The article formulated the methodological foundations for macroeconomic instability and the emergence of cyclical fluctuations under sanctions, put forward a hypothesis for the restructuring of a market economy through an import substitution system. The system of changes in the global natural process of development against the background of global challenges is considered, the system of institutionalization of the economy is analyzed. The object of the study is the processes that characterize an unstable macroeconomic system, violating the theory of cyclicality under sanctions. The subject of the research is the economic system and transformational changes against the background of macroeconomic instability. The purpose of the study is to improve the economic system as a natural process; identifying the features in its development. Materials and methods. The methodological basis for writing this article is the sources on the stated topic. The authors of this article assume rationality and irrationality for the processes, phenomena, internal and external factors that affect the economic system and its development against the backdrop of global challenges. The following approaches are applied in the work: institutional for the formation of competitive partnerships, the method of functional competition, the market approach in the formation of advantages over competitors, and the synergistic approach as a source of development and diversity of economic dynamics. Results. The methodology in this study is based on methods of economic theory, a set of techniques, approaches and principles for studying the economic phenomena in a dynamic economic system following certain patterns. A system of "competitive relations" is constructed to form the architecture of the process chain development of systemic interaction based on the theory of the development of the socialization of the economy with a shift in emphasis by the prevalence of the interests of the state. New institutional approaches evolve against the background of increased competition, along with a healthy competitive environment, which actualizes the research process. It is determined that management, as an independent object of the system, affects the subject, which includes complex actions of the entire economic chain, capable of providing a basic impact, which is a component of efficiency. The development of market transformations in the context of macroeconomic instability requires a modification of the competition mechanism and a definition of the concept of competitiveness of the national economy as an effective system of economic growth. Conclusions. Against the backdrop of globalization and processes, as well as the new packages of sanctions introduced, the development of the macroeconomic system in the Russian economy, completely new relations are being formed between business entities. A new management system is being created in all areas of activity and a new order, which requires changes after transformational processes, production relations at a new institutional level. The results and conclusions of this study can be used in the transformational, competitive and synergistic processes of industrial production in practice.