The Influence of Demonstrative Formal Rules on the Dynamics of the Effectiveness of Institutional Frameworks

Abstract

The purpose of this article is to identify the impact of demonstrative formal rules on the dynamics of the effectiveness of institutional frameworks. The importance of forming an effective institutional framework for any country is undeniable. The presence of an effective institutional framework is a prerequisite for ensuring the successful socio-economic development of the country, on the other hand, an ineffective institutional framework can have a wide range of negative consequences, including disparities in regional development. However, the achievement of today’s effectiveness of institutional frameworks cannot guarantee the proper socio-economic development of the country in the long term, because the institutional framework of any country is not unchanged, but is in a state of constant transformation due to the need to adapt the current formal rules to the new challenges facing society. Accordingly, the identification of the factors that determine the dynamics of the effectiveness of formal rules is no less important than the identification of the factors of ineffectiveness of formal rules. It is shown that one of these factors is demonstrative formal rules, that is, rules whose target effectiveness was not taken into account from the very beginning, and the only purpose of their implementation was to increase the political ratings of the initiators of their implementation. It has been proven that an effective measure to prevent the spread of demonstrative formal rules can be an increase in the general education of the population. The main advantages of the proposed measure are the low level of transaction costs and the absence of danger of manipulating public sentiment.