INSTITUTIONAL CIRCUMSTANCES FOR INNOVATIVE DEVELOPMENT OF THE RUSSIAN ECONOMY

In this paper, the process of modernization is considered in the context of institutional change which is generated by special interest groups. We have made an attempt to analyze the institutional change in the Russian economy synthesizing original and new methodologies of institutional economics. A great deal of attention has been paid to the concepts of social values, interest groups, social capital and trust. We assume that the hurdles to modernization are institutional underdevelopment, the deficit of trust, the influence of special interest groups and ceremonial dominance. The degree to which the ceremonial values of the community inhibit various economic processes as well as the quality and quantity of social capital determine the opportunities for economic development of the country. Furthermore, the problems of values formation in the realm of education have been addressed in the article.