The aim of this study is to determine the effect of the institutional structure on the local economic development process in Batman and Erzurum two cities in Turkey. For this purpose, multi-linear regression analyzes are conducted using survey data derived from 810 companies operated in these cities in 2017. According to the results of the analysis, the effect of institutional structure on local ecenomic development in both cities is positive in general. The three most effective institutional structures for Erzurum are voice and accountability, regulatory quality and government effectiveness. For Batman, control of corruption, rule of law and government effectiveness have been identified as the three most effective institutional structure indicators.