Capital as a factor of production and transformation of state enterprise into a private firm

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2020-07-03 02:47:06

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Transformation economy is a fundamental change in the main economic institutions and the formation of the new economy. The duration of the transitional period usually depends on the duration of how quickly private capital as a factor of production. The key institution of the modern market economy is firm. In the domestic economy firm as a separate institution is still at the stage of its formation and development. The formation of the company in the transition period is not always possible to perform from the standpoint of neoclassical theory as its methodological and categorical base is not enough for adequate analysis and explanation of economic phenomena in the dynamics. This necessitates the application of the institutional approach, which takes into account the human factor of production, and the extent to which entrepreneurial ability as a factor of production, can effectively be realized in such a     the organization as a firm.

The Process of economic reform, lead to the fact that the Corporation becomes the dominant economic-legal form of business activities. However, the ability of privatized enterprises can be quite limited. Therefore, their adaptation and demand of private capital as a factor of production. The unresolved practical problems necessitates a theoretical study of the influence of institutional factors on the process of establishment of firms in transition economies. During the transitional period of transformation of state enterprise into the firm, formed by private capital as a factor of production and development. During the reformation disappear previous formal institutions of the party and economic hierarchy, centralized planning and pricing, “public property”. In the transformational economy the state on a large scale “reset” with the performance of uncharacteristic economic functions.

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The Lack of market traditions, institutions and mechanisms hampering economic growth. Today, economists note that the Central place in the modern socio-economic processes of transformation should be a transformation of institutional structures and how quickly and in sufficient volume formed private capital. As a factor of production, it plays a determining role in structuring the new economy. The process of formation of institutions can be evolutionary or revolutionary means. The evolutionary scenario suggests that the emergence of new formal institutions in the process of transformation already existed. In the second embodiment, means the import of the institutions that have already proven their effective influence on the activities of economic entities.

However, the formation of the institutional environment in a transition economy occurs mainly through the “import institutions" developed  and successfully proven, market economy. The following directions of import of institutions: based on the theoretical model, standards that previously existed in the history of this country, for example available in other countries.

The Import of the institutions of developed countries ' firms has both positive and negative sides. Negative import of institutions is unsuccessful, merely leading them to a given institutional environment. Institutions that are acceptable in some countries can be totally unsuitable and unsustainable for other countries, especially to economies that just started to change the institutional structure where the incentive system is still focused on the former administrative system, and the interest of economic entities in the results of their activities remains weak or insufficient for the formation of new institutional structures.

In short, the import of institutions has contradictory effects. On the one hand, it contributes to a more rapid reform of the institutional environment of the firm. On the other hand, the transfer of institutions leads to increasing instability and conflict in the socio-economic development of the company.


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ZH: https://tostpost.com/zh/business/47716-capital-as-a-factor-of-production-and-transformation-of-state-enterpri.html






Alin Trodden - author of the article, editor
"Hi, I'm Alin Trodden. I write texts, read books, and look for impressions. And I'm not bad at telling you about it. I am always happy to participate in interesting projects."

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