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The Knowledge Encapsulation Phenomenon and Its Role in The Construction of a Knowledge Trasnfer Cost Theory

The Knowledge Encapsulation Phenomenon and Its Role in The Construction of a Knowledge Trasnfer Cost Theory

Journal of Institutional Studies, , Vol. 14 (no. 2),

The paper offers a general foundation for the currently fragmented economic studies on knowledge. We argue that such a foundation can be found in the frequently ignored phenomenon of knowledge encapsulation, coined by Harold Demsetz. Knowledge encapsulation refers to a situation under which economic agents are incentivized to compress the costly full knowledge it into incomplete knowledge algorithms. To prove the potential of placing such a phenomenon at the core of a general theory of knowledge, we identify the full knowledge elements and analyze the cost minimizing effects that encapsulation has on them. We then study a wide spectrum of knowledge encapsulation mechanisms, from instructions and superstitions to institutions and outsourcing. We demonstrate that each of these mechanisms can substantially decrease the full knowledge costs without causing a corresponding increase in costs of using incomplete knowledge. These results confirm the universality and the broad scope of knowledge encapsulation phenomenon and allow us to tentatively recommend its application in the general economic theory of knowledge. We further note that the Demsetzian approach may re-orientate the focus of knowledge studies in economics from the process of knowledge creation to its transfer.

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Institutional Trust as a Factor in Attitudes Toward New Technologies

Institutional Trust as a Factor in Attitudes Toward New Technologies

Journal of Institutional Studies, , Vol. 14 (no. 2),

The success of the country's innovative development depends not only on the supply side (production of innovative products), but also on the demand side – the readiness of the population to adopt new technologies. In this article we test two hypotheses using data from representative surveys conducted in 2018 and 2020. The first hypothesis is about a positive relationship between institutional trust (trust in federal, regional and municipal authorities), belief in the security of personal data collected by the state and attitudes towards new technologies (in the field of healthcare and unmanned vehicles). The hypothesis is based on the assumption that the state is perceived as a guarantor of the quality of the institutional environment and the infrastructure used, which are important for ensuring the safety of the introduction and use of new technologies. The second hypothesis is about a negative relationship between institutional trust and attitudes towards medical technologies, which act as a substitute for the functions that a person performs as part of his job duties. It is based on the assumption that in the case of low institutional trust, the population makes an increased demand for technologies that can replace the activities of a person working in a state system that they do not trust. The results show that, regardless of the type of technologies considered, higher levels of institutional trust and confidence in the security of personal data collected by the state is positively related with attitudes toward new technologies. The results obtained are important for building institutional and informational measures aimed at increasing the acceptance of new technologies by the population. It can also be important to customize measures for specific socio-demographic groups of the population, taking into account the level of institutional trust in the group.

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The Assessment of Microeconomic Institutions: Transaction-Contract Approach and Its Application

The Assessment of Microeconomic Institutions: Transaction-Contract Approach and Its Application

Journal of Institutional Studies, , Vol. 14 (no. 2),

The article is devoted to reasoning, justification, and specification of transaction-contract approach to the assessment of institutions at the microeconomic level as well as the concept developed for its realization. The necessity of priority development approaches of direct economic assessment of institutions is determined and justified. Direct estimation consists of the analysis and measuring institutional components thereby overcomes the disadvantages of indirect approaches, which are very approximate in the results and may be effective for comparative estimates. Methods of direct institutional assessment allows to estimate transaction and transformation costs and benefits, which reflects the structure in relations of production and property rights, which opens the possibility of modeling economic behavior of participants in institutional agreements. Based on the necessity of developing methods of direct assessment of institutions, authors suggested to implement such an assessment by estimation of structural components at transformation of individual efforts of economic agents in collective actions based on the process of the transactions and transformations changes on the level of contract as institutional agreement. It is developed the original approach for assessment of institutions as implementation of transaction-contract approach, which contains specification of basic components of institutional agreements, identification of types of institutional norms, determination of interconnections of transaction and transformation costs in a process of production, analysis of the structure of contract relations in the context of transaction and transformation costs and benefits, development of methods of institutional estimation and its practical opportunities.

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Сoronavirus Pandemic and Expert Knowledge Crisis: Reload of Miracle, Mystery and Authority

Сoronavirus Pandemic and Expert Knowledge Crisis: Reload of Miracle, Mystery and Authority

Journal of Institutional Studies, , Vol. 14 (no. 2),

The article analyzes the reasons for the important effect of the COVID-19 pandemic, which has become the catalyst for long-overdue decline in the authority of expert knowledge. The author claims that widespread access to information and scientific data results in the collapse of universal and monopolistic expert-scientific hierarchies of knowledge of a large society, controlled by the state. Scientific experts, who acted as the historical heirs of priests and shamans, have lost their privileged access to sacred knowledge, made public by the media and the Internet. This resulted in severe damage to the key function of expertise – legitimization of the political order and power elites. Experts without the status of agents of the state have become indistinguishable from ordinary citizens. The example of discussions between Waxers and Anti-Waxers shows that both sides are able to put forward convincing scientific arguments that rhetorically do not allow the authorities to bring the discussion about the effectiveness of vaccinations down to a completely unobvious dispute between enlightened state experts and uneducated obscurantists. It is in the most developed Western states where one can see a strong civil dissident movement that distrusts or calls into question the disciplinary regimes of collective coexistence, legitimized by the paternalistic rhetoric of concern from political elites. Accordingly, the elites in the background situation of strengthening the practices of heterarchy, post-truth and postmodernism can no longer rely on the usual metanarratives of the Enlightenment, which allowed them to monopolize the discourse of science in the name of progress and unconditional good, building hierarchies of knowledge-power convenient for their priorities. Since science, knowledge and information have long became public domain, the line between elites, experts and citizens in the field of access to science has become almost indistinguishable. The actual political problem is that the situation of collision of different paradigms, opinions and data is exactly the normal state of science, which is now transferred to the field of public discussions following the final secularization of science. Thus, the institution of expert knowledge turns into an unnecessary link in a situation of equal access of all interested parties to scientific data; to an institution that hardly would efficiently perform the functions of scientific legitimation of socially significant decisions in the foreseeable future.

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They Warned (Soviet Scientists Who Foresaw The Collapse of The Ussr)

They Warned (Soviet Scientists Who Foresaw The Collapse of The Ussr)

Journal of Institutional Studies, , Vol. 14 (no. 2),

The works of Soviet scientists who warned in the 60–70 years about the possibility of the collapse of the USSR are analyzed. In the book "Will the USSR live to 1984?", published in 1969, historian Andrei Amalrik identified the causes of the possible collapse of the USSR (the elimination of the most active and capable from the life and composition of the ruling class, the decrepitude of the regime, the degradation of morality and deideologization) and even named its approximate dates. In a note to the leaders of the government party dated March 19, 1970, physicists Sakharova and Turchin and historian Medvedev showed the slowdown in the sixties in the USSR of economic development and technological progress, the standard of living of the population, the growing lag in these areas from developed capitalist countries. They linked these phenomena with the lack of freedom of thought and creativity, political freedoms. The economist and historian Akhiezer analyzed the history of Russia and, based on the revealed cyclical development of Russia and the huge factual material about political and economic development, predicted perestroika and its collapse, accompanied by the collapse of the USSR. Khanin produced alternative estimates of the dynamics of the economic development of the USSR and its factors by a number of methods. A steady decline in the pace of economic development and resource efficiency has been revealed since the seventh five-year plan. On this basis, a significant reduction in the national income of the USSR was predicted from the mid-80s. B.N. Mikhalevsky, head of the Forecasting Department of the Central Research Institute of the USSR Academy of Sciences, in 1967 made a forecast of the development of the Soviet economy for the next 10–15 years. Based on an in-depth analysis of the structure of the Soviet economy and real inflation figures, it predicted a decline in industrial production and the standard of living of the population while maintaining the previous economic policy. It is shown that the authors of forecasts of the possible collapse of the USSR were either persecuted or their opinion was ignored. It is shown that ignoring warnings about the possible collapse of the USSR is explained by the authoritarian nature of the Soviet social system, the low intellectual level of the Soviet leadership of the 60s and 70s, and fears of losing power. The article analyzes the appearance of the authors of warnings about the collapse of the USSR.

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Theoretical and Methodological Issues of Analyzing Digitization in Economic Management: The Case of The Late USSR

Theoretical and Methodological Issues of Analyzing Digitization in Economic Management: The Case of The Late Ussr

Journal of Institutional Studies, , Vol. 14 (no. 2),

The article aims to test the new institutional theories of public choice and political markets for our analysis of the empirical evidence collected by the research literature on the realized and unrealized projects of the digital systems development for support of decision-making by the state management of the economy in the late USSR (mid-1950s – late 1980s.). We argue that their methodological instruments, developed on the basis of studies of economic and political phenomena of predominantly Western societies with market economy, can explain similar phenomena in industrial society of another type. Therefore the major contribution of the article is our interpretation of the economic history phenomena through the lens of the new institutional theories. We show how various forms of institutional competition led the way to development of departmental digital systems, while actually blocked the creation of nationwide ones. The following important factors of institutional interactions in the political market of the late USSR, which influenced the results of implementation of the digitization projects, are indicated. First, extra-expensive projects for creating national systems were largely a product of the technocratic thinking of the scientific and political elite of the late USSR, but institutional coalitions in favor of their development turned out to be unviable lacking explicit support at the highest levels of the state apparatus. Second, persistent disregard by the Soviet bureaucracy of the need for large-scale social changes, which inevitably accompany the change in technological structures. Third, technocracy of thinking by academic economists, who subjectively adhered to the principles of scientific rationality and maximization of public welfare, also hindered effectiveness of their interaction in the political market of the late USSR. We conclude that the new institutional theories of public choice and political market allow to adequately describe and analyze the practices of interaction between the political and economic spheres and the mechanisms of functioning of the centrally administered economy of the USSR, as a prerequisite for assessing possible influence of digital intelligent systems on management processes in the RF's economy.

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The Role of Circumstances in The Differentiation of Russian Wages

The Role of Circumstances in The Differentiation of Russian Wages

Journal of Institutional Studies, , Vol. 14 (no. 2),

The purpose of this study is to determine the influence of circumstances (opportunities) and efforts on the wages differentiation of Russian citizens. Research objectives: identification of factors of circumstances, quantitative assessment of their contribution to the wages of Russians and their individual income groups. The research is based on the HSE RLMS data for 2004 and 2018 and LITS-III data for 2016. We applied parametric methods of regression analysis, the Morduch-Sicular method of inequality decomposition, as well as the construction of quantile regressions. As a result of the study, we obtained assessments of the contribution of circumstances to wages inequality of the Russian population. We found that income inequality in the Russian labour market was primarily determined by the regional factor, to a lesser extent by the employment sector and the gender of the respondents. The least contribution to inequality was made by the factor of the employment formality. The influence of parents’ education on future earnings of offspring was also negligible – according to the model based on the LITS-III sample. The reduction in the contribution of circumstances to the general wage inequality in Russia in 2004–2018 was mainly due to a decrease in interregional differences in wages, where an active government policy of income redistribution played a significant role. The influence of circumstances on wage inequality was uneven in different quantiles of the distribution scale. In particular, employment in the metropolitan area or in the oil and gas sector has been most beneficial to high-income groups of workers. At the same time, parents’ education had the least and even negative effect on the earnings of the highest-paid people, which can be explained by the peculiarities of the formation of the modern Russian elite. The results of the study are applicable for conducting an effective social policy of the state.

Views: 293

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Capital Expenditures of The Russian Regions’ Budgets: Regulatory Problems

Capital Expenditures of The Russian Regions’ Budgets: Regulatory Problems

Journal of Institutional Studies, , Vol. 14 (no. 2),

Institutional approach to the discussion of public finance implies first of all the analysis of norms, regulating fiscal relations, their applications and their results. This paper analyses the problems of regulation of regional capital expenditures in Russia. Regional budgets’ capital expenditures are meant to ensure the renewal of the material basis of the economy and are one of the important factors of economic growth. An increase in the share of the investments in fixed assets is a condition for an overall increase in the efficiency of budget expenditures in terms of their multiplicative impact on the economy of the relevant territory. Meanwhile, in 2015–2019, the share of capital expenditures in the country’s regional budgets has decreased from more than 14% in 2015 to about 12% in 2018–2019; their share in the country's GDP has also decreased. The alarming downward trend in the share of capital expenditures in the total public subnational expenditures deserves close attention. The spatial distribution of regional budget investments is also uneven, dominated by a relatively small number of regions. Trying to explain the low investment activity of regional budgets, we have to state that the reason is not so much the lack of resources or low revenues. In the vast majority of cases, Russian regions neglect the possibilities of attracting debt financing, which is justified precisely for the purpose of financing budget investments. The revisal of regulatory norms, first of all the separation of the current and capital budgets, and therefore the differentiation of the current deficit and capital deficit along with the possibility of financing capital expenditures in whole or in part through borrowing, would allow to plan capital investments and borrowings in a coherent way, allowing to make maximum use of available financing opportunities to expand budgetary investments.

Views: 231

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