Institutional Capital in EU Candidate Countries

In economic theory, a growing understanding of the crucial connection between institutional capital and economic development. Modern economists stress that institutional capital is key to shaping an economic progress, influencing the policies of organisations like the World Bank and IMF, as North (1994) points out. This is especially important for developing countries. Efficient institutional capital plays a crucial role in the aspirations of candidate countries waiting European Union (EU) membership. These countries must cultivate strong institutions as the foundation of their path toward EU integration, given the strict criteria and expectations set forth by the EU. To conduct a comprehensive and complex analysis of a country's institutional capital, there are used two separate indexes: the Rule of Law Index and the Economic Freedom Index. These indexes provide clear but complementary insights into various aspects of a nation's institutional efficiency.