understanding the nature of government needs
Transcription
understanding the nature of government needs
ISSN 2219-746X EISSN 2219-7478 ECONOMICS / PUBLIC ADMINISTRATION RECEIVED 26.03.2015 ACCEPTED 25.04.2015 PUBLISHED 01.06.2015 DOI: 10.15550/ASJ.2015.03.106 UNDERSTANDING THE NATURE OF GOVERNMENT NEEDS I. Petrunenko National University “Odessa Law Academy” 7, Varlamov Str., Odessa 65000 Ukraine [email protected] Abstract: This article is concerned with determining the nature of government needs as one of the aspects of public procurement system and the main factor of public procurement management. It is stated that «government needs» became a legal term after the transition to market economy based on different forms of ownership. Proved that public needs can be identified by various qualities and introduced the criteria for distinguishing public needs. Supported the concept of «government needs» viewed as a mixed economy term that presents market mechanism of governmental interaction with business entities to satisfy needs in goods, works, and services. Maintained the position that the term «government needs», the scope of which can be changed with respect to historic and economic conditions, constitutes the expression of public private partnership. Distinguished the terms «public needs» and «public interests». Formulated the thesis that special public interests, which are met by means of specifically designed regulation mechanisms, are recognized as government needs. Satisfying government needs meets the demands of the whole society and the government; hence the needs have both economic and social content, which leads to the thesis that the term «public needs» would be more appropriate than the term «government needs». Keywords: Public procurement, government needs, public interest, social needs, governmental regulation of the economy, public private partnership. Introduction Current policy of any government is aimed at establishing stable relations with business entities by signing respective agreements that would affect economic development and improvement by means of public funds application. The government establishes legal and economic regulations that apply to the procurement of goods, works, and services at public expense, reinforcing relation between public procurement and government economics. The idea of dialectical causality of legal and economical grounds for the procurement of goods, works, and services at public expense is noteworthy, given that the law is considered as a concentrated manifestation of economy (Myhajlyk and Vernygora, 2011, p. 13). Said interconnection can be described as investing government budget funds into economy. In the context of financial and economic crisis, discovering most considerate forms and methods of public funds reallocation is of the essence. It is worth noting that reallocating public funds will not satisfy needs of every population group, since some groups are supported at the expense of other ones, and reaching consensus during the reallocation process is challenging. Under current conditions it is reasonable to introduce transparent reallocation of GDP through the budget, while the fiscal policy should be aimed at promoting business activities and discovering new forms of public private production modernization partnerships on the basis of innovative changes. (Butenko, 2009, p. 92-96). The specifics of public procurement market are high stability and guaranteed product distribution. However, there are negative aspects, such as pressure on the manufacturer. As reasonably mentioned by D. E. Sorokin, the excessive expansion of government share of the market is dangerous for business competition (Sorokin, 2002, p. 75), hence strict regulations that eliminate the possibility of corruption and ensure the competition between manufacturers are needed. The function of governmental establishments financed by government and local budgets is endowed through public procurement. In this case public procurement means acquiring any goods by government clients at public expense. 106 ADVANCEDSCIENCE.ORG THE ADVANCED SCIENCE JOURNAL It appears that the efficiency of most budget systems expenditures directly depends on legal, theoretical, and methodological support of public procurement institution and its development level, which provides for the relevance of research within this field. Government needs as a certain legal economic procedure should be considered in relation to public procurement market and certain need-specific factors. For example, A. O. Olefir mentions that it is reasonable to study public procurement problems within the context of legal relations, the requests of which are solved by said questions, since every one of them is instantiated by specific qualities (Olefir, 2012, p. 9). The quoted above provides for the author’s interest towards the outlined problem and specifies the range of research. Method Common academic interest of the author is studying legal and economic basics of public procurement system, providing grounds for systematic establishing of legal relations in context of current economic and legal policy, and providing recommendations concerning improvement of current legislation. The purpose of this research is studying the nature of government needs and understanding them during public procurement operations. It is possible to fulfill this purpose, provided that the following tasks are set: to determine nature and legal essence of public procurement and procurement management, to study the history of public procurement development and consider the possibility of adopting positive historical experience of legal regulation, and to analyze functions and principles of public procurement. The methodological basis of research includes general and special scientific methods: dialectical, logical, deductive, systematic, dogmatic, comparative legal, and historical-legal. For instance, social and legal nature of public procurements system, as well its interrelation with other fields and factors of economic management are studied using dialectic method; historical-legal method allowed analyzing certain conditions of public procurement system establishment and development; comparative legal method was used to study origination and historical establishment of said economic law institution; dogmatic method provided for public procurement regulations content analysis and allowed identifying the mistakes therein. Results One of the most important aspects for establishing awareness regarding government matters is that the government acts as a specific economic entity. Therefore, the government is, on one hand, is a supreme body of public economy, on the other hand – relative to other states – is a special social establishment (Beljanevych, 2006, p. 436). George Jellinek (Jellinek, 2004, p. 136, 374-375) mentioned that the government and public law unions are not only the bearers of public authority, but also entities that manage economy and their business by means available to a person not vested with power. The line between union’s actions as a wielder of power and as a business entity should be determined primarily by the respective legislation. The very existence of such social establishment as government preconditions and explains the necessity of satisfying ever-present public needs by means of public procurement that represents an integral system. Supporting development priorities is simultaneously the government management element and a public need, although the government management is too, by its nature, a public need. Largest Economies directly support the fields that represent the organizational policy and have limited capabilities for commercial and economic implementation of innovations. These fields include newly established knowledge-consumptive industries or businesses that require development alignment. The following manifestations of government influence on economy can be distinguished: supporting marginal economic entities and industries that improve living standards of population; revitalizing industry sectors that suffer from crisis; taking measures to mitigate possible unemployment; industrialization of underdeveloped regions by means of establishing new businesses, providing employment, personnel development, etc.; environmental protection and realization of economic ecological programs, etc. The elements of public procurement system are identifying needs in certain goods, works, or services, preparing orders for supplying goods, performing works, or providing services, placing orders, signing government contracts and their fulfillment. The analysis of introduced system implies studying it as a whole, and characterizing interaction of its elements. This methodological approach supposedly allows developing legal government mechanism adequate to complex legal relations in public procurement field, providing coordination of public and private interests when procuring goods, works, and services, as well as fixing legislation inconsistencies in this field. VOLUME 2015 ISSUE 3 107 ISSN 2219-746X EISSN 2219-7478 The term «government needs» constitutes an element of public procurement system. The necessity to develop special regulations that would determine which needs are recognized as government needs and met through the special procedure is evident. «Government needs» became a legal term after the transition to market economy based on different forms of ownership. Centrally planned economic system also did not recognize social needs that would be met by government. However, within that social and economic period, pursuant to the dominating concept, the government managed all aspects of economy: manufacturing, exchange, distribution, and consumption. As a representative of public interest, the government organized realization of planned production in the fields of industrial development, construction, transportation, agricultural produce procurement, etc. Government property was declared a public asset, all managing activity was performed by the government as a public representative, consequently, government and public interests were not distinguished; integral centralized mechanism of meeting social needs by setting planned tasks to manufacture certain goods in a specified volume and distribute them among specific consumers was in effect. Reformation period that changed perspective on economic role of the government began in the late 80th of XX century. References of that period mentioned that economic role of the government consist not only in direct management of enterprises, but is assured by the variety of its activities (Abalkyna, 1988, p. 380). The political course taken by the government was aimed at democratization of all aspects of public life, and included new economic system that was managing the activity of government enterprises basing on cost accounting and self-sufficiency. Plans tasks for enterprises expressed in a form of government order did not include the full volume of produce, but covered a part of enterprise’s manufacturing program. The policy of reducing the government orders relative share in the total volume of produce and encouraging enterprises to improve independent development of manufacturing program was in effect. Consequently, economic and legal content of government order was not limited to decentralization of planning comparatively to former directory tasks. The idea of A. F. Nozdrachev that government order reflected the following fundamental changes in the functions of centralized management relatively to enterprises: placing government orders only on essential produce, assuring the manufacturing of said produce, distribution of manufactured product at established price, making provisions for contractors’ commitment, etc. is definitely appealing (Nozdrachev, 1990, p. 45). The term «government needs» started being used as an independent legal term within legal framework that regulated market relations. It is known that needs can vary and include physical, spiritual, cultural, economic, and other aspects. Well-known notionalists, political and economic experts of the past and present, such as J. Gobson, K. A. Helvetius, G. W. F. Hegel, K. Marks, M. Weber, F. A. Hajek, and others viewed the need as the expression of human nature and subsumed it to the group of key economic categories. Need is a category that reflects the attitude of the public towards its living conditions. Social needs structure includes several types of relations that describe the reflection of life conditions of public, such as attitude towards environment (need to communicate with environment and protect it), current living means (needs in manufacturing means and commodities), towards themselves and other persons (self-expression, selfimprovement, social status, communication), towards labor and leisure (need in interesting creative work, rest, etc.). The nature of needs can be illustrated by the example of establishing new needs that arise from the people’s attitude to living conditions that are prone to the change due to people’s will. Hence, the needs have objective and subjective nature. The term «needs» is closely related to the term «interest». There is a reason why one of the meanings of «interest» is defined as «needs». Reference sources mention that special public interests, which are met by means of specifically designed regulation mechanisms, are recognized as government needs. Public interests can be identified by various attributes. One of criteria is provided by the law purpose for supplying goods, performing works, and providing services for public needs. Second criterion is a specific procedure for recognizing public needs. Public needs must be recognized in a manner specified by law. Another criterion of recognizing public needs is their financial source – budgetary and extrabudgetary funds that are specifically employed for these purposes (Dobrovolska, 2010, p. 78-79). «Government needs» is a mixed economy term that presents market mechanism of governmental interaction with business entities to satisfy needs in goods, works, and services (Andreeva, 2011, p. 10). Satisfying government needs is a type of interaction between government and private business (private business representatives) that constitutes an expression of public private partnership (Znamens’kyj, 2009, p. 7; 108 ADVANCEDSCIENCE.ORG THE ADVANCED SCIENCE JOURNAL Vinnik, 2010, p. 133). It would be reasonable to suggest that public private partnership is not any act of cooperation between government and private business, but the one caused by social need in realization of complex and/or long-term investment/innovation projects that the public interest bearers (government, community) cannot realize on their own (without involving private partners) due to the lack of necessary funds and other constituents necessary to implement these projects (experience, qualified personnel, innovative technology, etc.) (Shcherbyna, 2012, p. 71). The scope of government needs depends on specific historical and economic conditions, and can eventually change. However, as proven by historical and international experience, the purchases are made by the government for the purpose of resolving national issues, maintaining national defense capability and national security, as well as solving major social, economic, scientific, technological, and other problems. Thus, government needs can include demands in property, goods, services, and labor. The concept of government needs is articulated by special legal acts that regulate the provision of goods (works, services) for governmental purposes. A lot of countries significantly changed their legal acts in terms of public procurement; however, distinct criteria are required to define the notion of government needs, since public procurement is associated with vast spending of budget funds and is performed by implementing special legal mechanism introduced via legal acts. Therefore, «government needs» is a legal term that has its independent meaning. Public interests represent a vaster notion than government needs. The notion of government needs is based on the notion of public interests, which are, in fact, social needs recognized by the government. However, government needs are not equal to the notion of public interests. From our point of view, only special public interests that are met by means of specifically designed regulation mechanism are recognized as government needs (Petrunenko, 2013, p. 7). As was mentioned before, public interests can be identified by various attributes. One of criteria is provided by the law purpose for supplying goods, performing works, and providing services for public needs. Second criterion is a specific procedure for recognizing public needs. Public needs must be recognized in a manner specified by law. Another criterion of recognizing public needs is their financial source – budgetary and extrabudgetary funds that are specifically employed for these purposes. Listed arguments confirm that the needs of the whole society and government are satisfied by meeting government needs. These needs have both economic and social continent, therefore, we think that «public needs» would be a more appropriate term than «government needs». Discussion As concluded by the conducted research, public procurement as an economic and legal category represents a certain system with content, subjects, and other specific aspects. Organizing and performing public procurement can be considered as system composed from several elements. All elements of this system are related and their function is aimed at a single purpose – satisfying government needs. The term «government needs» is an element of public procurement system. The necessity to develop special regulations that would determine which needs are recognized as government needs and met through the special procedure is evident. Satisfying government need of various goods is performed in a context of establishment and development of goods market. Specifically, contractual form of relations with business operators is implemented, as it is in foreign countries. Public procurement market covers the turnover of goods, works, and services required to meet the most important needs of the society. These findings emphasize the economic and legal nature of public procurement and can constitute the basis for further research in this field. References Abalkyna, L. et al. (1988). Polytycheskaja ekonomyja. Moscow: Polytyzdat. Andreeva, L. (2011). Zakupki tovarov i energoservisnykh rabot dlya federal'nykh gosudarstvennykh nuzhd: pravovoe regulirovanie. Moscow: Volters Kluver. Beljanevych, O. (2006). Gospodars'ke dogovirne pravo Ukrai'ny (teoretychni aspekty). Kyiv: Jurinkom Inter. Butenko, O. (2009). Rol' derzhavnogo bjudzhetu v investuvanni ekonomiky. 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