Systemic analysis of informal institutions: advantages and disadvantages (logging industry in the Irkutsk Region case)

The importance of informal institutions in the logging industry has been analyzed. The relationship between informal and formal institutions of the forestry industry has been explained, and the role of informal institutions in correcting the dysfunctions in the formal system has been shown. The current issues of formal forest institutions and options for the government’s response to the abnormal situation have been considered, using the example of the Irkutsk Region forestry industry. The purpose of the study is to find real ways to reduce the level of informal institutions activity associated with their excessive influence on the logging industry economy. The object of the study is Russian logging industry. The subject of the study is informal institutions and changes in its place and role in the timber industry structure, as they are often destructive due to the weakness of formal decision tools. The system analysis methodology is used to study the formal and informal institution concepts in the logging industry. The study concluded that the use of informal institutions by formal systems provides them with tangible benefits and strengthens their position in the logging business. The regulation of the logging industry activity requires a systematic institutional approach combining legal changes considering the social and economic opportunities of the forest industry. However, reducing the informal institutions influence for human rights development is possible in the context of current forest industry regulations. The content of formal and informal forest institutions activities has been characterized, and it has also been established that their activities are interrelated.