Importance of institutional approach in economy regulation

The article touches upon some theoretical aspects of government regulation of the economy and substantiates the necessity of applying institutional theory for a more thorough analysis of the regulatory impact both on the global and regional levels. High priority is given to regulatory issues and government failures due to the global financial crisis and its consequences resulting in the slowdown of economic growth in the majority of countries. Some arguments regarding shortfalls and limitations of neoclassical theory in explaining various correlations in the modern economy are presented. The perspectives of institutional approach to regulation ensuring development and growth of the socio-economic system are outlined. Moreover, some controversial issues in the context of terminology are discussed. In the conclusion the author’s vision on the integrating institutional approach to the analysis of the regulatory process is presented.