This PhD thesis critically analyses the notion of institutions – the behaviour models that dominate in a society, restricting the individual rationality –, surveys economic, political and value institutions and their perspectives of development. It also proposes a theoretical framework to illustrate the interaction between the institutions, socioeconomic development and public policy. A system of quantitative indicators is proposed and implemented to evaluate this interaction. A quantitative analysis evaluates the socioeconomic impact of institutions, as well as the impact of public policy on the institutional environment. This PhD thesis offers and implements a method that includes an Institution Index for the evaluation of the institutional factors and an Institutional Potential Index for the evaluation of institutional development perspectives. The evaluation of institutions is based upon economic, political and value categories of the institutional environment, whereas the evaluation of the perspectives for institutional development offers information how these institutions can improve with public policies. Research is conducted to evaluate the institutions and their perspectives of development in innovation driven economies and countries that are in the transition phase to this stage. A detailed analysis is offered on institutions and their developmental perspectives in Eastern and Central European countries by identifying institutions that facilitate or prevent socioeconomic development, as well as by identifying public policies that impact the institutional environment in these countries. The results of our PhD thesis could be applied to the global development policy in order to facilitate growth in less developed countries, to the European Union regional policy in order to promote convergence among European regions, and to national level policy making and evaluation, as well as to private sector decision making regarding the allocation of investments in specific countries and territories. Suggestions are given to improve public policy in Latvia in order to facilitate the creation of institutions that facilitate the socioeconomic development. This PhD thesis consists of an introduction, three sections of analysis, conclusions and recommendations. It consists of 153 pages, excluding annexes. This thesis contains 34 tables, 25 figures and 9 annexes, clarifying and illustrating the content of the research.