inostrani kapital kao faktor razvoja zemalja - Ekonomski fakultet u ...

preventing financial crisis which can have grave consequences not only for the
countries hit by them, but because of the emphasized globalization processes, also
for the countries in the wider region, and for the world economy in general (the
example of financial crisis in the South-Eastern Asia is a proof for this conclusion)
etc.
Finally, institutions which are responsible for ensuring market legitimacy are
also responsible for social care and social insurance of the citizens, for effectuating
revenue allocation and relativization of social conflicts. Modern states use tax
policy as primary mechanism for achieving these objectives. The second
mechanism refers to citizens’ social security i.e. the state uses social funds (pension
and health care funds) as instruments that provide social security.
Besides this explication regarding the relation between institutions and
economic development, the modern scientific world uses numerous econometric
models that quantify effects derived from the quality of institutions regarding
dynamics of economies’ development. Generally speaking, these models show that
there is a significant influence of institutions on economies’ revenue, the economic
development rates, and the level of economic policies’ implications. The
conclusions being the following:
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• The increase in the actual average quality of the institutions in the sub-
Sahara Africa to the level of the institutions in the more developed
countries in Asia, would increase the revenue per capita in the countries of
sub-Sahara Africa for 80%;
• The greater quality of institutions decreases the economic development
instability, and in this case each improvement of quality for every standard
deviation decreases the development instability for 25%;
• Good economic policies require existence and functioning of good
institutions – in the opposite case, the weak institutions lower the chances
for implementation of best policies and also decrease the policies’
efficiency.
3. Opportunities for Institutional Changes
in the Republic of Macedonia
3.1. Key Institutions for Economic Development in Macedonia
In the text that follows, we are going to have a closer look at the opportunities
for institutional changes in the example of the Republic of Macedonia, as well as
the possible recommendations regarding the increase of the economic growth and
development rates by implementing these changes. At first, we will start with
analyzing the key institutions that influence the dynamics of economic
development in the Republic of Macedonia.