State regulation of entrepreneurial activity - essence, types and features

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Today, after the Kemerovo tragedy, disasters such as the wreck of the ship "Bulgaria", numerous fires in private boarding houses for the elderly, etc., perhaps no one doubts the need for state regulation and control of business activities. Adam Smith also wrote:

"…such use of the natural freedom of a few individuals, which may endanger the well-being of the whole society, must and must be limited by the laws of all governments - not only the most despotic, but also the freest."

Basic definitions

The use by the state of a certain set of methods, methods or mechanisms to stimulate entrepreneurs to solve problems relevant to the country's economy is called state regulation of entrepreneurial activity.

Under government regulationentrepreneurial activity should be understood as the activities of the state, represented by its bodies, aimed at implementing state policy in the field of entrepreneurial activity.

The essence of state regulation

The essence of state regulation of the activities of entrepreneurs is due to the need to create suitable economic conditions that ensure the formation and functioning of a civilized market. To do this, state structures establish uniform rules that help streamline the relationship of existing economic entities. For example, procedures for registration, certification of manufactured products, licensing of activities, reporting forms of all kinds, tax administration, etc. are being introduced.

In order to increase the effectiveness of regulatory decisions made, the state needs a clear understanding of the real state of the national economy and the determination of ways for its development, which is based on an objective assessment of the strategic prospects for scientific development.

Rule of law in government regulation

In the implementation of this process, the state can apply only such forms of state regulation of business activities, mechanisms and tools that do not violate the norms of the legislation of the Russian Federation. This is key. With such legal support, an appropriate regime of legal state regulation of entrepreneurial activity arises.

Main methods of legal regulation

The following methods of legal regulation differ:

• Dispositive method (recommendation method), which provides for self-regulation by entrepreneurs of legal relationships and the corresponding most relevant behaviors.
• Imperative method (mandatory prescription method), which puts forward mandatory regulatory prescriptions for the entrepreneur.
• Agreement method (autonomous decision method), which allows you to choose the model of your legal relationship by agreement of the parties.

13 main directions of business regulation

The economic literature highlights the following areas in which it is advisable to carry out state regulation of business activities based on legal support:

1. Guaranteeing the right of private property: protection of confidential information and intellectual property (patents, copyrights, industrial designs, trademarks); protection from raiding; real estate, land use insurance).
2. Providing legal status to business entities (registration, licensing, trade permit).
3. Protection of contracts and legal regulation of contractual relationships between business entities (contract law, forms of documents certifying ownership, etc.).
4. State control and arbitration. Ensuring the safety of business activities (terrorism,fire and information security, etc.).
5. Environmental protection (man-made emissions, landfills, illegal logging, forest fires, poaching).
6. Protection of competition (antitrust law).
7. Regulation of labor relations, development of social partnership (ensuring labor protection, monitoring the he alth of workers).
8. Protection of consumer rights (regulation of product quality, prohibition of low-quality advertising and the imposition of low-quality services).
9. State support for special, country-priority types of entrepreneurial activity (start-ups, technology entrepreneurship, socially oriented business, etc.).
10. Regulation of foreign trade activities (non-tariff regulation, customs tariff regulation).
11. Financial regulation (ensuring the availability of investment resources for small businesses, currency regulation, refinancing rates, bankruptcy).
12. Tax regulation.

Classification of types of state regulation

Types of state regulation of business activity are usually classified according to the following categories:

• territorial prevalence of regulatory actions: macro-level, meso-level and micro-level;
• nature of influence on the behavior of business structures: direct and indirect regulatory procedures;
• type of relationship between government and business structures: subordination and coordination;
• industryfocus: regulatory procedures used for agriculture, science and other activities.

Direct regulation is the presentation of imperative requirements to entrepreneurs, provided for by laws. For example, mandatory accounting, licensing, registration of entrepreneurs, or some decisions of executive bodies relating to specific entrepreneurs. The essence of indirect regulation is the implementation of state influence by taking into account entrepreneurial interests, and more specifically, when the state uses various economic incentives instead of sanctions to fulfill its instructions: subsidies, tax preferences, priority receipt of government orders, guarantees, and much more. The general classification is given below.

Methods of state regulation of entrepreneurial activity cannot be set once and for all. They change under the influence of many external and internal factors and in the context of the specific conditions of the country's development.

Over-regulated America

Which country do you think the following statement refers to?

We have become a country run by bureaucrats. Yes, society should always have rules, but we've gotten to the point where there are so many millions of rules that it's become impossible to play the game.”

At first glance it seems that this is about us. But you are wrong, this is about America. In his article 12 Ridiculous Governmentregulations that are too bizarre to be believed” (12 Ridiculous Government Regulations That Are Almost Too Bizarre To Believe), American economist Michael Snyder condemns the American bureaucracy for ineffective regulation. And this opinion is shared by many of his compatriots, who criticize the government for over-regulating business. So not only our entrepreneurs complain about the actions of officials that impede the conduct of their business.

On the effectiveness of business regulation

Government regulation can be both positive for the economy and society as a whole, for example, promote competition, protect consumers from dangerous products, etc., and negative - increase the costs of doing business, discourage investment, promote the growth of the shadow economy etc.

Ineffective state regulation of business activities can be a huge obstacle to its development. That is why government structures, when adopting new regulations, bear a great responsibility for the negative consequences of their decisions.

By its very nature, regulation is a balancing act between achieving social and economic costs and benefits. Among scientists and practical economists, standing on competing economic and ideological positions, there is a fierce discussion about how to achieve the optimal balance between them. But everyone recognizes that effective state regulation should not “nightmare” business, but should stimulate the emergence of new entrepreneurs.