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Political trust and economic development in European regions

Author

Listed:
  • Muringani, Jonathan
  • Dahl Fitjar, Rune
  • Rodríguez-Pose, Andrés

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

  • Muringani, Jonathan & Dahl Fitjar, Rune & Rodríguez-Pose, Andrés, 2024. "Political trust and economic development in European regions," LSE Research Online Documents on Economics 125630, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:125630
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    File URL: http://eprints.lse.ac.uk/125630/
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    Keywords

    political trust; social trust; quality of government; regional economic development; EU; D73; R11; H11; O43;
    All these keywords.

    JEL classification:

    • 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
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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