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Economic Sanctions of the West and Russian Anti-sanctions: Success or a Failure?

Economic Sanctions of the West and Russian Anti-sanctions: Success or a Failure?

Journal of Institutional Studies, , Vol. 8 (no. 4),

The main objective of the work is the analysis of the consequences for Russian economy from the imposition of sanctions by Western countries. The paper discusses issues related to the effectiveness of the sanctions on South Africa, Iraq, and Haiti; the work presents the consequences of imposition of sanctions for Russian economy as a whole, as well as highlight the impact of the introduction of anti-Russian and Russian sanctions on two sectors: banking and food industry. The first was chosen because it is an indicator of what is happening in the economy since a funding stream from the west has been blocked. As for the food industry - it is expected that the introduction of the embargo of the product will allow Russian companies to realize their potential and lead to the development of this sector. The imposition of sanctions, the fall of the ruble, as well as the decline in oil prices had a negative impact on Russian economy and the continuation of the current situation can greatly slow down its development in the future. According to our analysis we can draw the following conclusions: the banking sector came under several attacks at once (the prohibition of monetary financing from the west, the growth of past due accounts, the policy of the Central Bank). The food sector has potential for growth, but there is a lack of clear boundaries for the period of sanctions (which does not allow companies to invest in the development of food industry considerable sums), and declining purchasing power due to a significant increase in inflation for the past 2 years. The imposition of sanctions, the fall of the ruble, as well as the decline in oil prices had a negative impact on the Russian economy and the preservation of the current situation in the international arena can greatly slow down its development in the future.

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Culture, Behavioral Patterns and Inductive Reasoning

Culture, Behavioral Patterns and Inductive Reasoning

Journal of Institutional Studies, , Vol. 8 (no. 4),

Studies in culture are becoming more and more popular among economists. In this paper, culture is mainly considered in the framework of Original (Old) Institutional Economics. Basically, actors comprehend culture through behavioral patterns that are available to them. Social values correlate behaviors within and among various behavioral patterns in different cultural contexts. That is why culture is regarded as a bunch of social values, institutions and behavioral patterns associated with specific historical features of social evolution. The identification of behavioral patterns implies analyzing historical facts, actors’ discourses and narratives. That enables us to reflect on how well we understand manifold social values and specific cultural features. We may face difficulties comparing behavioral patterns embedded in different cultures. These difficulties lie in interpreting and understanding dominant institutions and values. Examining various available behavioral patterns does not enable us to develop a reliable deductive model that can be used for making predictions, because such a model fails to take into account the time and cultural contexts. While analyzing real economic processes, we have to take into consideration the fact that complex adaptive systems are constantly evolving. In the process of social and economic exchanges, actors choose relevant behavioral patterns simultaneously analyzing other individuals’ reaction. The regularity of social interactions entails that involved actors gain experience. In complex adaptive systems, actors use inductive reasoning to comprehend their experience in the context of culture and prescribed social values.

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The Comparative Analysis of Vertical Restraints Regulation

The Comparative Analysis of Vertical Restraints Regulation

Journal of Institutional Studies, , Vol. 8 (no. 4),

Comparison the way of vertical restraints regulation in the United States, the European Union and the Russian Federation is the subject to certain difficulties arising from their belonging to different types of legal system. The United States legal system belongs to the family of common law, while in the European Union and the Russian Federation operates a family of civil law.
 
Historically, the countries that were colonies of Great Britain (the US, Canada, India, Australia) steel continue the tradition of the Anglo-Saxon legal system. The civil law system dominates in Continental Europe and, consequently, in those countries that were formerly colonies of France, Denmark, Germany, Spain and Portugal. Separately to this list should include Russia and Japan.
 
Common and civil law systems differ significantly. The common law system is characterized by a decisive role of precedents. This fact explains that in the United States the judge acts as arbiter. In contrast, the European Union civil law concept implies the existence of detailed system of rules and principles, clearly defining the regulation process for every specific area of law enforcement. Thus, every legal system determines its own peculiarities practice of vertical restraints regulation.
 
Considering the differences of vertical restraints regulation the attention should paid not only the type of the country legal system, but also the interaction between the economic theory and the antitrust law, because the theoretical analysis played a crucial role in the regulation norms evolution.

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Possible Ways of Increasing the Attractiveness of Lotteries Associated with Implementation of Cooperative Specific Investment

Possible Ways of Increasing the Attractiveness of Lotteries Associated with Implementation of Cooperative Specific Investment

Journal of Institutional Studies, , Vol. 8 (no. 4),

The present paper continues the discussion of the theme raised in our preceding paper published in the second issue of JIS this year. The paper contained the analysis of vertical restraints (VR) set out in (Rey and Tirole, 1986) and (Hansen and Motta, 2015). We proposed an alternative approach, namely, the interpretation of VR as a tool for increasing the attractiveness of the lotteries associated with implementation of cooperative specific investments (in the above-mentioned articles the risks associated with market shocks were discussed).
 
The cooperative specific investments are more risky than the selfish specific investments. First of all, it concerns the possible termination of the contract after a specific investment will be carried out (at ex post stage). The VR voluntarily adopted by the firm play a significant role in strengthening the incentives for cooperative investments of the firm’s partners as they decrease the risk coupled with these investments.
 
Firstly, VR can reduce the riskiness of lotteries associated with investment in specific assets by the redistribution of control in favor of the investing parties.
 
Secondly, VR can be considered as an element of the firm’s signaling activity aimed to convince the investing partners in the firm’s readiness to continue cooperation at the ex post stage.
 
Thirdly, the VR, such as exclusive contracts, ensure receiving by the investing partners at least partial compensation (for termination of such contracts).
 
And only fourthly, VR limit the possible redistribution of quasi-rent between the firm and its partners.

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Institutional Organization of Economic Reproduction in X- and Y-Economies

Institutional Organization of Economic Reproduction in X- and Y-Economies

Journal of Institutional Studies, , Vol. 8 (no. 4),

The paper attempts to apply the principle of methodological institutionalism and the theory of institutional matrices, particularly the latter’s concept of the structure of X- and Y-economies, to the analysis of the processes of economic reproduction. In fact, we follow Marx and other scholars of classical political economy who in these processes identified the associated reproduction of social relations. In the reproduction model of Karl Marx he, on the one hand, identified movement of goods (products, works, services) in their real and monetary forms and, on the other hand, institutional and social arrangements that facilitate this movement in specific types of societies. The paper develops the idea that, over time, this insight about the dual nature of economic relations (supported later by Karl Polanyi and others) has been the neglected and lost sight of, until now. We also argue that Marx made his analysis of economic reproduction in respect of only one particular case – a capitalist economy, which we describe as the Y-type economy. With respect to the X-economies, a similar analysis of economic reproduction processes in accordance with Marx's model has not been carried out. This paper is the first one, in which we show that economic reproduction of goods in the X- and Y-economies is based on different structures of economic institutions. An external cause, influencing the difference between the prevailing economic institutions, is assumed to be differences in climatic conditions. The results of empirical statistical calculations are presented as proof of this assumption. It is also shown that indicators of economic reproduction differ in proportion between different institutional frameworks. As an example, results of the comparative analysis of capital accumulation in X- and Y-economies are presented, supporting the main conclusions of the paper.

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Precarity of Megapolis and Professional Identity in the Context of Tacit Knowledge

Precarity of Megapolis and Professional Identity in the Context of Tacit Knowledge

Journal of Institutional Studies, , Vol. 8 (no. 4),

Rapid urbanization and globalization change the old forms of social life. A modern city is presented as a space defined by routine behavioral rules. Institutional and technological changes cause increased instability and uncertainty for the megalopolis inhabitant, this is accompanied by changes in usual forms of employment in the direction of "flexibility" and therefore precarization. Precarity has become a significant feature of our society. This paper focuses on the problem of precariatization from an erosion of professional identity in conditions of frequent job changes and internalization of tacit knowledge.
 
Tacit knowledge serves as a transmission mechanism between professional identity and position of precarity on the labor market. On the one hand, the lack of professional identity is a barrier for tacit knowledge and incorporation into a professional network. In turn, a precarit has not tacit and specialized knowledge to become an unsuccessful position. Every time he must start all over again, becoming a novice. Continuous career change does not allow to use a explicit skills and become a professional in a certain field, and as a result create a professional identity. Person flashed as a tile set in a kaleidoscope of situational techniques. And he is deprived of personal integrity in the case of non-permanent employment

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Institutional Choice Factors of a Resource Strategy for Firms

Institutional Choice Factors of a Resource Strategy for Firms

Journal of Institutional Studies, , Vol. 8 (no. 4),

The offered research is devoted to the establishing relationships between specific factors of the institutional environment and the choice of a resource investment model for firms operating in the Russian economy.
 
The investment order can be explained by the mutual influence of two groups of factors: comparative features of a resource itself and institutional parameters of the market. To justify the choice of a strategy the author offers to use the control criterion over resources. This criterion is determined by a planning horizon and a bungle of property rights of an investor.
 
Clarifying the resources category from the position of the resource-based view and relational view let the author distinguish 2 models of attracting resources: the model, focused on the acquisition of assets, and the model, focused on the temporary mobilization of resources that are available in a network. The choice of the model is determined by the ratio of transactional and transformational costs when investors obtain property rights over resources.
 
In the course of the research the influence of two groups of institutional factors were studied: 1) dynamic: the turbulence of the institutional environment, the asynchrony of changes, differently directed short- and long-term economic goals; 2) structural: the use of the ‘rational openness’ model of the economy in Russia, the synthesis of market institutions of developed countries and original Russian coordination mechanisms, the specific mechanisms of economics deformalization, the use of the mechanism of setting strict norms but providing weak enforcement, the low effectiveness and specifics of the property rights institution, the poor institutional trust, the double role of the state as a market regulator and its participant.
 
The impact of specific and institutional factors led firms to the use of an intermediate model in Russia. It is a network (hybrid) form with strict barriers and institutional coordination mechanisms predominantly. This strategy is not effective. We identify the change's direction of Russia's institutional environment that regulates property rights.

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Franchising As Hybrid Organization: Russian Skill

Franchising As Hybrid Organization: Russian Skill

Journal of Institutional Studies, , Vol. 8 (no. 4),

Russia has favorable conditions for development of hybrid cooperation (franchising) on the different markets. On the one hand, as well as for the majority of countries with transition economies many Russian markets has been undersaturated. 
 
On the other hand, as for the developed countries, Russia has highly skilled human resources and the developed structure of consumption. In these conditions a model of coordination of the relations of franchising has been more and more popular. The benefit of this form can be explained from the side of institutional approach.
 
The matter is that in real practice to determine the borders of firm is not simple. Key decisions of firm sometimes can be performed not in one center that can complicate distribution of control and responsibility and the determination of its borders. On the other hand, the determination of key decisions in the market, distribution of its assets and responsibility within one firm can strongly increase agency expenses. Therefore the hybrid form of coordination of the relations (to which the franchising belongs) can lower these expenses, but in case of strict accomplishment of terms of the contract.
 
The hybrid forms of coordination includes the combination of characteristics of the market and hierarchy. Transactions are controlled via the price mechanism for coordination. For control and management of united actions, the maintenance of a certain symmetry in relations are necessary the hierarchical elements. The different conditions of franchise are the reasons of risks for both parties. And for decrease in risk of opportunism the special tools are developed for disciplining of the franchisee.
 
The described examples of the Russian franchises through comparison of contract terms showed how hybrid agreements solve the cooperation problems connected with specificity of resources, transactional expenses and the competition.

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On the Last - for the Future (On the Book by R. M. Nureev and Y. V. Latov «Economic History of Russia (Experience of Institutional Analysis)»)

On the Last - for the Future (On the Book by R. M. Nureev and Y. V. Latov «Economic History of Russia (Experience of Institutional Analysis)»)

Journal of Institutional Studies, , Vol. 8 (no. 4),

The work emphasizes an enormous role of studying economic history for professional education of economists and points out that the subject was underestimated in the late Soviet and post-Soviet periods. Among the analyzed theories of economic development the authors pay special attention to the preceding development theory. They look rightly at explanations of the institutional specifics of the economic development of Russia. Underestimation of remoteness from sea routes is a shortcoming. Evaluating the results of economic development in the pre-Soviet Russia the authors reached correct conclusions on the enormous lag from Western countries in terms of social-and-economic development; and the WWI as the “examiner” of Russian economy. Analyzing the Soviet economy, we support the authors’ thesis that rejecting the “New economic policy” was inevitable and the outcomes of modernization in the Stalin era were positive. However, we take a critical look at the author’s basis on the macroeconomic estimates given by CIA and present some alternative macroeconomic estimates. Agreeing with general institutional conclusions about the post-Soviet economy, we have to underline that characteristics of post-Soviet bourgeoisie are underestimated. The references by the authors to macroeconomic estimates by Rosstat are also criticized and some alternatives are given. A general shortcoming for all period is their poor world-system analysis. To explain the past and future of Russia, in addition to the factors outlined by the authors, we compare the IQ levels in Russia and other countries and focus on huge demographic losses of Russia in the XX cent. We consider the book as a considerable achievement in Russian economic science.

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