INSTITUTIONS AS A DETERMINANT OF ECONOMIC GROWTH – THE CASE OF CROATIA AND SOME SELECTED EU MEMBERS

Economic growth and its causes have long been explored in economic science. More recently, the quality of institutions has been recognized as an important determinant of economic growth. It can be said that the quality of institutions is almost inseparable from the economic growth of modern economies. Using the indicators of institutional development, the authors have researched whether institutions had an impact on the economic growth of Croatian economy when compared to some selected EU members. The authors have found out that the institutions have had a marked impact on the growth, in particular where the Index of Economic Freedom and the International Property Rights Index have been analyzed. It is in these areas in particular that Croatia needs to make a significant institutional shift in order to stimulate institutional change. In addition, other formal institutions such as the degree of openness, the rule of law, but also the importance of encouraging the change of informal institutions should not be neglected, because the importance of informal institutions in Croatia is relatively high. The authors have concluded that a stimulating institutional change will trigger and lead to positive economic growth processes.