Institutional structures and rules of behavior are a necessary condition for economic activity to flourish because incentive and price signal in a market economy cannot function properly without them. There are at least five main types of market-supporting institutions that are necessary, if not sufficient, conditions for rapid economic progress: property rights and legally binding contract; regulatory institution; social insurance institution; institutions for conflict management, and institutions to secure macroeconomic stability. Poor countries are often characterized by a lack of trust and the rule of law; weak institutions to mitigate risk and to manage social conflict; no clearly defined system of property rights: an inadequate regulatory apparatus to curb fraud and anti-competitive behavior; and a lack of clean government.
Key Wards: Institutions, Institutional Structures, Macroeconomic, Economic Development