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Corresponding author:
1 V.N. Karazin Kharkiv National University, Ukraine.
E-mail: lnzhukova16@gmail.com
ORCID: http://orcid.org/0000-0003-2765-5544

DOI: https://doi.org/10.30525/2256-0742/2020-6-2-39-42

ENSURING OF THE INSTITUTIONAL STATUS  
OF THE STATE UNDER GLOBAL CHALLENGES

Larysa Zhukova1

Abstract. The purpose of the article is a study of the theoretical and methodological aspects of ensuring the 
institutional status of the state under global challenges. Methodology. The scientific search for changes in 
the institutional status of the state has been carried out on the basis of classical, neoclassical and institutional 
methodology. On the basis of classical methodology, general theoretical approaches to discovering alternative 
options for ensuring the institutional status of the state in the economy have been clarified using the tools of 
dialectical analysis and synthesis. Structural and functional method based on systemic analysis has made it possible 
to formulate the author's vision about the contradictory impact of global challenges on the institutional status of 
the state. Institutional and neoclassical approaches have made it possible to analyze the factors of manifestation 
of the contradictory nature of the state in the economy. The results of the study have shown that, to date, there is 
still no effective institutional system in place in Ukraine that would ensure optimal use of economic potential and 
could form the basis of public consensus on strategic goals of socio-economic development. All this negates the 
effectiveness of measures to identify alternatives to the development of the institutional status of the state and to 
find ways to preserve national identity under globalization. The practical implication is to identify the priorities and 
directions of the state's regulatory capacity under growing socio-institutional gaps to maintain macroeconomic 
stability and an effective system to counteract destructive exogenous influences clearly. When choosing possible 
alternatives, the desire for economic efficiency and social justice of the society, ensuring sustainable development, 
which does not worsen the conditions and opportunities for future generations, should remain the leading idea 
of strengthening the institutional status of the state. Value/originality. During the research, it has been proved that 
one of the priority tasks of the state should be a radical change of the vector of socio-economic development and 
carrying out of urgent institutional reforms. In view of this, the fundamental ambiguity of global development 
paths requires the state to tackle the challenge of preserving and strengthening national subjectivity as a key 
condition for Ukraine's security and sustainable development. Connecting the tools and resources of innovative 
development to the problem can contribute to the long-term strengthening of national competitiveness and the 
strengthening of the institutional status of the state. The reliability of the work of all public institutes, the extension 
of technological freedom of economic entities and the safety of the functioning of the whole socio-economic 
system depend on the key position of the economic power of the state.

Key words: state, economic development, institutional status of the state, institutional changes, global challenges.

JEL Classification: E02, О11, Р43

1. Introduction
The deepening of the contradictions of the 

development of the modern economy against the 
background of exacerbation of global transformational 
changes at different levels of the economic system 
actualizes the decisions of fundamental questions of 
the institutional status of the state. In this regard, the 
economic research of ensuring the institutional status 
of the state in conditions of socio-economic instability 
becomes extremely important.

Today, there is still no effective institutional system in 
place in Ukraine that would ensure optimal use of the 
national economic potential and could form the basis of 
public consensus on strategic goals of socio-economic 
development.

Awareness of the peculiarities and radical nature of 
the institutional changes that have been made dictates 
to the society the need to develop a different behavior 
model, both economic agents and authorities, and 
requires a change in the priorities of their interaction. 



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Vol. 6, No. 2, 2020
Establishing and enforcing civilized rules and regulations 
is of paramount importance for all participants in 
the economic system, as it determines the further 
sustainable development of our state's economy.

Modern economic science has recently linked the 
institutional status of the state not only to the level of 
socio-economic development, but also to the potential 
and real opportunities for its enhancement. Therefore, 
the study of the institutional status of the state is quite 
relevant task in both scientific-theoretical and practical 
aspects.

The purpose of the article is a research of the 
theoretical and methodological aspects of ensuring the 
institutional status of the state under global challenges.

The scientific search for changes in the institutional 
status of the state has been carried out on the basis of 
classical, neoclassical and institutional methodology. On 
the basis of classical methodology, general theoretical 
approaches to discovering alternative options for 
ensuring the institutional status of the state in the 
economy have been clarified using the tools of dialectical 
analysis and synthesis. Structural and functional 
method based on systemic analysis has made it possible 
to formulate the author's vision about the contradictory 
impact of global challenges on the institutional status of 
the state. Institutional and neoclassical approaches have 
made it possible to analyze the factors of manifestation 
of the contradictory nature of the state in the economy.

2. Theoretical approaches to the analysis  
of the institutional status of the state

Given that the crisis phenomena have identified 
the shortcomings and gaps of the existing theoretical 
paradigm in economic development and have outlined 
the likely threats to national sovereignty of states, the 
issue of identifying alternative concepts of developing 
the institutional status of the state and finding ways to 
preserve national identity are of particular relevance.

The tendencies of development of the institutional 
status of the state under globalization are covered in the 
works of such foreign researchers as: L. Britton, I. Clark, 
E. Kofman, S. D. Krasner, M. Newman, R . Robertson, 
M. Fowler, J. H. Franklin, M. Fritzler and others. 
Various aspects of the study of problems of realization 
of the institutional status of the state under deepening 
integration and globalization of the economy have been 
reflected in the works of a number of leading domestic 
scientists, in particular V. Heiets (justification of the 
ways of institutional and structural transformations in 
the economy of the state in the context of the evaluation 
of alternative variants of development), A. Hrytsenko 
(institutional architectonics and the search for 
alternatives to strengthening the institutional status of 
the state), P. Yeshchenko (transformation of economic 
relations and alternatives ways of the institutional 
changes under global changes), V. Sidenko (the impact 

of economic integration on the institutional status), 
O. Yaremenko (institutional foundations of alternative 
choices of a national model of economic development) 
and others.

3. Research on the category of the concept  
of "institutional status of the state"

Obviously, the most effective institute capable of 
forming and maintaining the stability of the national 
economy (the ability to maintain its structure and 
functional features during a certain interval despite 
external and internal shocks) is the institute of the 
state. As V. Osetskyi notes: “The Institute of State is 
a relatively separate part of its mechanism, which has 
the characteristics of an institutional status and a certain 
autonomy” (Osetskyi, 2016). By means of economic 
rules, each entity acquires its own institutional 
and economic status. Category “status” can mean 
a condition, position, establishment, which implies 
a certain static condition of the subject, the condition is 
outlined, defined (Yakovlev, 1988).

The process of forming an institute and acquiring, in 
fact, an institutional status is a process of formalizing 
social relations, moving from informal relations 
and unorganized activity to creating organizational 
structures with a clear hierarchy of power, taking into 
account the regulation of the activity of individuals 
and their relationships, juridical legalization of 
organizational structures, if available and necessary 
(Stopin, 2001).

The specificity of the institutional status of the state 
lies in the possibility of “self-institutionalization”, that is, 
in granting the attribute of legitimacy to other institutes, 
in managing (within certain limits) the pace and stages 
of institutional transformation.

Institutional status determines the place of the 
entity in the economic structure, relationships, rights, 
responsibilities in relation to other entities. Formation 
of institutional status requires social, economic and 
individual (obligations to pay taxes or obtain necessary 
permits, to comply with public order) transaction costs. 
The mentioned costs should offset the social costs 
of establishing such institutional status. Ultimately, 
they should be identical. Accordingly, a society where 
the public and individual costs of institutional status 
coincide, or at least have slight variations, can be 
considered normal. In the case of a larger difference in the 
amount of expenditures, the inefficient state of resource 
allocation in society is obvious (Hrytsenko, 2007).

With these considerations in mind, let us define that 
the institutional status of the state is a theoretical concept 
that reflects the state's ability to embody the value-
institutional foundations of the socio-economic system 
(solidarity, justice, cooperation, equality and hierarchy, 
equivalence and reciprocity); exclusive powers of the 
state to formulate institutional rules and norms and 



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enforce them (exclusive right to violence, separation 
of powers, judiciary, monetary issue and ensuring trust 
in money, fiscal system, property institutions and their 
protection); the limits and nature of the subordination 
of the state itself to the mandatory institutional rules and 
regulations (judicial procedure for resolving disputes 
between the state and citizens, the obligation to provide 
social guarantees, following the principle: the state can 
only do what is allowed by law).

4. Search for alternatives to the realization  
of the institutional status of the state

Against the background of exacerbation of global 
imbalances and crisis phenomena, the scientific 
discourse on the regulatory capacity of the state 
under growing socio-institutional gaps to maintain 
macroeconomic stability and an effective system 
of counteracting destructive exogenous influences 
has been significantly actualized. In view of this, the 
important conditions for the institutionalization of 
secure economic development are the formation of 
a certain economic and institutional status by the state, 
that is, a set of rules and regulations that allow each 
entity to perform a certain economic role. Granting 
status, on the one hand, frees subjects from the 
uncertainty of their actions, extends their economic 
freedom and provides opportunities for accelerated 
development. On the other hand, due to its status, 
the state involves economic agents in the area of joint 
responsibility by overseeing, regulating and controlling 
their behavior to prevent deflection (Shevchenko, 
2009). That is, the analysis of the institutional status of 
the state is obligatory for understanding the complex 
transformational processes, crisis phenomena, when 
the clear functional specialization of certain elements of 
the economy is broken and the factors that usually go 
beyond the subject of economic science begin to play 
a decisive role (Yaremenko, 1997).

Therefore, it becomes too difficult to choose possible 
alternatives, but the desire for economic efficiency and 
social justice, ensuring sustainable development, which 
does not worsen the conditions and opportunities for 
future generations, should remain the leading idea of 
strengthening the institutional status of the state. Thus, 
one of the primary tasks of the state is a radical change 
in the vector of socio-economic development and the 
implementation of urgent institutional reforms.

5. Review methodology
In today 's environment of increasing global 

competition, a strategy of “gradual change” is becoming 
crucial in Ukraine. Along with the implementation of 
fundamental institutional reforms, the task of developing 
and implementing national programs for achieving 
social stability as a basis for ensuring the institutional 

status of the state is at the forefront. As V. Lahutin 
emphasizes, these national programs (shadowing the 
economy, overcoming corruption, deoligarchization, 
protecting property rights, overcoming the fictitious 
nature of the financial sphere) should form an effective 
system of anti-crisis measures that will not allow the 
uncontrolled development of society (Lahutin, 2017).

The process of integration of Ukraine into the 
environment of global competition calls for orientation 
on an innovative model of development, that is, a model 
of competitive behavior of a breakthrough nature. 
Institutional reforms aimed at concerted changes to 
rules and programs that form adequate conditions 
for access to resources and technology should be 
a condition for movement in this direction. In the 
context of accelerating global innovation in technology, 
it is unlikely to be able to catch up to the leaders, so, 
a “tunnel effect”, when a country finds a technological 
niche that corresponds to the national socio-economic 
genotype, is a more realistic alternative in choosing 
a national innovation development strategy. Such 
a transition is most possible if the national economy 
relies on a model of endogenization of economic growth, 
which once has been substantiated at the Institute for 
Economics and Forecasting of the National Academy 
of Sciences of Ukraine (Heiets, 2003). The advantage 
of this endogenous model is the focus on the advanced 
development, which compels the state and business to 
seek criteria for the effectiveness of reforms in the field 
of mutual complement of state institutes and market 
institutions, which is impossible without careful use of 
the available institutional and value resources of society.

A national strategy for socio-economic development 
cannot be conservative. It is forced to be innovative, 
that is, oriented towards the inevitable change of 
environment, technology and institutes. The realities 
of the modern world lead to the search for innovative 
solutions and mechanisms of innovative development 
that ensure the institutional status of the state. 
Therefore, a coordinate system is needed, the economic 
basis of which will be a scientifically grounded strategy 
for the transition of the socio-economic system to a new 
technological model of development, which would be 
in the interests of the people and society as a whole.

The American scientist A. Toffler at one time 
pointed to the advent of the age of “industrialization” 
or the era of “knowledge and information technology”. 
Currently, only a few countries are in transit and are 
able to move from the fifth to the sixth technological 
paradigm in the next 15-20 years. As for Ukraine, 
it is between the fourth and the fifth paradigm. The 
structure of the domestic economy is a symbiosis of 
industrial and post-industrial sectors of the economy. 
The main point, as A. Toffler pointed out, was to 
prepare the country for the big leap and also to reduce 
the negative consequences of collision with the “shock 
of the future” (Toffler, 2002).



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The entry of the Ukrainian economy into the 

technological trajectory of the evolution of human 
civilization requires increased attention to the 
knowledge-intensive industries, which will make it 
possible to build the type of economy where the sectors 
of technological materialization of knowledge will play 
a decisive role, and the production of knowledge will 
serve as a source of economic growth.

6. Conclusions
The particular complexity of the specific conditions 

of existence of the modern state structure is due to the 
fact that today there are many different perspectives 
and lines of development that may conflict with each 
other. In view of this, the fundamental ambiguity of 
global development paths requires the state to tackle 
the difficult challenge of preserving and strengthening 
national subjectivity as a key condition for Ukraine's 
security and sustainable development. Connecting the 
tools and resources of innovative development to the 
problem can broaden the scope of historical alternatives 
and contribute to the long-term strengthening of 
national competitiveness.

The reliability of the work of all public institutions, 
the extension of technological freedom of economic 
entities and the safety of the functioning of the whole 
socio-economic system, which should be based on 
the population of creative ideas for the approval of 
innovation-modernization development, depend on 
the key position of the economic power of the state. 

Today, the technological subjectivity of Ukraine can be 
seen as a prerequisite for the realization of economic 
sovereignty and strengthening of the institutional status 
of the state. In turn, ensuring sustainable economic 
development of the state is impossible without 
institutional transformation and providing policy of 
constructive change.

Firstly, the further dynamics of the institutional status 
of the state, based on a series of changes and reforms, 
should involve close cooperation between the private 
and public sectors of the economy. In order to do this, 
private businesses and government agencies need to 
adopt a new format for cooperation in order to increase 
national competitiveness.

Secondly, it is necessary to dramatically change the 
vectors in the state's policy on realizing the potential 
of the regions on the way to forming a single European 
space.

Thirdly, overcoming threats to the labor resources 
security of the country, which are caused by demographic 
challenges (rapid aging of the population, mass 
unemployment of persons of working age, migration, 
internal displacement of persons).

Fourthly, the development and further reform of 
high-potential branches of economy.

Therefore, the Ukrainian economy can succeed if the 
authorities engage in dialogue with the people and the 
reforms, in turn, are comprehensive and decisive. It is 
this process that will promote the norms of democracy, 
the rule of law, human rights and freedoms in Ukraine, 
as well as accelerated economic development.

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rozvytku ekonomiky [From exogenously dependent to endogenously oriented economic development strategy]. 
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institutional deviations]. Nauchnye trudy DonNTU, vol. 31–3(117), pp. 17–21.
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