosophy (Public Administration),
Dуatlova Y.V., PhD student
Donetsk State University of Management, Donetsk, Ukraine

Are systematized a scientific approach to defining the role and scope of government intervention in the economy regulation, the functions of government are separated depending on the level of economic development, the difference between a mechanism of state control and state regulation of economy is described and mechanism improvement is proposed.
Key words: government intervention in the economic, state regulation, state control, mechanism, methods, system, functions.

The main purpose of state influence on the economy, according to most researchers, is to achieve the most effective level of economic, social, scientific and cultural development of it [1,
с. 34-52; 2-4].
Based on the strategic goals and objectives of the national economy, the government regulates business activity (state management), trying to protect workers, consumers and the environment to prevent anti-competitive practice and discrimination [5, с. 135-260].
Such regulation is based on a specific mechanism at the entrance of which are administrative resources, and legitimate power impact of the authorized bodies of state administration, which, in turn, contain elements of both: motivation and compulsion to act. At a result we get government influence, which is expressed in quantitative statistical indicators of economic and social development of the state and qualitative indicators of social satisfaction. Mechanism functioning is carried out by the impact of central government and local authorities, using the above-mentioned powers, defined by regulations of the state system of administrative, legal and economic measures on the subjects of governance and socio-economic processes in the country in order to obtain the planned results of economy and society.
In implementing the this mechanism of influence, the state has a number of functions assigned to it, qualitative and quantitative composition is determined by the degree of development of the country's economy. World historical experience shows: that the more a country is lagging behind in its economic development, the more economic functions are forced to take over government agencies.
For countries with economies in transition characterized by the imposition on the state functions of market institutions, development of business rules and monitor their implementation. For further investigation, all functions should be classified into three groups.
The first group includes functions that are normally borne on the government in a developed market economy. They are: protection of national borders and territorial integrity [6]; management of the public sector; providing legal and institutional foundations of public administration entities [7, с. 7] (The forms and property rights, relations of economic entities); elimination or compensation of the negative effects of market failures related to environmental protection, the organization of basic scientific research, public education and health services and health care; maintaining the normal functioning of the national economy and the national market (smoothing cyclical macroeconomic fluctuations, ensuring conditions for sustainable economic growth, structural adjustment; identifying priority areas and sectors of development.
During a certain period of time the state is forced to assume certain functions that are also in the sphere of state influence, but delegated to local government and nongovernmental organizations of many economically developed countries [8, с. 14].
The second group includes functions related to the market relations formation, which over time could be disbanded or transferred to entities of state control of the lowest levels: development of economic legislation according to market economy conditions; reformation of national institutions (the tax system, telecommunications, information, education, social); attracting private and commercial structures to implement government programs and contracts; de-monopolization and promoting competition; define the scope and privatization of state property, encourage the private sector; participation in the management of joint stock companies with control and other shares of the state; mobilization of national resources; the formation of economic infrastructure; ensuring the rational activity of the transport system; organization of a single economic space and ensuring the stable functioning of the national market; defending the economic interests in the global economy; personnel training for market and nonmarket institutions.
The third group of functions should include those functions that under no circumstances the state does not delegate to other entities of state government. These functions are: protecting the integrity of national territory and borders, ensure domestic public order in the state; ensuring macroeconomic proportions in the economy; providing legal and institutional framework for the activities of subjects of public administration; monetary organization; control and restrictive functions; analytical and informational functions (assessment, analysis and forecasting needs of the population and industries); definition of strategic priorities of the country; direct management of the state property, not subject to privatization; creation and implementation of science and technology policy; training of civil servants.
Thus, the functions assigned by us to the third group, are pure functions of government. These functions can not be delegated to the level of local governments and other entities of public administration in a number of reasons:

  • 1. The protection of national borders, territorial integrity of the internal order and security can not be guaranteed and carried out by any of the subjects of government, as none of them did not have sufficient legitimate authority, in addition, to ensure the implementation of these functions associated with certain financial costs and the complete lack of profit.
  • 2. Develop and enforce legal and institutional framework for the activities of subjects of public administration and control and interdiction functions are global (universal) in nature and, in the case of delegating other business entities, could lead to an imbalance and disruption of the entire economic system.
  • 3. Ensuring macroeconomic proportions in the economy of one of the functions caused by deficiencies of functioning market system, to regulate and eliminate the consequences of which can only state due to the scale of their manifestation and economic implications.
  • 4. Monetary organization in the state is a function of infrastructure forming that can not be delegated to others, because sphere of money circulation is an integral part of all government processes and ensure their functioning and vitality.
  • 5. Analytical and informational functions, formation and implementation of science and technology policy, identifying strategic priorities for development are universal and should be centralized because of the scope of implementation.
  • 6. Each national economy is inherent availability of strategically important facilities and areas owned by the state and not subject to privatization, which are controlled solely at the state level. The majority of them are the objects and scope of supporting the operation of the state itself (transportation, communications) which are unprofitable, but strategically important (space- and aircraft industry, a major shipbuilding and engineering, social, etc.), providing a structural balanced development (education , health care, R & D, etc.).
  • 7. Training of public servants should be carried out exclusively by the state, because theory and practice of public administration suggests that the effective functioning of the state depends on how professionally they manage public servant.

State regulation of economy is a formation of social development priorities and interests of public policies based on the use of economic instruments and legal mechanism for economic activities with a view to achieving balanced development of economic systems (including industry, region) in the inability of automation solutions emerging issues based on market-based system management [9, с. 353].
Mechanism state regulation of economy – the purposeful activity of the state on behalf of the legislative, executive and supervisory bodies, which, through a system of different methods and tools help to achieve this goal and addressing the critical economic and social problems, the corresponding stage of economic development, regulating economic relations in society.
For example, Adam Smith and his followers Ricardo, J. Mill, A. Marshall considered the main activity of the primary functions of the state security (protection of national borders, protecting property rights, etc.) with the full non-interference in economic processes of market self-regulation.
According to Shevchenko Y.N. and Jakubowski S. government regulation must be subordinated to goal of limiting the methods of state regulation of economy, methods of market regulation [9, с. 353].
Of particular interest is the work Povazhniy S.F., the main idea is to "... strengthen the state by enhancing its quality. Fundamental in this case is the division of economic management between state and market, and the basic principles of effective public development is "... a market governance, social reforms, motivated, active current state able to regulate market conditions and to control what the market is unable to govern" [4, c. 9].
Abalkin L. says displacement of the regulatory role of the state toward greater use of economic leverage and weakening of administrative methods in order to most effectively manage the state's economy [10, c. 8-9]. Belaya S.O., Zhalilo J.A., Kushlin V.I., Shablistaya L.M. in research note the rapid growth of activity that began at the end of 19 century, which means the use expand of state regulation economic levers [11-13; 14, с. 138-142].
Grishan Y. insists on the view that "... the basic principles of state regulation of economy are: minimal government intervention in economic processes, ... the effect of relevant authorities on the development of socio-economic processes by means of set by the state economic controls and regulations" [2, c. 16].
Thus, it is possible to identify the main features of the mechanism of state management of the economy based on state regulation. Its main features are: the prevalence of share of market self-manage the economy in the state, the limited use of methods of state regulation, with a predominance of economic instruments, primarily the regulatory impact of the state is to create an appropriate climate favored the development of priority sectors of the economy.
However please note that in its pure form, these mechanisms can not be isolated. Division of scientific views of the authors was conducted on the basis of the percentage dominance of state influence on economic processes in society. The mechanism of governance based on the state as owner, the mechanism of state regulation, based on the state as regulator and participants in economic relations. The concept of the policy and mechanism of state regulation are both related and different concepts and processes that are more clearly represented in the form at the рic.

Comparative characteristics of forms mechanism of economy state management

Picture - Comparative characteristics of forms mechanism of economy state management

The mechanism of state control is a system of state influence on the economy on behalf of Commissioners of the legislative, executive and judicial power through a series of measures on the base of direct impact of administrative, economic and legal methods in order to stabilize and develop the economy, adapting to new management conditions.
Therefore, the analysis of scientific works of the aforementioned authors found that the mechanism of governance is more rigid form of intervention in the economy (including the functions of planning, organizing, monitoring and other functions that are inherent in general management) than the mechanism of state regulation, which is more democratic and implemented in majority on recommendation basis. Existing problems hamper the state mechanism development and do not achieve the desired effect. In this case it comes a necessity to improve the mechanism of influence on the development of the country's economy to improve its efficiency, that organically unites the mechanism of state administration and the mechanism of state regulation, which was built on the principles of quality management of economic processes adapted to the political territorial structure of Ukraine.

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