HOW STATES INTERNALIZE EXTERNAL FINANCING: INSTITUTIONAL DESIGN AND INTEGRATION INTO NATIONAL ECONOMIC SYSTEMS
Abstract
The article examines the theoretical and institutional aspects of integrating external financing into national economic systems. Existing approaches to interpreting the role of external financial resources in ensuring economic development are analyzed, in particular the resource-based and institutional paradigms, and their limitations in explaining differences in the effectiveness of financing use across countries are identified. The expediency of applying the approach of internalization of external financing is substantiated as a process of transforming financial resources from an exogenous source into an internal structural component of the economic system. The role of institutional design as a key factor in ensuring the effective integration of external financing and its transformation into an endogenous resource for development is revealed. A model of institutional design for the integration of external financing is proposed, including coordination, strategic filtering of resources, a portfolio approach, and a performance evaluation system. The results of the study provide a basis for improving economic policy in the field of external financing management and expand the theoretical understanding of economic development mechanisms through the prism of institutional resource integration. Special attention is paid to the comparative analysis of practices of states that have achieved high efficiency in using external financing for economic modernization, structural transformation of production, and infrastructure development. It is proven that the decisive factor is not the volume of attracted resources, but the capacity of state institutions to channel them into areas with the highest multiplier effect. It is shown that the absence of an appropriate institutional environment leads to program fragmentation, growing debt burdens, and a weak impact on long-term growth. The practical significance of the study lies in the possibility of using the proposed approaches to formulate a modern strategy for attracting and utilizing international financial resources in Ukraine under conditions of post-war recovery and structural economic transformation.
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