On the Transformation of the Russian Model of Budget Financing for Merit Goods

The budgetary organizations in Russia rely equally on market signals and on the directive target settings of their state founders. The author outlines the conclusion about the excessive negative externalities of state managerialism, which has spread in Russia since the budget reform. The author justifies the transformation of the budget economy, which is described as being “forged in fire”. On the one hand, the economy is forced to operate under the laws of the market. On the other hand, it functions within a closed bureaucratic system. As an alternative to the “dualism” of budget subsidies and revenue from services, alternative investments could become the “third pillar” that could gradually take the place of the state. The purpose of the article is to present the author’s model dedicated to the transformation of the budget sector by promoting the economic deregulation and investment finance. As a result, the model proposes a new approach to reducing the burden on the overall budget system in the long run by replacing subsidies with the other sources of revenue. The model is based on the bank loan to a budget organization, providing the government guarantees the amount of N-year total budget subsidies. The organization subsequently uses the bank funds to establish an endowment and generate investment income. At the end of the N-year period, the founder is relieved from the obligation to finance the budgetary organization. In the mathematical version of the model, given the parameters of the money market, a target level of investment return is determined that ensures the viability of such a model. Calculations confirm the conclusion that the model can be implemented with low (preferential) interest rates and a loan term of 8–12 years.

1. Higgs R. Crisis and Leviathan: Critical episodes in the growth of American government. New York, NY: Oxford University Press; 1987. 350 p. (Russ. ed.: Higgs R. Krizis i Leviafan. Povorotnye momenty rosta amerikanskogo pravitel’stva. Moscow: IRISEN; 2010. 500 p.).

2. Titmuss R. Essays on the welfare state. London: Allen and Unwin; 1958. 232 p.

3. Buchanan J. M., Musgrave R. A. Public finance and public choice: Two contrasting visions of the state. Cambridge, MA: The MIT Press; 1999. 272 p.

4. Rubinstein A. Ya. General theory of patronized goods: Textbook. St. Petersburg: Aletheia; 2024. 432 p. (In Russ.).

5. Kaul I., Conceição P., Le Goulven K., Mendoza R. U., eds. Providing global public goods: Managing globalization. New York, NY: Oxford University Press; 2023. 672 p.

6. Baumol W. J., Bowen W. G. Performing arts: The economic dilemma. New York, NY: The Twentieth Century Fund; 1966. 582 p.

7. Tambovtsev V. L. Economic ideology: Versions of the concept’s acceptations and application. Voprosy ekonomiki. 2024;(10):5–27. (In Russ.). DOI: 10.32609/0042–8736–2024–10–5–27

8. Zaostrovtsev А. Welfare state: Generosity or predatory? Voprosy teoreticheskoi ekonomiki. 2024;(4):22–44. (In Russ.). DOI: 10.52342/2587–7666VTE_2024_4_22_44

9. Yudaeva K. V. New Normal for Russia. Moscow: Delo; 2013. 20 p. (In Russ.).

10. Friedman M. The optimum quantity of money. Abingdon, New York: Routledge; 2017. 309 p. URL: https://www.dl.fiqhci.com/library/Crypto/economy-money/En/The-Optimum-Quantity-of-Money-nodrm.pdf

11. Friedman M. Money mischief: Episodes in monetary history. New York, NY: Harcourt Brace Jovanovich; 1994. 304 p.

12. Schwab K., Vanham P. Stakeholder capitalism: A global economy that works for progress, people and planet. Hoboken, NJ: John Wiley & Sons, Inc.; 2021. 304 p.

13. Jackson T. Prosperity without growth: Foundations for the economy of tomorrow. Abingdon: Routledge; 2016. 350 p. DOI: 10.4324/9781315677453

14. Jones C. I. The end of economic growth? Unintended consequences of a declining population. American Economic Review. 2022;112(11):3489–3527. DOI: 10.1257/aer.20201605

15. Kapelyushnikov R. I. Artificial intelligence and the problem of singularity in economics. Preprint WP/2025/01. Moscow: Higher School of Economics Publ.; 2025. 67 p. URL: https://wp.hse.ru/data/2025/01/23/1974857211/WP3_2025_01_____.pdf (In Russ.).

16. Kettl D. F. The global public management revolution: A report on the transformation of governance. Washington, DC: Brookings Institution Press; 2000. 117 p.

17. Volchik V. V., Koryttsev M. A., Maslyukova E. V. Institutions and ideology of managerialism in higher education and science. Upravlenets = The Manager. 2019;10(6):15–27. (In Russ.). DOI: 10.29141/2218–5003–2019–10–6–2

18. Lavrov A. M. The logic and prospects of budget reforms in Russia: In search of “optimal decentralization”. A Series of publications and documents (1998–2019). Moscow: Higher School of Economics Publ.; 2019. 832 p. (In Russ.).

19. Zvereva I. Public sector reform: Problems, achievements, and prospects. Round table, 02.02.2022. Voprosy gosudarstvennogo i munitsipal’nogo upravleniya = Public Administration Issues. 2022;(1):7–48. URL: https://vgmu.hse.ru/article/view/25029. (In Russ.).

20. Klyachko T. G. Organizational-economic reforms of the Russian education system. Obrazovatel’naya politika = Educational Policy. 2017;(1):47–61. (In Russ.).

21. Melnikov V. V. Metrics as pseudo goals of reforms. Zhurnal institutsional’nykh issledovanii = Journal of Institutional Studies. 2024;16(1):85–100. (In Russ.). DOI: 10.17835/2076–6297.2024.16.1.085–100

22. Zolotareva A. Prospects for encouraging competition in the public social services market. Ekonomicheskaya politika = Economic Policy. 2024;19(3):154–181. (In Russ.). DOI: 10.18288/1994–5124–2024–3–154–181

23. Radygin A., Entov R. Government failures: Theory and policy. Voprosy ekonomiki. 2012;(12):4–30. (In Russ.). DOI: 10.32609/0042–8736–2012–12–4–30

24. Rubinshtein A. Ya., Gorodetsky A. E. State paternalism and paternalistic failure in the theory of patronized goods. Zhurnal institutsional’nykh issledovanii = Journal of Institutional Studies. 2018;10(4):38–57. (In Russ.). DOI: 10.17835/2076–6297.2018.10.4.038–057

25. Dzagurova N. B., Agamirova M. E. High-Powered incentives and their possible dysfunctionality in public administration. Voprosy ekonomiki. 2020;(3):28–45. (In Russ.). DOI: 10.32609/0042–8736–2020–3–28–45

26. Radygin A. D., Entov R. M., Abramov A. E., et al. Large-scale reluctant privatization: Contradictions and challenges under sanctions. Voprosy Ekonomiki. 2018;(8):5–38. (In Russ.). DOI: 10.32609/0042–8736–2018–8–5–38

27. Voiko D. V., Voiko A. V. The relationship between the capital structure and the financial efficiency of the company`s activities. Vestnik universiteta (Gosudarstvennyi universitet upravleniya). 2021;(7):176–186. (In Russ.). DOI: 10.26425/1816–4277–2021–7–176–186

28. Karacharovskiy V. V. Social thinking capital: Individual discount rate when contributing to merit and public goods. Voprosy ekonomiki. 2020;(11):47–68. (In Russ.). DOI: 10.32609/0042–8736–2020–11–47–68

29. Kossova T. V., Sheluntcova M. Estimating social discount rate for government investment projects in Russia. Voprosy ekonomiki. 2024;(5):21–37. (In Russ.). DOI: 10.32609/0042–8736–2024–5–21–37

30. Borin E., Donato F., Sinapi C. Financial sustainability of small- and medium-sized enterprises in the cultural and creative sector: The role of funding. In: Innerhofer E., Pechlaner H., Borin E., eds. Entrepreneurship in culture and creative industries. Cham: Springer; 2018:45–62. (FGF Studies in Small Business and Entrepreneurship). DOI: 10.1007/978–3–319–65506–2_4

31. Maslenkova O. F. Loans secured by republican brands from a regional banking syndicate. Finance: Theory and Practice. 2023;27(4):206–218. DOI: 10.26794/2587–5671–2023–27–4–206–218