application/pdf 1031567 bytes Inclusive Institutions for Sustainable Economic Development Journal of Central Banking Theory and Practice 7(1) http://creativecommons.org/licenses/by/4.0/legalcode eng 2018 Jakšić, Miomir Jakšić, Milica info:eu-repo/semantics/article Abstract: In recent two decades, due to contributions of political macroeconomics, the focus of macroeconomics turned away from a narrow perspective based on market and privatisation (market fun- damentalism) towards a broader perspective based on institutions and values (institutionalism). Within the institutional paradigm, the emphasis nowadays is put on inclusive institutions. The main thesis of one of leading proponents of political macroeconomics, D. Ac- emoglu, is: “growth is much more likely under inclusive (economic and political) institutions than extractive institutions.” Good institutions are characterized by three attributes: 1) they es- tablish and protect property rights; 2) they restrict social elites which strive to expropriate income and property of others members of so- ciety; 3) they provide equal chances for employment, social security and civil rights to all individuals. Good institutions contribute to po- litical stability, successful macroeconomic policy, and enhance initia- tives. The key role of institutions is to secure stability and continuity. Extractive institutions can negatively affect entrepreneurship and entire economic development in two ways: a) by increasing the op- portunity cost, resulting in upward movement of the opportunity cost curve; and b) by affecting return to entrepreneurship resulting in leftward movement of the return to entrepreneurship curve. Apart from independence and accountability of institutions what is needed is sufficient level of inclusion. Inclusion should encompass three dimensions: personal, financial, and political. The introduc- tion of principles of independence, accountability, and inclusion is essential for emergence and performance of all institutions. https://phaidrabg.bg.ac.rs/o:28768 doi:10.2478/jcbtp-2018-0001 ISSN: 1800-9581 Key words: political macroeconomy, inclusive institutions, sustain- ability, good governance