Public Administration System of Russia: Dysfunctions and Institutional Reforms

Abstract

In his lecture during the Nobel Prize in Economics receipt Joseph Stiglitz considered the interconnection of state, market and non-market institutions and emphasized that several reasons were given against state interference in market relations after the growing theoretical understanding of ineffectiveness of markets with imperfect information. However, the analysis revealed that incentives and constraints related to state activities differ from those operating in the private sector. Therefore, even if the state and the private sector confront the same information constraints, in the first case welfare can be increased. Based on this analysis the speaker concluded that market mechanism can be efficient only under very certain circumstances. Thus it is possible to avoid dysfunctions in sustainable economic system development if state institutions, market and non-market institutions are combined.

Keywords: public administration, structural reform, dysfunction