Purpose. To analyze the kleptocratic economy as an institutional arrangement that is focused on the key function of generating sources of income for the ruling pseudo-elite by introducing corrupt non-market transaction costs for firms and households, which are based on administrative, bureaucratic and political violence. Methodology. In the proposed scientific research, we distinguish three types of research methods: firstly, inherent in cognition as a whole (general logical) methods such as analysis, synthesis, abstraction, generalization, induction, deduction, analogy; secondly, general scientific, primarily empirical, research methods, namely observation, description, measurement; thirdly, the theoretical methods of cognition used by the economic science, in particular: idealization, formalization; the axiomatic method for constructing theoretical knowledge; a hypothetical-deductive method for constructing and developing theoretical knowledge. Findings. The socio-economic structure of Ukraine is analyzed from the point of view of the factors that are determined by the impact of formal and informal institutions in kleptocratic economy and affect corruption risks. Recommendations are provided for modernization of the institutional environment in Ukraine in the context of the modern methodological paradigm of searching for points of contact within the interaction of government, business and society. Originality. The proposed study carried out a comprehensive analysis of the institutional environment of the Ukrainian economy, which provides convincing grounds to characterize it as kleptocratic, and such where the fundamental modernization proposed in the work has yet to be implemented, accounting for the European integration prospects. In contrast to previously proposed studies, the presented approach focuses on the correlation between key performance indicators of institutions, GDP per capita, and corruption indices in Ukraine and in the studied countries of the European Union. Practical value. The research results can be used by specialized experts when forming the institutional requirements for creating an effective system for preventing corruption.