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MECHANISMS OF STATE REGULATION IN THE EVENT OF CRISIS IN MARKET ECONOMIC SYSTEM
Bondarenko Andrii Ihorevych, PhD in Public Administration, candidate for a doctor's degree Ukraine, National University of Civil Protection of Ukraine, Training Research and Production Center
ABSTRACT_
Problem setting. The formation of the state strategies in the system of national economy is determined by the realities of the global environment and its cyclic development, increasing competition in the international markets, the specifics of the national investment and business climate and the phenomenon of the global financial crises with the possibility of the "second waves". As a rule, the mechanisms of state regulation of overcoming the consequences of the financial and economic crisis, which are being implemented in the world, are based on reorganization of the financial system and stimulation of the domestic demand. However, the unsystematic direction of the cash flows in the financial sector even by the countries with the developed market economies does not restore the expected crediting to the real sector of the economy. For Ukraine, whose economy is marked by the excessive openness with a low level of competitiveness, underdeveloped domestic market, lack of domestic savings, which could be used for investment, the situation is even more complicated.
Recent research and publications analysis. Theoretical and methodological bases of the mechanisms of state regulation of crisis management, dynamics, modern forms, features of the global competitive environment, formation of the new activities and creation of the competitive advantages have been investigated by many scientists
The paper main body. The article analyzes the mechanisms of state regulation in the event of crisis processes based on the use of qualitative and quantitative parameters of economic sustainability which allows to assess the likelihood of the crisis emergence and sustainability of the real sector of economy before the crisis, to develop administrative and managerial measures to ensure the state security of the economic sector of Ukraine. Conclusions of the research. In the context of the approach studied, the changes of the structural elements of the current model are proposed:
- rejection of the dogma of efficient markets with their built-in ability to self-rsgulation which is based on the risk assessment by the private institutions;
- transformation of the control system of national regulators over the banking systems;
- consistent and sustainable increase of government spending to stimulate the final demand by increasing the tax burden on the financial sector;
- understanding that the recovery of the national economy as a subject of international economic activities is a long process.
The global economic crisis, which the world is going through now, is restructuring the global economy, the relationships between financial capital, commodity production and service sector, changes priorities in the choice of the means of production. _
Problem setting. The formation of the state strategies in the system of national economy is determined by the realities of the global environment and its cyclic development, increasing competition in the international markets, the specifics of the national investment and business climate and the phenomenon of the global financial crises with the possibility of the "second waves".
As a rule, the mechanisms of state regulation of overcoming the consequences of the financial and economic crisis, which are being implemented in the world, are based on reorganization of the financial system and stimulation of the domestic demand. However, the unsystematic direction of the cash flows in the financial sector even by the countries with the developed market economies does not restore the expected crediting to the real sector of the economy. For Ukraine, whose economy is marked by the excessive openness with a low level of competitiveness, underdeveloped domestic market, lack of domestic savings, which could be used for investment, the situation is even more complicated.
Recent research and publications analysis Theoretical and methodological bases of the mechanisms of state regulation of crisis management, dynamics, modern forms, features of the global
ARTICLE INFO
Received 5 February 2017 Accepted 12 February 2017 Published 10 March 2017
KEYWORDS
mechanisms of state regulation, of governmental and managerial measures, public security of the economic sector of Ukraine
© 2017 The Author.
competitive environment, formation of the new activities and creation of the competitive advantages have been investigated by such scientists as [1; 2;3; 4; 5].
Paper objective is to analyze the mechanisms of state regulation in the event of crisis in the market economic system, to ensure security of the state economic sector of Ukraine.
Paper main body The transition from the restorative growth to the stage of sustainable development, which was halted by the global financial crisis of 2008, actualizes the problem of choosing the optimal anti-crisis strategies for the development of the real sector of economy which at the present stage of functioning of the national economy not only differs by the complexity of economic relations but also by the large number of risks and threats, implementation of which significantly complicates the already existing crisis situation.
The market reforms, further integration of Ukraine into the global world economy and, finally, the effects of a deep financial crisis in the country resulted in a number of serious economic problems in the real sector of economy. There are large gaps of the socio-economic, financial, organizational and technological nature, as well as the asymmetry in the property relations, distribution, and in the management system.
We distinguish two directions of explanation of the mechanism of development of the crisis phenomena in the economy.
1. The direction that defines the crisis in the "broad" sense, as a result of the functioning of complex and open socio-economic systems which are experiencing an ongoing system transformation at each stage of its life cycle.
2. The direction that considers the crisis in the "narrow" sense, as a result of changes in the financial and economic component of development. Each of the two directions considers the different stages of the crisis development, crisis overcoming and the mechanisms of the anti-crisis measures.
According to this, it is necessary to explore the phenomenon of crisis as a systemic phenomenon. The crisis "in the broad sense" occurs as a result of continuous changes of the turbulence and stability phases of the economic systems functioning. As a result of changes in the external environment and interaction with the growing process of inconsistencies: first, with the parameters, then with the structural elements of the system, with the processes and problem-solving tools, and ends with the development of the crisis of the fundamental principles of functioning of the economic system, after which the question of the appropriateness of its existence arises [5].
The given above necessitates the formalization of the certain types of crises of a separate economic system in terms of its turbulence and sustainable development:
- the parametric crisis - parameters, conditions, preconditions for the development of the economic system do not meet the requirements of the external environment;
- the structural crisis - the discrepancy between the structural elements of the economic system and the algorithm, method and technology of solving the tasks;
- the process crisis - the discrepancy between the processes and ways of organizing the interactions of the system elements and the requirements of both internal and external environment of the system (a large number of management levels, low efficiency and inflexibility in decision-making, etc.);
- the crisis of the principles of system functioning - nonoptimality and inefficiency of the principles of the system as a "built-in" element of the subsystem of the higher order of actions;
- a new stage of the system development -transition of the system to a new qualitative stage of development or destruction (there is no need for its existence) [2].
According to the second approach to the crisis in the "narrow sense", the crisis phenomenon is determined from the point of view of financial instability.
In this respect we believe that the origin of crisis (in the "narrow sense") is formed by the interrelated sequence of economic phenomena which leads to the insolvency. In this case the insolvency can be presented as a variable characteristic of the business entity which takes the meanings: random, episodic, recurrent, and chronic.
Combining the parameters of the crisis as a systemic phenomenon (in the broad sense of the word) and the crisis as a financial component, it is possible to get the criteria of the decomposition of the crisis state of the business entities as complex and open economic systems and parameters of the anti-crisis policy, mechanisms and results of operations.
The interrelations between understanding of the crisis in the "broad" and "narrow" sense of the word is determined by the methodological method of the dialectical interaction of the "whole-part" which is manifested in the fact that the crisis as a systemic phenomenon of turbulence and stability of economic systems functioning includes the financial crisis component of the development of economic agents as constituent elements of economic systems.
The similarity between these two approaches to the crisis phenomena lies in the similarity of the stages, degree of turbulence, the state of the economic systems and businesses. In this way it is possible to
recognize that the signs of the current global financial crisis are inherent in the elimination of the crisis of financial instability from the micro to higher levels - meso and macroeconomic level, which threatens the bankruptcy of not only individual enterprises but the bankruptcy of entire regional systems and nations.
At the same time, it should be noted, that there are differences between the two approaches in the study of crises (in the broad and narrow sense), which are manifested in the differences in the level of manifestation of the signs of the crisis phenomena at the level of individual components and the holistic crisis characteristics at the level of the entire economic system ill.
Thus, economic crises are inevitable and useful, because any system, including an economic one. evolves according to the regularities of the cyclical dynamics and the inevitable element of any cycle is the crisis phase which ends with the system upgrading or its replacing with a new, more efficient and viable one. Consequently, because economy is only a part of a society, it is influenced by the effects of fluctuations in the adjacent and remote systems - technological, environmental, demographic, political, socio-cultural, which are periodically confronted by the crisis shocks that affect the economy.
The diversity and multifactor nature of the crisis phenomena is caused by a variety of reasons of the both internal (endogenous) and external (exogenous) nature. The endogenous factors are: reproductive and structural - changes in the phases of the reproductive cycles and, as the result, the changes in the structure of the economy, a painful change of the most advanced industries and fields; institutional, organisational and economic - changes in the forms of ownership, market institutions, forms of production organization and management; state-economic and market conditioned - the demand of changes in the forms and methods of the state regulation of the economy based on the sustainable changes of the market conditions; international economy - the resonance effect of the global crisis, the crisis shocks in related integrated economies, the radical changes in the structure of foreign trade, excessive external debt and so on. Among the exogenous factors, it is necessary to highlight the following: technological - the exhaustion of the technical potential, technological orders and technological modes of production; demographic and natural-ecological - overpopulation or depopulation, exhaustion of available reserves of natural resources, excessive pollution, a significant increase in the demographic load on the natural environment; socio-cultural and psychological caused by the crisis in science, education, culture, ethics, ideology, psychological expectations from the crises; constitutional and military caused by the crisis of the governmental and political system, internal social conflicts and wars.
It should be noted that the current crisis is global in nature, primarily because of the contradictions of the development of the financial system and years of low interest rates which have led to the increased demand for low-cost housing and mortgage lending. Further, there is a fall in stock markets, capital outflow, the overestimation of the refinancing rates, increased unemployment, unpaid loans, and bankruptcy of banks in all countries of the world economy. It is sometimes compared to "the great depression of 30-ies of XX century" and the Asian crisis of 1998, but it has absolutely individual characteristics and causes. First of all there are studies that suggest that the main cause of the current crisis is a cyclic development of the economy [3l.
Thus, if the crisis of 1997-1998 was created by the developing countries, the crisis of 2007-2008 was caused by the developed countries. The double deficit of the US budget and balance of payments led to the devaluation (depreciation) of the dollar, reduction of incomes and inflation. Overcoming inflation, the US Central Bank raised the refinancing rate, commercial banks did the same, the loans became more expensive, the demand of Americans declined. Thus, there began the bankruptcy of the households unable to repay the loans on the houses purchasing, then the bankruptcy of the mortgage banks and construction firms. This led to the deployment of the liquidity crisis, or shortage of funds for payments. Assessment of the economic outlook became less positive, the investors started to sell the shares, the indexes of Dow Jones Ind. Avg. and the NASDAQ declined [5l.
Then the crisis spread from the stock market to other segments of the world economies, causing recession in the United States, Western Europe, Japan, affecting even the economies of those countries which did not have any objective preconditions for this. The rapid expansion, in the frames of the world economy due to the effect of the information processes, transnationalization of business activity, mobility of factors of production, is another characteristic feature of the crisis.
Currently, humanity is going through the fourth information revolution and the level of trends is affected by the process of informatization, which takes the form of the global information revolution, and it is possible to observe the development of the entirely new, both in its content and implications for all spheres of human activity, information making important the problems of its understanding as a strategic resource and driving factor in the development of the economy.
Information is, first of all, a factor of production that shapes the development of the information economy, it is also not associated with the space, it is capable to universalization, depends on the factors of time, does not disappear in the process of production, but its most important characteristic is a low price of transfer and transportation.
Consequently, when the crisis begins, the trends of production and economy as a whole to their periodic improvements and restructuring become defining. The depth and nature of the crises depends on being able to predict them and the ability to use them for the benefit of the economy.
The global crisis has disproved the notion that thanks to the globalization, innovative development, strengthening of the regulatory functions of the state and, finally, the development of economic science, which uses the lessons of past crises, the market economy has managed to overcome or substantially mitigate the cycles of ups and downs. Many reputable scientists are searching for the adequate response to the questions on the agenda, trying to impartially understand the problems proposed by the crisis. It turned out that in the modern market economy only the state can help both the people and the businesses survive a large-scale crisis. Thus, "reaction of the state authorities to the crisis does not fit into any of the neoclassical theory but differs by a pragmatic approach designed to defend, in the first place, national interests and the system as a whole".
To determine the set of efficient measures for crisis overcoming, both in the global economy and within national economies, scientists refer primarily to the analysis of the causes of the crisis Г41.
Therefore, the development and implementation of a modern model of the development of national economy requires defining of the balanced and scientifically grounded cause-and-effect relations of the current crisis. Experts and scholars do not doubt the fact that the current crisis primarily develops as a financial one. The undisputed epicenter of this crisis is monetary sphere. It should be noted that in recent years there has been rapid separation of the financial system from the real economy and hypertrophic growth of the powers of the financial institutions.
Hence, the main causes of the crisis are the following:
- lack of transparency of financial companies, dishonesty of the rating agencies;
- complexity of the system of derivatives;
- errors in the regulation of financial markets.
Conclusions of the research Thus, we agree with the opinion of the scholars that whatever the idea is taken as a basis, it must create the conditions that will enable to get rid of the defects of the current model, and, as one of the main conditions of transformation, propose a system of effective control over the international operations of the banks. In the context of this approach, the changes of the structural elements of the current model are proposed:
- rejection of the dogma of efficient markets with their built-in ability to self-regulation which is based on the risk assessment by the private institutions;
- transformation of the control system of national regulators over the banking systems;
- consistent and sustainable increase of government spending to stimulate the final demand by increasing the tax burden on the financial sector;
- understanding that the recovery of the national economy as a subject of international economic activities is a long process.
The global economic crisis, which the world is going through now, is restructuring the global economy, the relationships between financial capital, commodity production and service sector, changes priorities in the choice of the means of production. Interpretation of the crisis solely as a financial is onesided. In fact, financial bubbles are only a consequence of these tectonic shifts of production in the technological systems, mononational structure of the economy, when technologies and institutions cease to work as they had worked before.
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