Grinchenko Y. The Influence of the Institutional Factor on the EU Economic Policy Structure and Effectiveness.

The presented dissertation paper is dedicated to the problems of interrelations between the institutional structure of the European Union and the effectiveness of its economic policy. Nowadays the perspectives of the future enlargement of the EU and the creation of the economic and monetary union require effective institutional answers for economic regulation challenges. The European Union has a very complex system of economic regulation, which is very different from national and international regulation regimes. The institutional design of the EU has a great influence on the policy-making processes in the Union. Different factors of economic, social or political nature have their impact on European decision-making systems. The political factors are very strong, but we intended to analyse the institutional structure from economic point of view. The goal of the research is to show the relations between the institutional structure of the European Union and the effectiveness of the European policy-mix inthe context of the economic and monetary union and the future accession of the Central and Eastern European countries. As the result of our research we wished to define an optimal type of economic governance in the European Union, which will insure the coordination of national economic policies and the effective regulations on the all levels of the governance system. To accomplish this task we have to define the factors, which influence the development of the institutional structure of the EU. We propose several scenarios of this development and analyse the effectiveness of economic policy in the each of them. So we could point the directions of transformation of the institutional structure of the EU. In the first section we analyse the theories of economic integration. We define the integration process as the removal of economic frontiers among national states. The nature of integration is to provide the free movement of goods, services, labour and capital. The other side of integration is the coordination among different autonomous national regulation regimes. The integration has many forms, but we analyse the market type of it. The main principles of the European integration are deepening, widening and enlargement. These principles allowed the EU to reach the stage of monetary union. The transfer of economic regulation competencies give us reasons to define the economic constitution of the European Union. The constitution consists of economic goals and economic methods of European integration. The main methods are the common market, the coordination of national economic policies and the economic and monetary union. The structure of economic policy of the EU is extremely complex. The monetary policy is in the competence of the European Central Bank. So we can say that it is centralised on the supranational level of governance. The budget policy is still under national competence, but the Pact of Stability and Growth limits its scope. To restore the effectiveness of the national budgetary policies we propose touse a system of coordination. The most effective one in the conditions of economic and monetary union between heterogeneous national economies is the discretional institutionalised model of macroeconomic policy coordination, which guarantee the effectiveness of the policy on the European level and flexibility of the policies oh the national level of governance. There are many theories of the process of economic integration. The dominant ones are intergovernmental theory and neofunctionalism. Each theory has its own advantages and disadvantages, but none of them could propose the explanation of regional integration. We support the transaction-based theory of integration. The development of economic, social and political exchanges results in creation of transnational societies. They promote the integration process and formation of supranational regulation regimes. This enhances the transnational exchanges. So the dynamic effect of the integration appears. The regulation strategy of the European Union has two main aspects: the subsidiarity principle and the regulation competition. The usage of subsidiarity principle allows redistributing the regulation functions effectively from economic point of view. The regulative competition prevents the excessive regulation on the European level of Economic governance. The detailed analysis of the modern system of economic regulation in the European Union allows us to come to a conclusion that the optimal type of economic governance is the network governance model. This type is very flexible and economically effective. The institutional structure, which responds to that type of governance, is a multi-tier government. The interactions between the European Commission and the European council define the whole institutional structure of the European Union. We propose four models of combination the supranational and the intergovernmental institutions in the system of governance. But only one model, based on the network governance, can insure the economic effectiveness of economic regulation in the EU. The next result of the dissertation paper is the analysis of the European economic policy effectiveness in the four scenarios of the institutional development of the European Union. The model of economic policy shows that the network governance with redistribution regulation functions between the European Commission and the European Council insures the optimal and effective economic regulation in the European Union. The research of the perspectives of Ukraine's joining EU shows that Ukrainian model of economic governance should correspond to that of European Union. Budgetary policy has to be modernised; monetary policy has to be oriented towards price stability. The European system of coordination of economic policies, based on network governance, creates the conditions for sustainable economic growth in Ukraine.