New Institutional Economics (NIE) is a field of economic thought that emphasizes the role of institutions—rules, norms, and organizations—in shaping economic behavior. It builds on traditional economics by incorporating insights from political science, sociology, and law to understand how institutions affect economic performance and development. NIE explores how institutions evolve and their impact on transaction costs, property rights, and governance structures. By analyzing these factors, NIE helps explain why some economies thrive while others struggle, highlighting the importance of effective institutions in promoting economic growth and stability.