In view of the fact that competition constitutes one of the key postulates of the economic prosperity of both the national economy and its economic entities, this paper brings to attention the need for its continuous improvement. Improvement of competitiveness of a national economy is the most reliable way to achieve economic growth and development, and thus improve the prosperity of the citizens. In this regard, the paper discusses different theoretical approaches to this important economic problem and analyzes the key factors of economic competitiveness. In accordance with the subject of this research, the emphasis is given to the importance of institutions, since they are crucial for creating a competitive business environment and improving competitiveness and economic success. The research implies that it is necessary to determine the level of competitiveness, as well as the state of basic economic institutions, in order to identify both strengths and weaknesses of the national economy as preconditions for the creation and implementation of relevant competitiveness and economic success improvement policies. Such approach is particularly important for overcoming devastating economic conditions in Serbia, which have been present for many years. The paper stresses the importance of the enforcement of contracts and property rights, judicial independence, quality and professionalism of public administration, as key institutions in Serbia's economy which must be consistently regulated in order to be able to contribute to improving the national economy competitiveness. Furthermore, it is pointed out that the institutions, by creating a favorable environment for successful development of economic activities, represent a very important factor in improving the competitiveness of the national economy, and hence provide a solid basis for the long-term growth and development.