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Trust And Its Impact On The Economic Growth

Author

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  • Cristian C. Popescu

    (Faculty of Economics and Business Administration, "Al. I. Cuza" University, Iasi, Romania)

Abstract

The new models of development take into account the influence of social capital in inducing the economic growth. Assuming that trust is one of the main dimensions of the social capital, we demonstrate that it is able to reduce the transaction costs and to lay off large amounts that can be redirected towards investments, thereby inducing economic growth. The policy makers are responsible for taking this into account and promote the budgetary measures able to raise the level of trust in a society. We believe, based on the model designed by Zack and Knack, that in addition to the policies which guarantee the contracts, strengthen the formal institutions that prevent the abuses, reduce the social heterogeneity and economic growth, the growth optimization is possible to be achieved by allocating sufficient resources to education. The inference is based on an empirical research on the Romanian society, whose results are presented in this study.

Suggested Citation

  • Cristian C. Popescu, 2011. "Trust And Its Impact On The Economic Growth," Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice (1954-2015), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 58, pages 449-458, november.
    • Handle: RePEc:aic:journl:y:2011:v:58:p:449-458
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    References listed on IDEAS

    as
    1. Joel Sobel, 2002. "Can We Trust Social Capital?," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 139-154, March.
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    More about this item

    Keywords

    trust; growth; human capital; education;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education

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