An institutional structure is a certain ordered set of institutions that create matrices of economic behavior that define restrictions for economic entities that are formed within the framework of a particular system of coordination of economic activities^[87].

The state plays a crucial role in shaping and changing the institutional structure of a country's economy. To identify the influence of the state on the process of forming institutions, let us turn to its definition from the point of view of neo-institutional theory. According to D. North, «a state is an organization with comparative advantages in the implementation of violence, extending to a geographical area, the boundaries of which are determined by its ability to tax its subjects^[88]>». Therefore, the state can either promote the creation of effective market institutions, or, conversely, create an institutional structure that does not allow the advantages of a competitive order to manifest themselves due to monopoly power and other factors leading to an increase in transaction costs. Everything depends on specific historical conditions and the comparative effectiveness of a particular system of economic coordination in these conditions. Although it is the state that is a necessary attribute of progressive economic systems, the institutions generated by it can not only contribute to improving efficiency (in the sense of approaching the conditions of Pareto-optimal resource allocation), but also hinder it^[89].

The institutional structure of the economy of each country is formed both under the influence of historically formed state actions, and as a result of the natural, spontaneous selection of the most viable and effective institutions.

In countries with established market mechanisms, especially in Western countries, the institutional system is at a high level of development and corresponds to the prevailing mode of economic coordination. This allows such States to apply both direct and indirect forms of state intervention to implement targeted economic policies without significantly undermining the stability of the entire economic system. Even if such measures cause certain distortions in certain sectors of the economy, the scale of these deformations is usually not critical and does not lead to systemic failures.

The situation is quite different in countries with economies in transition or underdeveloped market relations. Here, the institutional structure is in the process of being formed, and sometimes it is completely absent. It includes elements inherent in both the market and command-and-control systems, which leads to institutional incompatibility and conflict of coordination mechanisms. In such conditions, the efficiency of the economy is significantly lower compared to both mature market systems and centrally managed models, where a clear vertical of management prevails.

Excessive state regulation, especially in the phase of market institutions ' formation, creates a situation in which state intervention does not so much contribute to economic development as hinders the formation of effective market mechanisms. As a result, an institutional paradox is created: the state intervenes because of the weakness or inefficiency of market mechanisms, but this intervention itself hinders the development of the necessary institutions, without which market mechanisms cannot fully function. This creates a vicious circle, which requires a delicate balance between regulation and creating conditions for independent institutional growth.

The emergence of institutions is inextricably linked to the formation of human society. Already at the dawn of civilization, when tribes began to form and society was stratified along property lines, basic economic institutions appeared – such as private property and free (market) price. These elements have become the basis for future economic interactions.

A key factor in the development of institutions is sustainable forms of interaction between people. The accumulated experience of communication and exchange forms the basis for reproducing the most effective and convenient behavior models. Over time, on this basis, as well as with the support of certain social groups, the idea of «correct» or «proper» forms of interaction is fixed in the public consciousness.

This is how informal institutions are born-rules and norms that are not fixed in laws, but regulate people's behavior. They are based on morals, traditions, habits, and social beliefs about justice. Despite their informality, these institutions are often no less important for the functioning of the economy than formal structures.

Formal and informal institutions exist dialectically in society, just as morals and law exist in society. Each of the institutional forms has strengths and weaknesses, as well as a different mechanism for maintaining and changing. Informal institutions do not need the support of the state, since the basis of support is based on the consciousness of people, on their choice of a model of proper behavior^[90].

The system of socio-economic institutions is in constant motion. The dynamics of its development depends on the vector and pace of transformation of society, its political, economic and cultural changes. Institutions adapt to new conditions, reflecting both internal demands of society and external challenges. The entire institutional structure is divided into three levels of functioning:

- the level of formal rules, which includes officially established norms, laws, regulations and policies governing socio-economic relations and the activities of institutions. These rules are amenable to formal legal adjustment and create a framework for the functioning of the state and the economy;

- the level of informal rules that encompasses sustainable practices, customs, norms of behavior, and unwritten agreements that are formed as a result of social practices and interpersonal interaction. They often play as important a role as formal laws, especially in weak institutions.

- the level of cultural traditions and values, which is a deep layer of the institutional environment, including historically formed attitudes, mentalities, religious beliefs and national characteristics that determine the perception of institutions and the degree of their legitimacy in the eyes of society.

These levels are closely interrelated: changes on one of them can trigger transformations on others. Therefore, the sustainable development of socio-economic institutions requires a comprehensive approach that takes into account the specifics of all three levels.

These levels represent a pyramid of institutional variability. Each level has a certain inertia and sensitivity. Formal institutions in this hierarchy are the most superficial and dynamic level. Cultural traditions originate in the minds of people and have the greatest inertia. The inertia of this level is based on the psychology and historical experience of people, and it will take a long time to change. Any attempt to influence institutions at this level is met with considerable resistance. Changes in the level of cultural traditions and values cannot occur with the same dynamics as the transformation of formal rules^[91].

Formal and informal rules are closely interrelated, but they differ in their nature and function, reflecting well-established values, norms of behavior, and cultural traditions of society. Informal institutions, such as customs, tacit agreements, and social sanctions, can play a key role in regulating public relations, especially when formal structures are weak.

If a society already has a stable system of informal regulation, for example, when concluding transactions and fulfilling contractual obligations, then the introduction of formal norms – in the form of legislation and the activities of authorized state bodies-can strengthen and institutionalize the already established practice. In this case, transaction costs and the cost of implementing formal rules will be minimal, since they are embedded in the usual context of interactions.

However, in the opposite situation, when informal institutions contradict the proposed formal norms or do not support their implementation, efforts to implement formal regulation will require significantly more resources. This is due to the need to overcome resistance from ingrained behaviors that may be inert and not ready for change. Thus, the effectiveness of formal rules largely depends on the degree to which they are consistent with existing informal institutions.

Modern societies in most countries of the world operate in a mixed economy, the socio-economic system of which contains such components as the state and business sectors of the national economy, as well as households. At the same time, « ... the public sector... is a special economic institution...»^[92], the main purpose of which is to meet the needs of society, as well as the production of high-quality public goods, such as ensuring national security, medical care and social protection of citizens, providing them with educational services, improving the level and quality of life of the population, developing public infrastructure, conservation of the natural environment , etc . However, «the production of clean public goods ... is indeed the prerogative of the public sector^[93]». The public sector also carries out state regulation of the economy, which « ... is a form of state intervention, the purpose of which is to influence the behavior of economic entities^[94]». It is the public sector that is the main regulator of the entire system of the national economy, so it is assigned the role of the central link of the entire social economic mechanism and the main means of achieving national development goals. Thus, the public sector of the economy can be characterized from two positions: first, such a sector acts as a special type of economic agent and the central subject of socio-economic relations, and secondly, the public sector is presented as the main regulator of these relations^[95].

The public sector of the economy, acting as a special institution, has a dual nature. On the one hand, it is a key subject of public administration, forming the «rules of the game», establishing norms, standards and regulatory frameworks for the functioning of all economic agents within the socio-economic system. On the other hand, the public sector itself acts as an object of management, since its activities are carried out within the same regulatory and institutional constraints that it partially forms.

This dual role gives the public sector a special significance and emphasizes its specific position in the national economy. It not only ensures the implementation of the state's strategic objectives, but also directly affects the sustainability and direction of economic development. In this regard, the public sector is an important mechanism for both ensuring the public good and institutional regulation, which makes it an important element both for the functioning of the State and for society as a whole.

The public sector, like any other institution, is characterized by institutional agreements and an institutional environment. At the same time, institutional agreements mean « ... contracts between individuals aimed at reducing transaction costs... the institutional environment is the framework in which institutional agreements are^[96]concluded». In this environment, formal and informal «rules of the game» are established for economic agents. However, the public sector is more prone to formal rules approved in the form of legislative acts, standards and regulations.

The public sector consists of many institutional units that function in the system of the national economy. It is characterized by a multi-level and complex hierarchical structure. According to O. S. Makarenko, the institutional structure of the public sector of the economy has two basic components, i.e. « ... is formed from the public administration sector, which includes authorities of different levels and institutions subordinate to them, and state institutional units included in the sectors of non-financial and financial corporations^[97]».

There are three key complex institutional structural elements within the public sector of the economy, each of which plays an important role in ensuring sustainable socio-economic development of the country. In the conditions of Kazakhstan, these elements are manifested as follows:

- government authorities. It is the central element of the management system that performs strategic planning, economic regulation and implementation of public policy at the macro-, meso-and micro levels. In Kazakhstan, such bodies include, for example, the Ministry of National Economy, the Ministry of Finance, the Ministry of Industry and Construction, the Agency for Strategic Planning and Reform, as well as agribusinesses at the regional and local levels. These institutions develop and implement state programs, such as the National Development Plan of the country until 2025, the Program of Industrial and Innovative Development for 2020-2025, the Program of Regional Development for 2020-2025, etc.;

- state-owned companies. These are economic entities that operate on the basis of state ownership and commercial principles. In Kazakhstan, such companies include JSC Samruk-Kazyna (National Asset Management Fund), which includes large national corporations such as JSC NCKazMunayGas» (oil and gas), JSC NACKazatomprom» (uranium industry), JSC NCKazakhstan Temir Zholy (railway transport), JSC «Kazakhstan Electric Grid Management Company» (KEGOC) (electric power industry), etc. These companies play a strategic role in ensuring economic sustainability, budgeting, and implementing infrastructure projects.

- state institutions and organizations of the social sphere. They ensure the provision of public goods and services to the population mainly on a gratuitous basis and are financed from the State budget. In Kazakhstan, such institutions include public schools, colleges, universities, hospitals and polyclinics, employment centers, social homes and boarding houses, libraries, cultural centers, sports schools, etc.

Thus, in the context of Kazakhstan, the public sector of the economy is represented by an extensive and multifunctional system that includes management, production and social elements. Their coordinated interaction makes it possible to effectively implement the country's strategic priorities, ensuring both macroeconomic stability and social sustainability.

It is also advisable to classify the institutional structure of the public sector of the economy on a hierarchical basis, based on the principle of building a «vertical of power», characteristic of public administration systems. This classification is particularly applicable to administrative institutions, since they assume different degrees of subordination and the presence of hierarchically structured structural units.

As a rule, in the institutional system of public administration, there are three main levels:

- the lowest level includes the head of State, the Parliament, the Presidential Administration, the Government, as well as central executive bodies, such as the Ministry of National Economy, the Ministry of Finance, the Ministry of Labor and Social Protection of the Population, etc. This level forms the strategy of socio-economic development, determines budget and tax policy, develops priority non-governmental projects and programs;

- the lower level includes regional akimats, city akimats of republican and regional significance, as well as relevant territorial bodies of ministries. It implements state policy in the regional context, adapts national programs to the specifics of the region, and coordinates the activities of subordinate institutions. Examples include regional departments of health, education, architecture, and construction.

- this level includes district and rural akimats, local self-government bodies that directly interact with the population and resolve issues of local significance, such as the provision of public utilities, landscaping, and local social support. In the context of political reforms in Kazakhstan, the institute of direct elections of rural and district akims is beginning to play an important role, aimed at strengthening the accountability and involvement of citizens in local governance.

This hierarchical structure is typical not only for the public administration system, but also for other elements of the public sector – state-owned enterprises and social organizations. Thus, large national companies, such as JSC NC «KazMunayGas» or JSC NC «Kazakhstan Temir Zholy», have an extensive network of subsidiaries, branches and production units subordinate to the head office. Similarly, the system of public schools or medical institutions is organized according to the principle of vertical subordination: from ministries to regional departments and further to specific local institutions.

The current scale and structure of the public sector in Kazakhstan is shaped by government policies, socio-economic development priorities, historical and cultural characteristics, and territorial differences. For example, in agrarian regions, special attention is paid to supporting agriculture and infrastructure, while in industrial regions-to modernization and innovation issues.

The public sector actively interacts with private businesses and households, forming a stable network of economic ties necessary for the stable development of the entire national economy. In Kazakhstan, this is manifested through the implementation of public-private partnerships, business subsidies, support for small and medium-sized businesses, as well as the provision of socially significant services to the population.

In this regard, the effectiveness of the public sector is determined not so much by the scale of intervention, but by the quality and soundness of its institutional structure. A well-designed system of state institutions – taking into account vertical and horizontal links, interagency coordination and flexibility-provides the necessary potential for sustainable economic growth, improving the country's competitiveness and the well-being of its citizens.

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^[96] Rozmainsky, I. V. Institutionalism // Journal of Institutional Studies. – 2010. – Vol. 2. – No. 4. – P. 139.

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