oday the prevention of global challenges (from global security to the problems of poverty) relates to the institutional quality. Nowadays, the social standards or other “social rules” make the part of the market system, since they are built into the country’s institutional structure. Neither social nor economic reforms can be implemented without the support through institutional mechanisms. The purpose of this paper is to explore the relationship between social sector institutions and basic institutions, taking into account the economic development of countries and the way in which they are formed. A number of empiric studies confirmed significant role of institutions to provide conditions for economic development. In order to define and assess the link between the basic institutions and the social sector institutions, we formed panel data that includes 20 countries for the period from 2007-2014. We assessed quality of the basic institutions using The Worldwide Governance Indicators (WGI). WGI methodology provides an evaluation of six dimensions of the institutional quality that enables to define the connection and the impact of every dimension on the institutional quality of the social sector. The model additionally evaluates the impact of the incomes distribution inequality, general economic welfare on the institutional quality of the social sector. Among all dimensions of governance “Rule of Law” and “Regulatory Quality” the statistically significant direct impact on the institutional quality of the social sector has been revealed. It confirms the complementarity of basic institutions and institutions of the social sector.

An institutional quality convergence is always a relevant subject matter since institutional quality is considered to be a vital factor for economic development. The question regarding the convergence of social parameters into development is especially acute when choosing a social policy direction and the related instruments. This paper proposes a methodology to calculate the institutional development gap of social sector (IDGSS) in its three measures: social capital development, social infrastructure development, social security system development. IDGSS is calculated here for 20 countries. The estimation demonstrates how social development parameters (social capital, social infrastructure and social security) depends on a country's economic development level. Besides, we show how IDGSS depends on noneconomic factors, including the level of basic institutions' development, the degree of inequality in the distribution of income and poverty.

The article provides theoretical underpinning for the need to assess institutional quality of the social sector. Basing on the critical analysis of the existing approaches to index construction, traditionally used to study economic development and quality of life, it is proposed to form the index of social sector quality, and also the principles of its calculation are justified. The presented methodology for calculating this index is built upon the principal component analysis. The calculation includes 20 indicators, which represent three groups (education, healthcare and social security). The index creation is based on the data for 25 countries divided into four groups. According to our evaluation findings, the quality of social institutions will be primarily determined by their ability to provide an extension of average life expectancy and to maintain an adequate level of health, as well as employment according to the results of education. The quality of social security institutions' operations affects the index variability to the least extent.

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This paper summarizes the arguments and counterarguments within the scientific discussion on the issue of the institutional quality of the social sector, its measurement, and the impact of institutional transformations on the creation of positive social results. The main purpose of the research is to present an empirical study of the relationship between the quality of social sector institutions and the parameters of social and economic development, social activity and trust, subjectively evaluated by individuals. The evaluation of macro impact (positive social results at the macrolevel) were evaluated based on three components: health, wellbeing, and political engagement. The findings showed a direct significant relationship between the quality of social institutions on the one hand and health and well-being on the other. The obtained results do not allow to substantiate enough the connection between the quality of social institutions and social confidence and involvement in political life without conducting additional research. However, the level of social confidence and the desire to participate in public and political life directly depends on the level of economic development of the country (GDP per capita). The analysis was carried out for 11 countries (Austria, Belgium,