ANÁLISIS DE LOS RESULTADOS DE LA ENCUESTA

This chapter has sought to identify and explain some of the key terms used in the study in an effort to focus the scope of the study. The concentration has been on the definition of corruption, a term loaded with meanings and often left undefined. The terms enterprise and bureaucracy or bureaucrat are also included, though their respective meanings are far less vague, they are described in this chapter in an effort to determine exactly what aspect of each is being referred to in the study.

Oliver E. Williamson, The Economic Institution of Capitalism, London: Collier Macmillan Publishers (1985)

This review of corruption, enterprise and bureaucracy are by no means exhaustive. In the case of corruption, it is unlikely that a comprehensive definition or universal conception of the phenomenon will ever exist. This is not an apology however, for a limited study of the issue. William A. Clark writes that “the imprecision of the study and the weakness of the data in no way make the study of the phenomenon any less important to better understanding the changes and patterns of behaviour in politics and economics in the r e g i o n . T h e fact that relatively litde is known about corruption makes it that much more important to study in all its forms and from a variety of perspectives. Only when this work has been conducted and completed can we hope to arrive at a better comprehension of the matter.

This thesis has sought to provide a look at some of the main contributing and defining elements of corruption. The theoretical work that has been done on the subject is extensive although limited by numerous factors, most related to the impossible task of determining a universal understanding of the issue. Therefore, it is crucial to examine a number of factors in order to grasp corruption’s full meaning in a particular society, country or region. Without putting it into context, corruption is a “catch-all” phrase without real meaning and application to an empirical study. This thesis has sought to identify a number of the factors that help determine the parameters of the concept of corruption for the study of Ukraine and its transition to a capitalist system. Culture, regionalism, history, and public opinion all play a role in understanding corruption.

Enterprise as used in this study reflects the set of firms examined in the study. They are identified as small independent enterprise, whose role in the economy is recognised as critical but whose relationship with the bureaucracy is uncertain. These are enterprises run by Ukrainians, with no investment from foreign companies, few with credit support and most making their way through a bureaucratic system on their own.

The bureaucracy has been examined from the Weberian ideal to a more appropriate public choice structure with all of its inherent flaws. This study has isolated a particular group of bureaucrats, at a particular level of the official structure, and has established operations level bureaucrats and the regulatory implementation at their level as one perspective of the study.

The definition and clarification of major terms, as well as the explanation of several speciahsed terms used in the analysis, concludes the introductory part of the thesis. The following chapters will follow with theory, the data collecting and information management strategy and show the cases, their analysis and conclusions.

Information has value or grants power, only in the presence of uncertainty -Bertrand Russell-

Ch a p t e r III - Th e o r y

Master or servant: The role of bureaucracy in the development of small enterprise in Ukraine in the context of post communist transition

This chapter sets out to discuss the theoretical underpinning of the study and to arrive at a theoretical construct that will help understand the interaction between the bureaucracy and small independent enterprise in Ukraine. The construct will be less a full model and more of a foundation upon which to place the study.

The chapter is divided into three sections. The first starts with the short empirical description of the general economic construct in Ukraine. This serves as a starting point for developing a more general framework. The point at which there is a direct exchange between the operational level of bureaucracy and enterprises is examined. This relationship is described as an ‘interaction’, a process whereby the enterprise seeks to obtain official services and public goods from officials. Later in the first section the concept and functions of interactions, as points of direct link between enterprise and bureaux, will be discussed including the state’s role as provider of services and public goods. Finally, this section will identify the principal actors: bureaucracy, enterprise, and government, and discuss their behaviour, including incentives, motivation, and knowledge.

The second section concentrates on the environment in which interactions take place. It discusses the relations between the bureau and the enterprise. First by looking at the public

service contract notably the bureaucracy’s specific role in the particular interactions, and the question of the bureaucrat maximising personal interest; second by examining the enterprise’s place in interactions and the maximands of the entrepreneur.

The final section takes a closer look at the interactions themselves and sets the groundwork for understanding interactions as opportunities either for corruption or as foundations of a regulated system based on the rule of law and the correct apphcation of normative procedures.

Introduction: PixMems in the interaction between bmeaucracy and enterprise

Bureaucracy’s role in the development of small enterprise is an important one as it characterises the quality of the relationship between the two entities. In turn, the quality of that relationship affects the ability of business to function and to grow and to contribute to the economy as a whole. Because the nature of this relationship is being questioned here, it is assumed that a conflict exists in the relationship as it is currently structured.

In Ukraine, the popular view of bureaucracy-enterprise relations is that problems exist. By examining points of interaction between them, concrete problems become visible and open to scrutiny. As such they are no longer seen as merely abstract difficulties of bureaucratic meddling or entrepreneurial ignorance of the rules but as predictable reactions to given environmental factors. In some cases, certain parts of individual interactions may be identified as particularly problematic without blanketing the entire procedure as such. The

obvious point of direct dialogue between the two occurs in interactions for government goods or services. This chapter will develop a theoretical construct of interactions between bureaucracy and enterprise in the context of post-Communist transition in order to determine points of difficulty between the two at the operational levels.

The apphcation of a theoretical construct of interactions between operational level bureaucracy and small enterprise in Ukraine is based on an amalgam of an economic theoiy of bureaucracy and a theory of corruption. The construct revolves around two principal players, bureaucracy and enterprise, with a significant third player - the central government and the relationship that hnks them in a direct manner on a daily basis. This hnk is critical; it touches common interactions estabhshed by laws and the regualtory structure of the country.

Bureaucracy was the principal institution in the hves of Soviet citizens. In many ways httle has changed and it remains the main institution of post-Soviet society. Bureaucratic processes have strong effects on everyone in the region. Strangely somehow, bureaucracy is arguably the most powerful, and yet in many respects, the least effective institutions in the newly independent states. In the Soviet period its power stemmed from its direct hnks to the pohtical powers and the intertwining of authority. Pohtical powers supported the bureaucratic, while the bureaucratic did the same for the pohtical. The state had a firm grip on people’s hves. Almost every activity was at one time documented, filed and kept by the bureaucracy; virtually every aspect of people’s daily activities was monitored or regulated. It has since become relatively ineffective. Bureaucracy’s control of people’s daily hves has visibly diminished.

Current economic realities of the former Soviet States are largely responsible for this change. The inability of the state to provide the services once offered has attributed to the loss of authority. Furthermore, the once strong links between political and bureaucratic authorities have weakened. Where there once was strong leadership there now exists a vacuum and a break down of authority. This is partly due to the break-up of the USSR leaving bureaucracies without direct links to their upper level authority in Moscow, and partly due to the inexperience of republican leadership to exercise full control over the regional bureaucracy without the directive and example from the Kremlin. The legacy of the Soviet bureaucracy however, remains. This legacy is responsible for whatever authority the bureaucracy still has; be it through coercion, fear tactics or even real authority, the character of today’s bureaucracy in Ukraine is stamped with the image of the past.

Enterprise as a sector is a new concept to most ex-Soviet citizens and, in many ways the practice of business is in a “beginner” phase. This implies that the rules of the game may be far less clear for government, bureaucracy and enterprise, than all players may wish to admit. Most possess knowledge of the former social/pohtical/economic ‘system’, and some understanding of the emerging one. But in the uncertain and changing environment many have figured out ways of either circumventing it or using it to their advantage. While new found creativity in the interactions might serve a variety of purposes for a while, now and in the future, a more professional and uncorrupted approach is a must.

In order for an economy’s entrepreneurial sector to prosper, small business operators must be able to work within a set of rules that allegedly meet international legislative standards For individual enterprises, the incentive to work within a legal framework brings advantages. Among them, the promise of democratic protection for all under the legal system makes the small entrepreneur strive for a clean record so that they may indeed be treated in a fair manner should they have trouble. Yet, there are factors, such as opportunities for corrupt behaviour among bureaucrats that may prevent the clean running of a business or which simply make the daily chores of business complicated matters.

The chapter concludes by examining the interaction within a corrupt environment and the consequences for the players involved. Opportunities for corrupt behaviour at operational strata of officialdom may find origin in the historical development of bureaucracy. Innumerable accounts of bureaucratic malfeasance exist in most if not all countries at virtually any point in time. Contemporary manifestation of opportunities for corruption are determined by certain factors that have a direct impact on the role and responsibilities of the operating agency as well as the nature of its relationship with the constituency it serves.