Trust and economic growth

Video 77 of 245 from the course: Development Economics
Twitter HashTag: #MRUDevEcon
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Trust cannot be underrated as an important source of growth and economic development.  Here is a look at what we know.  Lesson: culture really matters!

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Perhaps the causality can be hypothesized to run in both directions i.e. trust and economic growth are mutually reinforcing. If this is true, then it isn't incorrect to say that trust causes higher levels of growth - it just isn't the whole story.

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This is a reasonable question! Interestingly, the video says trust decreases with population heterogeneity and wealth (wealth increase is meant I guess, if not this doesnt make sense as wealthy countries like Norway have a higher trust). I think social inclusion and wealth distribution play a big role for trust, so comparing this findings with the Gini index would be interesting. I think the video could have put more emphasis on informal institutions which really matter a lot.

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The chicken or the egg dilemma ;) I tend to think that cooperative behaviors such as trust, solidarity and so on, are probably conducts reinforced by good results, honesty flourish where is convenient act honestly and vice versa, so may be result more than cause, anyway is an open question, and it is not easy to figure how to broke the vicious circularity

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