Trust and Prosperity: A Conditional Relationship

Asongu, Simplice A. and Kodila-Tedika, Oasis (2013): Trust and Prosperity: A Conditional Relationship.

Abstract

The paper extends Breggren et al. (2008, EE) on ‘trust and growth: a shaky relationship” by incorporating recent developments in the trust-growth literature and using a robust methodological underpinning that accounts for the presence of outliers. The empirical evidence is based on 63 countries. Two main findings are established. Firstly, the substantially documented positive trust-growth nexus is broadly confirmed. Secondly, when initial levels of growth come into play in determining the relationship, only 0.25 and 0.90 quantiles confirm the positive nexus. The results suggest that the trust-growth nexus cannot be generalized for all countries as some previous studies have concluded. Accordingly, blanket trust-growth policies may not succeed unless they are contingent on existing levels of development and tailored differently across rich and poor countries.

• Item Type: MPRA Paper
• Language: English
• Keywords: Trust; Growth; Conditional Effects
• Subjects: A - General Economics and Teaching > A1 - General Economics > A13 - Relation of Economics to Social Values; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology > Z13 - Economic Sociology ; Economic Anthropology ; Social and Economic Stratification

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