In fact the state can never be treated as an exogenous actor in development policy and getting the prices right only has the desired consequences when you already have in place a set of property rights and enforcement that will then produce the competitive market conditions. (North, DC: 1993: 5).
North goes ahead to define institutions as the rules of the game of a society or more formally as the humanly-devised constraints that structure human interaction. They include formal rules (statute law, common law, regulations), informal constraints (conventions, norms of behaviour, and self imposed codes of conduct), and the enforcement characteristics of both.