European Journal of Management Issues

163-169

Authors: Alteen, C., & Wohlgemuth, V.

Actuality of the study: Mutual funds are a favourite investment product among many investors. They provide a simple means of diversification, especially for those with smaller amounts of capital, and the popularity of mutual funds has increased with the success of the marketing efforts behind them. Purpose: This study evaluates the performance of actively managed and index mutual funds within the Canadian equities market. Findings: As index investing has increased in popularity, and other markets have become more connected and open, there is a need for research on equity mutual funds in countries outside the US. Originality / Value: The majority of previous research on index funds and actively managed mutual funds is focused on the US market and related indexes such as the S&P 500. Practical implications: This study suggests that, on average, active funds in Canada fail to beat their benchmarks net (but not gross) of the common fee or management expense ratio. Surprisingly, this research finds no positive relationship between higher fees and better gross performance. Actively managed funds also have poorer performance over the long term. This study finds that investors would be better off purchasing low cost index funds as they provide a more secure return. Future research: This study endorses research on other markets with inclusion of additional variables in order to explain gross performance and secure returns.

177-184

Authors: Boiarynova, К.

Management environment system is a comprehensive and coordinated component in the provision of economic functionality of a machine-building enterprise, which predetermines the need to examine it. A difference in the level of innovativeness of innovation-oriented enterprises in machine engineering that operate within the framework of technological stages IV and V requires a substantiation of recommended values of indicators of the dynamics of executing economic functions by management environment system for each group separately. The goal of present work is to substantiate the recommended values of indicators of the dynamics of executing economic functions by management environment system as a result of comparing machine building enterprises at technological stages IV and V in terms of its component environments and phases of innovation-oriented development within an organization. We compared a range of recommended (indicative) values of indicators of the dynamics by the relevant indicators of effectiveness of executing economic functions by the component environments of management environment system at the machine building enterprises of technological stages IV and V in terms of performing dynamic economic functions: enhancing capability in comprehensive staff retention, increasing financial motivation and safety for employees, growth in profitability by increasing the potential of employees’ experience, development of innovative potential by developing the intellectual one; increasing the provision with reliable partners, increasing savings on costs, increasing the economic substantiation of interaction in ecosystem, development of consumer interest towards innovation; increasing the supply of active main assets for core activity, renewal of technical and technological states, actively increasing the share of intellectual property in assets, increasing active innovation. The novelty of present research is in the identification of differences in the range of values for indicators of the dynamics by economic indicators of effectiveness in the functioning of management environment system for the enterprises that operate within the framework of technological stages IV and V, and the substantiation of their drivers. A practical result of the study is a deepened analysis of economic indicators of effectiveness in the execution of economic functions by management environment system with the substantiation of their comparison by the machine building enterprises that operate within the framework of technological stages IV and V. A direction for further research is the substantiation of achieving indicators of the dynamics of execution of economic functions for financial-investment environment system at a machine building enterprise.

194-200

Authors: Ivanov, L.

The article focuses on the role of cultural diversity in consumer research. The topic was approached in a non-empirical manner utilizing relevant literature published in the period 2011-2015 in A+ to C ranked journals. Four themes emerged and were integrated into the «4Cs» research taxonomy: Consumer differences, Consumption practices, Complexity in research, and Communication advice for practitioners. Two distinctive streams of research on the topic were identified. The first one concentrates on biculturals by birth or by migration. The second one investigates attitudes towards cultural diversity through identity formation. Important findings from the first stream are that cultural competence impacts the allocation of decision making roles, biculturals are more willing to consume diverse products, and biculturals react positively toward both individually or interpersonally focused advertising appeals. The second stream, related to attitudes towards cultural diversity, identifies that cultural identity impacts consumer behavior. Cultural identity can be approached as national vs. global identity, or as local vs. global identity, or from a position of the global citizenship.

207-214

Authors: Katan, L., Vasylieva, N., & Vinichenko, I.

With the accelerated globalization processes, the strength of connection between agricultural production and rural territories is growing; the ratio is changing in the structure of institutions of influence towards financial provision of balanced economic, social and environmental development of this complex systemic formation. Despite the growing interest in research papers to the issues of financing agriculture, an analysis of institutional foundations for the provision of financing the sustainable development, which take into account the multifaceted nature of institutional mechanisms of its implementation in the agricultural sector, is limited. The aim of present work is to substantiate theoretical-methodological and applied principles of institutional provision of financing the sustainable development of agrarian sector in Ukraine. We defined key approaches to the formation of institutional provision of financing the sustainable development of agrarian sector. We believe that the institutional provision of financing the sustainable development of agrarian sector is a set of socio-economic, organizational and legislative measures of state authorities and entities (collectively, public and private institutions) in the field of financial relations that form necessary legal, organizational and economic conditions for effective engagement, accumulation and application of financial resources in order to achieve a planned dynamic social-ecological-economic effect. The components of institutional provision of financing the sustainable development of agrarian sector are presented. We analyzed the status of agricultural sector in Ukraine over 2000-2013 and evaluated the tightness of relationship between the volumes of investments and the level of development of national economy (GDP) and agricultural sector (agriculture DP). It was revealed that the growth of investment in fixed capital by UAH 1 million contributed to the GDP growth of national economy in Ukraine by UAH 60.9 million. At the same time, an increase in investments in the main capital of agriculture by UAH 1 million predetermined the increase in the gross production of agriculture by UAH 7.9 million. The sources of financing agricultural sector that are closely related to the development of agricultural sector (correlation coefficient is equal to 0.94) include foreign direct investments, but they do not exert significant impact on the growth of gross agricultural product (growth by USD 1 million stimulated increase by UAH 0.14 million). In the agricultural sector, investment activities of both domestic and foreign investors remain secondary; the amount of invested resources does not meet required volumes. We proposed to create an innovative-oriented cluster of agricultural sector, to improve credit mechanism and the mechanism of state regulation in the context of sustainable development. The value of present research consists in determining the tightness of connection between the amounts of investment provision and the level of development of national economy (GDP) and agricultural sector (agriculture DP). Practical use of recommendations, proposed in present work, on updating the draft Concept of the "State program for sustainable rural development in Ukraine through 2025" will make it possible to optimize financial mechanism of state support for sustainable development of agrarian sector in Ukraine. A promising direction of research is the study and assessment of the possibility to apply foreign experience in the optimization of components of institutional provision for financing the sustainable development of agrarian sector in Ukraine.

222-228

Authors: Kucherenko, A.

One of the most important decisions that entrepreneurs and investors adopt in the process of their activities to obtain a positive micro- and macroeconomic result is the placement of monetary funds into ranked financial instruments. Such a decision requires understanding of investment features and risks for all classes of assets. A special attention should be paid to derivatives as their use, despite high effectiveness, is not commonly practiced in Ukraine. The aim of present work is a theoretical study of financial and organizational prerequisites for hedging, particularly, to identify obstacles to the introduction of this technique, including when working with derivatives, in risk management, formation of conceptual approaches to assess and overcome obstacles in the effective application of hedging strategy. Main problems in the application of hedging technique for the work with derivatives at domestic enterprises and financial markets of Ukraine are characterized. We substantiated a hedging technique as an alternative, by efficiency, method in risk management. The most common financial techniques are characterized, which include natural and synthetic types of hedging. A structure of the financial market is revealed, and financial negotiable instruments – objects of application of hedging technique – are classified. A system of participants in the Ukrainian stock market is presented. We described the essence of technique and certain methods of hedging. Micro-and macroeconomic obstacles are identified when applying hedging relative to derivatives: unsubstantiated number of exchanges, weakly-developed legal-normative base, insufficient warrants of property rights to foreign investors, lack of actual delivery of the base asset, low investment attractiveness of Ukraine, lack of a unified regulator for financial markets, absence of hedgers, small volumes of transactions for all futures, low level of financial literacy among the population. The scientific novelty of present research is in outlining the aspects of practical implementation of hedging technique into risk management in dealing with derivatives. Results of the study might be used by legal entities when managing risks in operational and financial activities. Further research into the scientific problem specified may be directed to regulate drivers of profitable business activity by innovative and progressive methods and techniques.

237-243

Authors: Onyshchenko, S.

Globalization has a dual effect on the world financial system, contributing to its development and simultaneous occurrence of potential threats to financial security of states. Despite their rapid escalation to the real ones, most countries in the world do not perceive these threats as serious. Enhancement of the latter necessitates studying the problems of providing for the budget safety under conditions of world globalization, redefining directions when forming effective budgetary system in terms of secure development, strengthening the fiscal security of state. It is necessary to explore in detail the drivers that influence the level of budget safety and its interrelations with other components of economic security. The aim of present work is to examine relationships of budget safety taking into account effect of the process of financial globalization and to assess its level by the principles of retrospective analysis. We proposed our own interpretation of the concept of budget safety as the level of capability of a budgetary system to ensure solvency and financial stability of the state, effective use of budget funds taking into account strategic development priorities of budgetary relations and potential capability to resist and predict the threats of internal and external origin. Results of analysis of economic security indicate the highest rate of decline in financial security in 2015 by 14.1 percentage points to the level of 36.7 % among all the components of economic security. It was established that this situation is due to a decrease in revenues from basic budget-forming taxes with strengthening fiscal pressure on the economy, a sharp devaluation of the national currency, a significant growth of the state and the state-guaranteed debt with increased risk of default, illiquidity and insolvency of financial institutions, shrinking resource base of banks, problems with their capitalization. This determined critical and close to critical state of almost all the components of financial security. We analyzed current status of indicators in budget security. The correlation links are assessed between the integral level of budget safety and other components of economic security. The factors and interrelations of impact on the level of budget safety were defined. Direct dependence and the largest impact on the poor level of fiscal security were caused by absolutely dangerous levels of currency and debt security. We substantiated the need to improve a methodological approach to determining the level of safety with regard to the globalization processes and drivers of exogenous and endogenous origin, which reflect the share of the shadow economy, debt and fiscal burden on the budget, inflation processes and other indicators, key to providing revenues to the budget. The scientific novelty of present research is in the following: based on the results of analytical assessment of interrelations in budget security, we defined methods, means and tools for state regulation over risks and threats, we performed a strategic monitoring, prediction and implementation of measures of preventive nature to ensure economic security. A practical significance of the results obtained is the verification of provisions to improve scientific and methodological principles for the assessment of level of budget security of the state taking into account the budget safety interrelations with other components of economic security. Results have practical value to the bodies of state administration when compiling

250-257

Authors: Samoilenko, A.

Under conditions of global intellectualization of technology, information–communication and transport infrastructures are closely connected to the utilization of intellectual and creative capabilities of human resources. It is an appropriate and relevant question to address the optimization in regulating the international movement of human resources and to define economic instruments to stimulate the development of intellectual resource of Ukraine. The goal of present work is a theoretical substantiation of recommendations concerning the regulation of international movement of human resources in Ukraine and economic instruments for the development of intellectual resource of the state under conditions of global intellectualization. In the research, we applied general scientific and special research methods: induction, deduction, method of imaginary experiment and substantiation, theoretical generalization. A conclusion was drawn on that the strategic direction of economic policy in the development of intellectual resource in Ukraine should be a state-led regulation of international movement of human resources in all their forms, namely, migration, tourism, transit-professional relocations and virtual international movement. Development of intellectual resources of Ukraine depends on economic instruments, among which we consider it appropriate to highlight: state monitoring over the processes in international movement, intellectual property protection, motivation of development of domestic human resources, the intensification of international cooperation, promotion of intellectual immigration and re-emigration. The scientific novelty of present research is the substantiation of recommendations related to the regulation of international movement of human resources and the determination of basic tools for development of intellectual resource in Ukraine. A practical value of the research consists in the fact that the results obtained might be used by state bodies to improve effectiveness of the legal base and protection of intellectual resources of Ukraine at the national and local levels. In future, further research can be directed towards the conceptualization of state economic policy in the regulation of international movement of human resources of Ukraine; to study experience of the world leading countries on retaining intellectual resource.

280-286

Authors: Zinchenko, O., & Malyshko, U.

Under modern conditions of business operations, an analysis of environment of an enterprise is getting more and more important. This is an initial phase in the formation of strategy of the enterprise, since it provides for the appropriate basis to define the mission and goals of its functioning. Existing methods of analysis, however, are more focused on the factors in macro environment; as for the microenvironment, it is examined comprehensively, not accentuating its exceptional role in the process of management decision-making. This predetermines the need to develop methodologies and approaches to diagnosing the environment of business, their approbation under conditions of a particular enterprise. The aim of present work is to develop, based on the methods of SWOT and PEST analysis, a new technique, which will make it possible to assess the impact of factors in microenvironment on the results of current and future activities of an enterprise in the pharmacy industry. We developed a new technique for CLCP-analysis, by using which one it is possible to assess the impact of factors in microenvironment on the results of current and future activity of an enterprise. To conduct a new analysis, four groups of factors in microenvironment were isolated, which in case of their change are capable of affecting the activity of an enterprise. These are factors of influence from consumers, legislation, competitors and providers. An algorithm for conducting the CLCP-analysis is proposed, which includes five stages: identification of factors that may affect activity of the company; analysis of significance and a degree of influence of each factor; assessment of probability in the changes of factors; evaluation of real significance of the factor; compiling a consolidated table of CLCP-analysis. We devised a tabular form for the representation of information related to CLCP-analysis. This technique was verified under conditions of an establishment in the pharmacy industry. We found factors that may affect the company the most in the event of changes – this is the occurrence of new consumer requirements to the product range, increased state taxes, the use of new technologies in service sector by competitors and failure to supply the goods on time by suppliers. A ranking of these factors was conducted based on the method of expert estimations. We proposed actions for the enterprise to minimize threats and utilize possibilities that may occur due to changes in microenvironment. In contrast to others, method proposed by Authors will make it possible to assess in full and comprehensively the factors in microenvironment and refine the processes that take place in it. It might be used for business diagnosis when developing competitive strategy of the enterprise. Important scientific tasks of both theoretical and applied nature in future implementation of the given methodology is the cost assessment of influence of each factor in the microenvironment of a pharmaceutical company, development of mechanisms to minimize the risks associated with changes in microenvironment, analysis of interrelation between the micro- and micro-environment. Their fulfillment will contribute to the development of strategic management and implementation of its approaches in the practice of enterprises in the pharmaceutical industry.

3-14

Authors: Falkiewicz, S., Wohlgemuth, V., & Bogodistov, Y.

The article is a part of a larger analysis of the scientific literature on the subject of entrepreneurship and related trends of scientific research. The main purpose of writing this article is a review of international scientific literature on entrepreneurship with emphasis on the aspects of an individual and the society and resource management. For a comprehensive review, 100 topical research papers were selected in the following categories: individual, economics, theories, building relations, mistakes, opportunities, internal entrepreneurship, strategy, resource management and family enterprises. The article focuses on the actual definition of entrepreneurship and its aspects, namely "individual and society" and "resource management". The analyzed subjects provide material for future research. Suggestions on interesting topics for further scientific research are attached. It is proved that a common concept of entrepreneurship, “an entrepreneur is born, not made”, is false. Despite the fact that the term "entrepreneur" has existed for more than 200 years now, a radical development of the concept has become obvious of late. Entrepreneurship today occupies a central position in the economy, and every economy grows thanks to the small and medium enterprises and their innovativeness. Special attention is paid to the modern interpretation of entrepreneurship in scientific journals. A review of current scientific trends through the lens of the concepts of "individual and society" and "resource management" is proposed.

23-33

Authors: Bеlopolskyi, M., & Kuzmina, O.

The purpose of writing the article is presenting the results of the study of theoretical and methodological aspects of the development of the stages of strategy of sustainable development of an industrial enterprise and determining main directions of this development. The research was performed using the methods of synthesis and analysis, deduction and induction. The essence of the concept of strategy of sustainable development of an enterprise and its components was revealed. The strategy for sustainable development is proposed to be considered in two aspects: economic and social. It was established that an enterprise enters new levels of competitive management and the operational effect of synergy occurs. It was proven that the formation of development of an enterprise should be based on synergetic harmony with the terms and objectives of the enterprise as a whole and with each functional unit. Main stages of formation and implementation of the strategy of sustainable development of an industrial enterprise were characterized. The paper considered the specificity of defining strategic position, formulating an enterprise development strategy, identifying opportunities and peculiarities of application of an express test for the actual financial state, allowing detecting signs of imbalance at the enterprise without significant calculations for the diagnosis of the actual financial status. In order to ensure prompt and unbiased testing of the actual financial state, it is advisable to restore the practice of social certification in the industry. It was proven that an important aspect in the formation and implementation of balanced development strategy is the development of the concept of sustainable strategic management of industrial enterprises. The concept allows establishing methodological bases of management principles and methodological bases of management technologies and tools for individual companies. It was established that the strategy of sustainable development of industrial enterprises should be based on a long–term program of sustainable development, which is a strategic document that contains a number of steps, coordinated in space and time, to engage resources. It was proven that the implementation of a balanced strategy of development involves purposeful improvement of economic, organizational, technical, technological, production, market, social, administrative, environmental and other components of the system. Transformations that occur in the course of implementing the strategy under the influence of external factors acquire new quality, both economic efficiency and competitiveness of the enterprise in the market increase. The scientific novelty of the research lies in the development of the concept of strategic management of the balanced development of an industrial enterprise based on purposeful improvement of economic, organizational, technical, technological, production, market, social, administrative, environmental and other components of the system, which collectively provide a synergistic effect. The practical significance of the work is in the possibility to form and implement a strategy of sustainable development of an industrial enterprise as an efficient system of management, which will provide for a timely forecasting of purposeful and gradual improvement of economic, organizational, technical and technological, production, social, administrative, market, environmental and other components of this system, which will acquire new qualities during the process of implementation of the novelties.

44-54

Authors: Goley, Y.

The aim of the research is to improve the management of innovative potential in the field of Housing and Communal Services (HCS) under conditions of establishment of decentralization of the regions and the formation of measures to provide reforms in this area. Theoretical and methodological basis of the research is the scientific papers and designs of local and foreign authors; the State program of reforming HCS. To achieve the set purpose, we applied general scientific, as well as comparative and analytical methods. The need to manage the innovative potential under conditions of growing competition among national manufacturers in their pursuit of integration into the world economic space was researched. The performed analysis found technical–technological and financial state of HCS in the regions unsatisfactory. Formation of measures to implement the State program of reforming and development of HCS was substantiated. It was demonstrated that the way to engage foreign investments stumbled into certain obstacles, related to the excessive centralization of financial resources and their insufficiency for economic freedom of the regions. Special attention is paid to the fact that innovation activity in Ukraine has low level of development that can be explained by insufficiency of financing of scientific activities (applied research, designs), as well as the lack of incentives for its implementation. Unfavorable macroeconomic situation and the activities of the government bodies to withdraw working capital, increasing taxation burden lead to decrease in innovation activity of enterprises. It was demonstrated that the priority fields of the economy of the state, which need stimulation of investment and innovation, also include HCS, which remains one of the most technically backward industries of the national economy. It was proven that the current state of technological infrastructure did not meet the requirements of a market-driven economy. The qualitative analysis of technological backwardness of HCS in Ukraine by the leading foreign specialists was cited, in particular by the Friedrich Ebert Foundation. The scientific novelty of the research lies in the need to improve the management of innovative potential and to develop proposals of consistent reforms in the area of HCS. Practical significance of the work is to provide recommendations to the urban residents regarding the implementation of the advantages of setting up ACMAB. The prospect of further research is the analysis of existing ACMAB in the regions and preparation of proposals for elimination of the shortcomings in their activity.

68-77

Authors: Evtushenko, N.

The paper is devoted to the study of the current state of taxation system in the period of its reform and to further designs in the field of fundamental bases of taxation. The purpose of writing this article is an in–depth study of the nature, the essence of risks in the sphere of taxation, consideration of the content of the system of the risk management and substantiation of conceptual bases of the efficiency of the taxation risk management by introducing a systematic approach under conditions of a large share of the shadow economy. The study was conducted with the use of the methods of deduction and induction, system approach, analysis and synthesis on the basis of the legislative framework of Ukraine, data by the state fiscal service of Ukraine, data by the state statistics service of Ukraine, papers by domestic and foreign economists, materials of the authors’ research. The nature and position of taxation risks in the system of their management were studied. It is proven that the taxation, as well as economic, risks are usually too overestimated, because as far as the cost is concerned, the measures to improve the performance results of human capital are very vague and formed under imperfect information conditions. The need for a systematic approach to managing taxation risks was identified. The main elements of the management system of taxation risks were considered. The influence of human capital and information on the efficiency of taxation risks management was proven. Special attention is paid to the feasibility study of taxation risks in the system of their management and to minimization of countermeasures. It is proven that such a system can be described as a set of certain methods, procedures and measures that makes it possible to forecast the deficit of tax payments and to take measures in regard to minimizing abuses in the taxation field. The main elements of the taxation risks management system were considered. This system is a set of interconnected and interrelated elements such as: 1) the essence and the original sources of risk; 2) analysis, evaluation and description of the risk; 3) methods of minimizing risks; 4) monitoring of measures of prevention and counteraction of risk. It is proven that the method of systematization of the taxpayers is applied according to the standards for determining the taxation risks in the system of their management. This approach will allow implementing into practice a new strategy of organization of the control and revision work with significant reduction in the cost of implementation of planned inspections. It is stressed that the taxation risks should be considered as a scientific basis for the design of the criterion of the efficiency of creating systems of national taxation security. Like any risk, taxation risks must not be identified only, but kept to a minimum. To do this, it is advisable to apply a taxation risks management system as a set of certain methods, procedures and activities. The use of human capital and information software will provide for reaching the necessary level of efficiency. The application of a systematic approach in the theory and practice of taxation will help to anticipate the negative consequences of the impact of the external environment; will contribute to the efficient monitoring of the risks and their practical management. The fiscal service may increase the amount of tax revenue to the budget by reducing tax abuses (tax evasion). This, in turn, will promote the exit of the economy out of the shadow. Scientific novelty of the research is in the deepening and determining the nature and the essence of taxation risks, as well as the substantiation of conceptual bases of the efficiency of their management through the implementation of a systematic approach. Adopting a systemic approach will allow fiscal services to efficiently manage taxation risks. A promising area of research is to review regulating documentation of the state fiscal service on the basis of a systematic approach and consideration of taxation risk as a measurement of results of human capital performance and imperfect information provision.

87-96

Authors: Meshko, N., & Shitov, D.

Growing international competition on the world market increases relevance of the problem of development of high technological potential of the country. The most dynamic sector of the world economy is knowledge–intensive services that belong to the most science–intensive and technology–intensive sector of the world economy. The purpose of writing this article is to systemize scientific and practical bases of research into the area of knowledge–intensive services in the context of global economic integration. General scientific and special research methods were applied: the method of historical analysis, method of abstract–logical analysis, theoretical generalization, systematic approach. The paper defines knowledge–intensive services as the main factor in the rapid development of the national economy. Their connection to the increasing importance of knowledge and to their converting into a separate factor of production was substantiated, which directly affects the formation of the national competitiveness of the economies of countries and increase in their productivity. A historical review was performed and it was discovered that the model of innovative development of national economy transformed into the concept of the "knowledge economy”, because scientific and technological innovation is just the final result of a wide range of socio–economic factors, many of which form and operate outside the productions facilities, where innovations are directly implemented. It is shown that innovations form the basis of the development of the global economy: companies perceive them as an efficient means of increasing profits and entering new market segments, while the governments – as a means of accelerating economic growth through competitiveness in global markets. It is stressed that the knowledge–intensive services are an integral part of the economy. They are based on knowledge and are an important driver in the development of the world economy under conditions of global economic integration. The main factors were investigated that influence the pricing of knowledge–intensive services. The factors of the formation of the market for knowledge–intensive services were substantiated. The scientific novelty of the research lies in the systematization of scientific and practical bases of the development of knowledge–intensive services in the context of global economic integration. The practical significance of obtained results is the application of materials of this article by domestic scientists to analyze the pricing and competitiveness of knowledge–intensive services of Ukraine in the world market. Analysis of the drivers of creation of the export potential of the knowledge–intensive services of national economies of leading countries is a relevant scientific task for further studies.

103-113

Authors: Nosyk, О.

Exploring the peculiarities and trends in innovation development in modern conditions is based on defining its new characteristics caused by postindustrial transformations. The aim of writing this article is to study the main elements of open national innovation systems and trends of their integration into international innovation cooperation. In the course of performing the set tasks, we used methods of system and structural–functional analysis to substantiate the main components of open innovation systems and the trends in their formation and operation. It was stressed that the main characteristics of open innovation systems are innovation entrepreneurship, innovation networks, innovation cooperation and partnership, innovation clusters and ecosystems. The driving force of modern innovation process is the entrepreneurial innovation activity, covering all stages and areas of system innovation process, relying on innovations in technology, management, market, social and providing for innovative development of the society. It was discovered that the innovative collaboration involves its participants in the innovation process with the use of such forms as technology transfer, information exchange, research and educational programs, commercial exchange of innovative products. Innovation partnership combines innovation resources and activities of the participants – setting up innovative enterprises, joint implementation of innovative projects. In the modern period, innovation collaboration and partnership develop at the level of corporations, industries and sectors of national economy and on the international level. Development of innovative cooperation and partnership depends on the formation and status of innovation ecosystems as the medium of open innovations. Influenced by global factors, the development of innovation clusters is characterized by the trend of internationalization of innovation activities on the basis of international cooperation among clusters of different countries. Innovation development leads to certain transformations in the human capital, growth in the level of its innovativeness and innovation. Internationalization of human capital in innovation occurs on the basis of the development of international scientific and technical cooperation and implementation of social humanitarian programs. Directions of formation of open innovation systems are the development of innovation entrepreneurship, innovation networks, innovation cooperation and partnership, innovation ecosystems and clusters. The core of open innovation systems is the human capital of innovation development. The scientific novelty of this research made it possible to determine the conditions and factors for the innovation systems to reach various levels of open nature and substantiation of their components and areas of internationalization. The practical significance of the obtained results is application of the materials of this paper by the subjects of innovation activity for managing the innovation process based on the principles of open innovations. Further research into defined scientific problem will be focused on the substantiation of features of renewal of human capital of open innovation systems.

123-130

Authors: Slivenko, V.

The aim of the research is the analysis of efficiency of the processes associated with the innovations in the sphere of activity of the prosecution service during the reform of the law enforcement system of the state, the study of important factors of reformatting and dynamics in further changes in the system. To achieve the goal, we used a set of methods: comparative, of structural analysis, synthesis, induction and deduction. The processes associated with the realignment of the law enforcement institutions of the state were analyzed with their legal status clarified. The directions for reformatting of the law enforcement institutions of the state were identified, the innovations in the management of the law enforcement activity during the reform of law enforcement areas were illustrated: formation of new principles of personnel policy of the department (independent and transparent competitive mechanism of appointments to vacant positions), arranging the system of motivation, increasing the level of independence in decision making, getting rid of not inherent functions and improving the disciplinary liability of employees. It was noted that the reforms in the field of management of the law enforcement service were carried out with regard to international experience and the European standards of law enforcement. The scientific novelty of the research lies in the review of innovations in the sphere of the law enforcement activity in the period of radical reform of the society: formation of new principles of personnel policy in the department, independent and transparent competitive mechanism of appointments to vacant positions, arrangement of system of motivation, improvement in monitoring systems, increase in the level of independence of employees in decision–making, freeing employees from the unofficial "pressure" by the leadership, organization of independent and democratic bodies of the law enforcement service – Council of prosecutors and qualification board, getting rid of not inherent functions (general supervision over the law) and increase in disciplinary responsibility. Practical significance of the obtained results allows taking the conclusions into account in further reformatting of the prosecution service to a new law enforcement structure that meets the requirements of a legal state. Further research in this direction will contribute to the search for innovative ways of solving the problems of the reform of law enforcement system of our state.

144-153

Authors: Yaniv, L., & Zinchenko, O.

In the period of crisis situation in the economy and socio–economic instability in Ukraine, the problem of the budget deficit is very acute. In recent years the state budget of Ukraine has faced such a big problem as the deficit, due to the excess of spending over income of the state budget. The purpose of writing this article is to research into existing problems of the deficit of the state budget of Ukraine, substantiate causal relationships in the system of insufficient funding of state activities and development of ways of its optimization. During the study we analyzed scientific papers by Ukrainian scientists and experts who explore the problem of the deficit of the state budget, legislative and government materials. We used the following general scientific methods: method of cognition, method of analysis, method of analysis and synthesis, as well as the method of comparison. The essence of the deficit of the budget system and the reasons of its occurrence in Ukraine was considered. Underlying causes of budget deficit in Ukraine are slump in production, decrease in the efficiency of functioning of industries and businesses, unreasoned socio–economic policies, which led to a decline in the volume of gross domestic product and national income. This naturally caused a decrease in the volume of financial resources in the state and reflected in the indicators of the budget in the form of long–term deficit. We defined the dependence of the budget deficit on the government debt. It is established that there is a close relationship between the size of the budget deficit and state debt. Budget deficit increases national debt, and rising debt, in turn, requires additional expenditures for its service and thereby increases the budget deficit. The links of budget deficit to the country's economy were identified. We discovered the consequences of raising interest rate, which, on the one hand, reduces investment attractiveness in the domestic market of the country, on the other hand increases the attractiveness of the foreign financial investments in the country. Significant currency flows lead to the growth of the debt and, as a result, the growth of the currency exchange rate, reduction in the net exports of goods and decreased indicators of investment activity. This reduction is the reason for reducing the level of labour productivity and real income in all of its forms that provokes a decrease in investor confidence, and hence, reduces foreign investment programs and increases the withdrawal of capital abroad. The ways of overcoming budget deficit were substantiated that are based on improving the taxation system, attracting personal savings of the population to the investment sphere, providing financial support to small and medium businesses, enhancing the responsibility of businesses, strengthening control over the payment of state money, reforming taxation system, improving normative and legal support of the budget process. The scientific novelty of the research lies in the establishment of causal relationships of budget deficits for the scientific substantiation of budget management in the period of the structural transformation of the economy. The practical result is to identify ways of reforming the budget system of Ukraine and its transition to the investment model. A promising direction for further research in this area is developing a model of the budget process on the basis of causal relationships, which is capable of detecting the risks of deficiency and minimizing their impact.