Basic Institutional Environment:

At this level, institutions like constitutions, political systems and basic human rights, property rights and their allocation, laws/courts/and related institutions to enforce political/human rights andlproperty rights, currency and related basic financial institutions including the government's power to tax, laws and institutions governing migratiodtrade andforeign investment rules, and the politicalllegal andeconomic mechanisms that facilitate changes in the basic institutional environment are included. In a society with dynamic equilibrium, a given set of basic institutions at this level will be compatible with the society's social foundations at any particular point of time. Changes in the basic institutional environment occur more quickly than changes in the cultural or social foundations i.e. level I institutions identified above. But change is still relatively slow and partially constrained by the slow rate of adaptation to the underlying social and cultural foundations, with response times varying from a low of 10 years to a high of I00 years.