In recent years, historians, political scientists, and economists have become increasingly interested in the role played by institutions in the process of economic growth. Institutions can best be thought of as the laws, rules, and informal agreements within societies that both permit and bound economic or other types of social behavior.
Formal institutions are politically determined.
Examples would include labor laws, environmental laws, regulations governing the operation of banks and securities markets, laws governing the formation and dissolution of families, and other legally codified restrictions on the activities of individuals or corporate bodies. Formal institutions also include Constitutions and the various political decisionmaking processes they create. Institutions can also be informal. Informal institutions are not legally codified, but include norms and values that are culturally embedded. Examples would include norms and values related to honesty, civic mindedness, cooperation, group identity, and the like.