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Trust and Prosperity: A Conditional Relationship

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  • Asongu Simplice

    ()
    (Yaoundé/Cameroun)

  • Oasis Kodila-Tedika

    ()
    (Kinshasa, Democratic Republic of Congo)

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, trust-growth policies should be contingent on existing levels of development and tailored differently across rich and poor countries.

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Bibliographic Info

Paper provided by African Governance and Development Institute. in its series Working Papers with number 13/024.

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Length: 17
Date of creation: 07 May 2013
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Handle: RePEc:agd:wpaper:13/024

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Keywords: Trust; Growth; Conditional Effects;

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  1. La Porta, Rafael, et al, 1997. "Trust in Large Organizations," American Economic Review, American Economic Association, vol. 87(2), pages 333-38, May.
  2. Kodila-Tedika, Oasis & Agbor Agbor, Julius, 2012. "Does Trust Matter For Entrepreuneurship : Evidence From A Cross-Section Of Countries," MPRA Paper 42292, University Library of Munich, Germany.
  3. Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
  4. Jesús Peiró-Palomino & Emili Tortosa-Ausina, 2012. "Can trust effects on development be generalized? A response by quantile," Working Papers 2012/16, Economics Department, Universitat Jaume I, Castellón (Spain).
  5. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731, April.
  6. Guido Tabellini, 2007. "The Scope of Cooperation: values and incentives," Working Papers 328, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  7. Asongu Simplice, 2013. "On the effectiveness of foreign aid in institutional quality," Working Papers 0001, African Governance and Development Institute., revised Jan 2013.
  8. Simplice A, Asongu, 2012. "Fighting corruption in Africa: do existing corruption-control levels matter?," MPRA Paper 36900, University Library of Munich, Germany.
  9. Niclas Berggren & Mikael Elinder & Henrik Jordahl, 2008. "Trust and growth: a shaky relationship," Empirical Economics, Springer, vol. 35(2), pages 251-274, September.
  10. Okada, Keisuke & Samreth, Sovannroeun, 2011. "The effect of foreign aid on corruption: A quantile regression approach," MPRA Paper 27969, University Library of Munich, Germany.
  11. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output Per Worker Than Others?," The Quarterly Journal of Economics, MIT Press, vol. 114(1), pages 83-116, February.
  12. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1251-88, November.
  13. Billger, Sherrilyn M. & Goel, Rajeev K., 2009. "Do existing corruption levels matter in controlling corruption?: Cross-country quantile regression estimates," Journal of Development Economics, Elsevier, vol. 90(2), pages 299-305, November.
  14. Felix Roth, 2009. "Does Too Much Trust Hamper Economic Growth?," Kyklos, Wiley Blackwell, vol. 62(1), pages 103-128, 02.
  15. Sjoerd Beugelsdijk & Henri L.F. de Groot & Anton B.T.M. van Schaik, 2004. "Trust and economic growth: a robustness analysis," Oxford Economic Papers, Oxford University Press, vol. 56(1), pages 118-134, January.
  16. Yann Algan & Pierre Cahuc, 2010. "Inherited Trust and Growth," American Economic Review, American Economic Association, vol. 100(5), pages 2060-92, December.
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