The Role of Institutions in Socio-Economic Development

The aim of the paper is to quantitatively evaluate the impact of institutions on the socioeconomic development on a global scale and in factor-driven, efficiency-driven and innovation-driven economies. We define institutions as socially approved behavior models that restrict the rationality of an individual and constrain or encourage specific behavior and classify institutions into three groups-economic institutions, political institutions and value institutions. The regression analysis confirms that institutions play an important role in socioeconomic performance. But the importance of specific institutions depends on the socioeconomic development level of the economy. Results of the research can be applied to global development policies for less developed countries, as well as regional development policies for geo-political regions, e.g., the European Union.