In the new economic conditions, the Azerbaijani government needs a policy conducive to the development of entrepreneurship. For the economy, it’ s important not only to ensure the development of entrepreneurship, but also the quality of its institutions and economic policy, which is guided by the encouragement of entre-preneurship, since the underlying institutional mechanisms-formal and informal, determine the prospects for economic progress. Government agencies should con-sider the quality of formal and informal institutions when developing policies in order to ensure effective implementation of policies and the development of entre-preneurship. Institutional changes can positively affect entrepreneurship when it removes or reduces barriers to entry and / or exit into the market, thus creating opportunities for entrepreneurs. Social and economic and progress depends more on economic institutions than on the cultural characteristics of the population or the availability of natural resources. Cultural factors are important in explaining certain aspects of human behavior. However, they cannot explain all types of behavior: the same people with the same motives tend to act differently in different institutional settings. The problems of most developing countries are that entrepreneurial activity is aimed at socially destructive action. Socio-economic reforms in post-Soviet countries should be aimed at restoring the institutional basis that ensures the pros-perity of socially productive activities. Different levels of economic freedom explain the significant differences in economic growth in different countries. Entrepreneurship is the main way in which economic freedom promotes economic growth.