INSTITUTIONS AS A FACTOR OF (REGIONAL) GROWTH AND DEVELOPMENT

Regional differences have become a frequent problem in all countries regardless of their development level. However, there are significant disproportions between level differences of a specific country. Many European Union Member States are concerned with significant regional differences as well as differences at their national levels. Determination of regional differences is usually performed according to economic criteria (e.g., GDP, unemployment rate of working-age population, revenues within local government, investments, extraction for education in GDP, foreign direct investments, etc.). However, taking into consideration just the economic indicators most of the time does not give a unique response when considering causes of the differences created. Therefore, the aim of the paper is to determine the institutional impact as a noneconomic indicator in growth and development differences – within-country and between-country differences. In this paper, institutions are considered to be comprised by North’s definition (2003, 13), according to which “institutions are the rules of behaviour in a society, or more formally speaking, the restrictions on which man has figured out how to shape human interaction”. Focus on economic criteria of monitoring the differences is usually expressed by economic growth. But, development comprises a wide variety of indicators reflecting the welfare of a specific country. Examples of differences within and between a certain country (countries) are going to be the frame for displaying a de facto situation. Besides, as growth and development are cine qua non components of every country, research and contribution of institutions are a necessity. Institutional performance of formal and informal institutions differs significantly. According to the predominance of a specific institutional form, it is possible to outline different guidelines of institutional impact. The purpose of this paper, according to the institutional activity framework in a specific country, is to record the influence on economic development of a specific territory (region) or economy as a whole.