This paper deals with the concept of institutional competitiveness, explained by the example of the member states of the European Union. From the very beginnings of the concept of competitiveness, to the way it functions today, under the wing of globalization, the paper emphasizes the importance of institutional competitiveness for the growth and development of the economy. The concept of competitiveness is increasingly popular in economic research. In the world economy, which is increasingly more open and integrated, competitiveness is extremely important for all developed and developing countries. It is one of the main driving forces of growth and development, as evidenced by the fact that, as such, competitiveness holds its place on the list of strategic goals for most states. In order to achieve sustainable conditions for economic growth and development, it is important to analyze not only competitiveness, but also each of the components that determine it. Institutional competitiveness is singled out as one of the most important determinants of competitiveness in this paper. A high-quality and efficient institutional framework represents the “fertile ground” of development itself. This paper will analyze the quality of institutions as factor of competitiveness through selected Indices of institutional development, such as: Human Freedom Index (EFI), Human Development Index (HDI), Corruption perception index (CPI), World Governance Indicators (WGI) and European Innovation Ranking (EIS). The mentioned indices will be observed on the data of the member states of the European Union.