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Trust as societal capital: economic growth in European regions

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  • Wim Moesen
  • Tom Van Puyenbroeck
  • Laurens Cherchye

Abstract

The neo-institutional approach to economic phenomena has forwarded the institutional framework within a society as a fundamental determinant of economic performance. Cultural characteristics, also referred to as "societal capital", have gained specific attention in this respect. Basically, a culture that is characterised by trust is increasingly considered as a competitive advantage. This paper fits in this neo-institutional perspective. We outline an integrated conceptual framework that articulates the direct and indirect channels through which a culture may influence the economic record. Confining to economic growth as an indicator of economic performance and using data from the European Value Study, we subsequently investigate empirically the link between cultural values and economic performance, hereby focusing on a European sample that includes regions as units of observation. This empirical evidence indeed seems to confirm the trust-growth hypothesis. Building on this result, we finally consider a number of possible policy implications. We hereby envisage the government as the main designer of the formal institutional framework within which economic agents interact. In addition, we emphasise the government’s exemplary role as a visible emanation of societal values.

Suggested Citation

  • Wim Moesen & Tom Van Puyenbroeck & Laurens Cherchye, 2000. "Trust as societal capital: economic growth in European regions," Public Economics Working Paper Series ces0001, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
    • Handle: RePEc:wpe:papers:ces0001
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    Cited by:

    1. Gregory N. Price, 2012. "Race, Trust in Government, and Self-Employment," The American Economist, Sage Publications, vol. 57(2), pages 171-187, November.
    2. Gioacchino Fazio & Francesca Giambona & Erasmo Vassallo & Elli Vassiliadis, 2018. "A Measure of Trust: The Italian Regional Divide in a Latent Class Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 140(1), pages 209-242, November.
    3. Akçomak, I. Semih & ter Weel, Bas, 2009. "Social capital, innovation and growth: Evidence from Europe," European Economic Review, Elsevier, vol. 53(5), pages 544-567, July.
    4. Soogwan Doh & Connie McNeely, 2012. "A multi-dimensional perspective on social capital and economic development: an exploratory analysis," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 49(3), pages 821-843, December.
    5. Akcomak, Semih & Ter Weel, Bas, 2007. "How do social capital and government support affect innovation and growth? Evidence from the EU regional support programmes," MERIT Working Papers 2007-009, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. Luk Bouckaert, 2013. "Spiritual humanism and corporate economics," Chapters, in: Luigino Bruni & Stefano Zamagni (ed.), Handbook on the Economics of Reciprocity and Social Enterprise, chapter 35, pages 344-353, Edward Elgar Publishing.

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