NEW INSTITUTIONAL ECONOMICS AND INSTITUTIONAL CONVERGENCE

This research provides analysis of theoretical and empirical findings that have largely shaped contemporary understanding of institutions and their role in development management. The paper reviews the basic principles of the New Institutional Economics employed to examine the process of institutional convergence. Transition and the European Union (EU) enlargement process, as well as creation of globally competitive community depend on institutional capacities and institutional quality. Both common and national institutions are responsible for the successful implementation of development policies. The phenomenon of institutional convergence is tackling key development issues within the general development and EU integration policies. To achieve further convergence, considerable efforts should follow to develop institutions and institutional capacities of new EU member states as well as of future members, such as Croatia. The key findings of this research identified lines of future research, particularly in development of indicators measuring the institutional quality. Effective development policy will result from improved quality of institutions and their convergence to more coherent institutional systems.