The article considers urgent issues of regulation of the agricultural production development based on the use of provisions of the theory of institutionalism in the administrative process. The author defines on a systematic basis the essence, content and position of the theory of institutionalism in the formation of agrarian relations in the rural area, emphasizes the dominant human role in the formation of extended economic reproduction as a factor of the growth of production and formation of human potential in rural areas.
The practical content of institutionalism is based on the development of rules and codes of conduct in a market environment for family commodity producers, which can be conducive to extended economic reproduction. The object of the study is the process of functioning of small agribusiness in rural areas.
The subject of the study is a set of managerial, economic and legal aspects that comprise institutional content of the development of small businesses in rural areas.
Methodological basis of this publication is the fundamental provisions of modern economic theory, scientific works of foreign and domestic scientists on the specified problems, which reveal the essence of the above-defined economic theory and its influence on the nature of modern economic relations in the rural areas.
The objectives set in the article have been solved from the standpoint of a systematic approach and the use of the following methods: monograph – to study and summarize the scientific and methodological foundations of the theory of institutionalism; abstract-logical – develop and specify the categorical apparatus of research and formulation of conclusions; graphic – to establish the structural elements of the category “institutes” and “institutions”; peer review – to determine the motivation for choosing a form of business.
Scientific works on the specified problems by well-known foreign scientists W. Hamilton, T. Veblen, R. Cruz, D. Nart, M. Olsen and domestic scientists V. Heets, H. Kaletnik , M. Malin, A. Mazur, O. Shpykuliak, etc. who study this problem are used in this research.
On the basis of scientific research, the author has formed a scientific paradigm as a synthesis of hypotheses and theories that investigates structural changes in unstable economic systems. He refers the environment to the main elements of institutional theory, e.g. norms and rules of living in the rural area; property rights; economic entities of business activity; contractual terms and market transformations in the land system; production efficiency; quality of management: the degree of trust in society; transaction costs, etc.
The study emphasizes that the essence of institutional theory is based on the content of the conceptual apparatus, which makes it possible to reveal the mechanisms of functioning and interaction of institutions in the agrarian economy. The author argues that “institutions” are rules of the game in society, or thought-out restrictions that direct human activity in a particular direction. They influence the socio-economic processes as traditions, social individual norms of the organizational structure of the enterprise, etc. In other words, they structure human and organizational interaction coordinating exchanges within the achievement of agricultural production efficiency.
Practical activity on the formation of institutional environment in the rural area is based on maximizing the possibility of developing a family type of business. In particular, the main priorities of the state agricultural policy should be creation of conditions for realization and protection of rural people’s rights to land and formation of market relations in the rural area.
In our opinion, a priority direction of the institutional support of business entities in rural areas is the development and implementation of state and regional programs of integrated development of rural areas, improvement of state support of the enterprise development.
The study of the foundations of institutionalism as an economic theory and practice of economic activity lets us conclude that it is advisable to introduce this concept as a form of economic relations in the system of small-scale agricultural production.
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