The article explores how institutions, which are rules guiding human interactions, impact economies and their performance over time. Institutions, distinct from organizations, influence transaction and production costs by reducing uncertainty in society. Entrepreneurs drive changes in institutions by seizing opportunities to improve existing systems. This symbiotic relationship between institutions and entrepreneurs prevents rapid replacement of inefficient institutions that can persist due to the balance between growth and inefficiency. Changes in prices and ideas drive institutional modifications, although transaction costs can hinder full exploitation of price changes. Ultimately, institutional developments are influenced by transaction costs and evolve based on past paths taken.