Transformation of the institutional environment of a timber enterprise as a factor of social and economic development of the Finno-Ugric region in the 1990-ies

Introduction. The article examines the processes of transformation of the institutional environment of the regional timber industry enterprises in Karelia in the 1990s. The aim of the study was to identify the impact of this transformation at the level of socio-economic development of the Republic of Karelia as a Finno-Ugric region with the predominant development of the branches of the timber industry. Materials and Methods. The research methodology is based on the use of a predominantly institutional approach. Its application makes it possible to trace the changes that occurred in the structure of the institutional environment of regional timber industry enterprises with the beginning of market transformations in the 1990-ies, as well as the degree of effectiveness of the interaction of this enterprise with various economic entities. Results and Discussion. The analysis of the changes that took place in the first post-Soviet decade in the institutional environment of regional timber industry showed a number of negative aspects. First of all, the role of the state greatly reduced, which was unable to form effective “rules of the game” for the timber economy. The Forest Code adopted in 1997 infringed upon the rights of Karelia as a subject of the Federation, since only a part of the forests could be transferred to the ownership of the Republic. In the current difficult conditions, with the absence of the party and state control departments, and the difficult financial situation of the region, the role of regional authorities in solving the problems of forestry enterprises increased. In the context of spontaneous privatization and the collapse of the financial system, timber industry enterprises faced numerous problems of interaction with suppliers, customers, consumers and banks. This period was the time of the strengthening of the role of foreign companies in the work of timber enterprises. Unfortunately, having received a controlling stake in a number of domestic enterprises, foreign entrepreneurs were in no hurry to invest in their development. Conclusion. The transformations that took place in the institutional environment of the regional forestry enterprises in the 1990-ies negatively affected the level of the socio-economic development of Finno-Ugric region, based on the development of branches of the timber industry complex.