Institutional environment – basic requirement of economic competitiveness

Research shows that institutions play a key role in facilitating private investment and that institutional quality is the most important factor that explains why capital does not flow from developed countries, where it has a lower return, to developing countries where it has a higher return The importance of institutions is not restricted to the legal framework. Government attitudes toward markets and freedoms and the efficiency of its operations are also very important: excessive bureaucracy and red tape, overregulation, corruption, dishonesty in dealing with public contracts, lack of transparency and trustworthiness, or the political dependence of the judicial system impose significant economic costs to businesses and slow down the process of economic development. The paper approaches thus a topic of present utmost interest, rising the interest of specialists, media and, last but not least, the interest of entrepreneurs, irrespective of their domain of activity.