Summary

The institutional development is one of the actual topic in economics science. Directions of institutional development is depended on its structure and framework. Transformation of institutions is important for every economy, especially for developing countries. Institutions have a major role in our daily life. Economic processes are influenced as economic as non-economic institutions.Theyare different by their importance, structure and nature. So, economic analysis of institutions requires their arrangement into different groups characterized by specific features.

To measure different institutions, firstly we must group them. The most popular distinction is formal and informal institutions. Also, an interesting question is who sanctions rule-breaking? Government or society?So internal vs external institutions is present as a second dimension in the institutional structure.

First goal of research is to measure a size for each institutional type in transition/post-transition countries and compare to the Georgian economy. Considering both dimensions of institutional structure (formal vs informal, internal vs external) we get four types of institutions. We can use different indicators, but most suitable for our research are Global Competitiveness indexes.

Second aim of research is to determine interactions between institutions. We can use statistical methods to evaluate interactions between different types of institutions.

Institutional analysis shows important correlation between developments of different institutional groups. Formal internal institutions are most powerful in transition/post-transition countries.  These institutions are more successful in post-transition EU economies where arbitration of private sector is too effective. Like other transition countries, in Georgia formal internal institutions are powerful. Formal external institutions such most legislation have positive effect on the development of state efficiency.

Quality of informal internal institutions are too low as in Georgia as in other countries, because informal norms of society weakly corresponds to formal institutional environment. Public opinion about business-making is formed only after desolation of Soviet Union.

Also, dynamics of formal internal institutions development is similar to informal external institutions in Georgia. So, efficient policy of government and stable business environment causes formation of corporate ethics. But it is long-run process and has not instant sharp impact. In the overall, quality of the institutional space are progressing with close connections and synergy effect of different institutions.