Universiteti xabarnomasi

 
 
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QON UNIVERSITETI XABARNOMASI
 
 KOKAND UNIVERSITY HERALD 
 
 
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~ 4 ~ 
I
Institute 
I
1 
for economic agents, A 
I
2 
for the guarantor of the 
institution, G 
In some specific cases, the legislature may abolish an institution or 
replace it with another. However, changes to institutions are not always 
accompanied by positive effects, but this will be discussed later.
Figure 1. Structure of the institution (rules)
 
 
The theory of institutional change contains various concepts that 
explain factors in the development of institutions. Thus, according to 
the concept of H. Demsetz
3
(Demsetz, H. 1967) the development of 
institutions is influenced by changes in the relative prices of economic 
resources, and the North, D. C., & Thomas, R. P., 1977) concept is 
influenced by demographic pressure
4
. The authors of both concepts 
believe that the inefficient use of resources forms the demand for new 
institutions necessary to use the opportunities provided by these 
changes. At the same time, the state and social groups play a passive 
role, do not participate in the process of creating institutions, but only 
accept them. An important prerequisite for this change, however, is 
increased efficiency, which contributes to the creation of value.
In-depth research in the field of institutional change has shown 
that the above-mentioned concepts contain a number of points 
requiring clarification. In particular, scientists have questioned the fact 
that changes in institutions automatically follow changes in economic 
conditions. North's concept (North, D. C., 1990), published in the 1990s, 
managed to dispel these doubts, and also became a seminal work for 
new developments in this area
5
.
Д. North, examining the processes on political markets, found that 
political actors (entrepreneurs) have their own interest in institutional 
change. They are the main organizers of new institutional agreements 
aimed at reducing uncertainty and creating a basis for finding a 
compromise in the conflict of interests. In our opinion, D. North came 
to this formulation of the issue under the influence of evolutionary 
theory of J. Schumpeter. After all, in the theory of economic 
development the entrepreneur is given a central place as a disruptor of 
equilibrium, a catalyst of change and a source of innovation. 
Consequently, by combining new factors of production, the 
entrepreneur initiates changes in both relative (institutional 
arrangements) 
and 
absolute 
property 
rights 
(institutional 
environment). In doing so, the mechanism of institutional change is 
triggered by combining the action of external change and internal 
knowledge accumulation. D.North wrote about this as follows: "Factors 
(sources) of change are opportunities as perceived by entrepreneurs. 
They are derived from changes in the external environment, as well as 
from the accumulation of experience and knowledge and the 
integration of these factors in the mental constructions of the actor"
6
.
Based on D. North's approaches, an algorithm of institutional 
development was constructed, which looks according to Fig. 2. where: 
change in knowledge leads to new technologies; 
new technologies change relative price levels for resources; 
new price levels create incentives for owners of potentially 
increasing resource values to transform their ownership of resources; 
3
Demsetz, H. (1967). Towards a theory of property rights, American Economic Journal, 347-
359. Ownership, control and the firm, 57(2), 347-359.
4
North, D. C., & Thomas, R. P. (1977). The first economic revolution. The Economic History 
Review, 30(2), 229-241. 
5
North, D. C. (1990). Institutions, institutional change and economic performance. Cambridge 
university press
. 
6
North, D. (1997). Institutional change: a framework for analysis. Voprosy ekonomiki, 3(6), 7. 
7
Institutional Economics: The New Institutional Economic Theory: / Ed. by A.A. Auzan. - 
MOSCOW: INFRA - M., 2005. -416 
с
.
new price levels, in turn, lead to the emergence of rules to 
maximise the value of the use of such rights; 
at the same time, non-zero transaction costs on the political 
market prevent all potentially possible institutional changes from being 
realised and useful for value creation
7
. 
As we see it, this algorithm shows the relationship between 
technological and institutional changes, which confirms our conclusion 
about the influence of J. Schumpeter's ideas on the formation of D. 
North's concept. 
According to the concept of induced innovation by V. Ratten, V., 
2019
8
and Solis-Navarrete, J. A., 2021
9
, exogenous factors form the 
demand for institutional change, but political actors (entrepreneurs) 
suggest such changes in institutions that will provide them with a 
certain income
10
.
In our view, this concept indicates that, first, each institutional 
environment corresponds to a different distribution of political and 
economic power among economic agents and, second, political actors 
with more power seek to develop and consolidate such institutions that 
will allow them to improve the efficiency of economic activity in 
individual markets. 
The author of the theory of the distributive nature of institutions 
G. Laibkep
11
is convinced that institutional changes cause shifts in the 
distribution of wealth and political power, so stakeholders develop 
distributive mechanisms to indicate the recipients of benefits from 
changes in institutions over time
12
. The theory of G. Laibkep was 
developed in the works of M. Olson, who supports the view of the 
existence of special interest groups, but argues that groups should be 
distinguished by the degree of their capacity - into small and large. We 
believe that the latter is due to the fact that large groups are ineffective 
in achieving a common goal because of the "stowaway" effect. 
According to J. Knight, the "stowaway" effect consists in the fact that a 
rational agent will not take part in the political process, because in case 
of its successful completion he will get a part of the overall benefit 
without any costs. Small groups are more efficient because of the 
commonality of interests (homogeneity of preferences) of the group 
members and low costs of making collective decisions (voting costs).