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Political trust and economic development in European regions

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  • Jonathan Muringani
  • Rune Dahl Fitjar
  • Andres Rodriguez-Pose

Abstract

This paper examines the complex relationship between political and social trust, government quality, and economic development across 208 regions in the European Union (EU). We use a pooled data generalized structural equation model (GSEM) to show that political trust serves as a fundamental driver of regional economic development in the EU. Political trust is, in turn, influenced by both social trust and government quality. Social trust and government quality have quadratic effects on political trust, showing diminishing returns, while the effect of political trust on economic development is linear. Political trust mediates the relationship between social trust and economic development entirely, while government quality retains a direct relationship with economic development. These findings underscore the fundamental role that political trust plays as a mechanism through which both formal and informal institutions shape regional development.

Suggested Citation

  • Jonathan Muringani & Rune Dahl Fitjar & Andres Rodriguez-Pose, 2024. "Political trust and economic development in European regions," Papers in Evolutionary Economic Geography (PEEG) 2435, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Oct 2024.
    • Handle: RePEc:egu:wpaper:2436
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    File URL: http://econ.geo.uu.nl/peeg/peeg2436.pdf
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    More about this item

    Keywords

    EU; Political trust; Quality of government; regional economic development; social trust;
    All these keywords.

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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