Slow-Changing Cultural Features And Socioeconomic Development: Individualism, Collectivism, Institutions, Meritocracy, And Growth

This article investigates the possible causal relationships between slow-changing cultural characteristics like collectivism and individualism and the economic development of nations. Evidence in the literature shows that there are at least two aspects of collectivism in a society that are important for its economic development. The first can be defined as the strength of collectivism and is related to how strictly individual actions are limited by the power of social norms or the extent to which group members feel socially obliged to give up personal gain for the benefit of the group. The second aspect is the scope of collectivism. This dimension refers to the size of the group within which the collective feeling manifests and whether it spreads also to people with whom an individual has no history of personal relationships. Collectivism that is confined to a narrow group (family, clan) usually hinders economic development, while broad and strong collectivism can foster growth (e.g. East-Asian economies at the end of the XX century). Innovations that accompany economic and social development – such as the expansion of markets, the advances in transport and communications, and the increased educational opportunities in turn affect the strength and scope of collectivism. The influence of individualism-collectivism on economic development and vice versa is mediated by societal features like social capital, norms, institutions, ability to organise collective action, conformism, democratisation/modernisation, and meritocratic organisations. An in-depth look into the above mechanisms and their effects on subjective well-being can also help answer the unsettling question why a number of quality of life indicators have ceased to move in parallel with economic growth in leading economies in recent years.