Do racist attitudes and behaviors impede economic growth? Cross-national and regional evidence

This paper investigates the effects of racist behaviors and attitudes on economic growth. Using survey responses from the World Values Survey (WVS), we create an indicator of racist behaviors and find this indicator to be significantly and negatively associated with economic growth across countries. The association is robust to the inclusion of several geographic, institutional, and economic controls. Next, we create an indicator of racist attitudes using responses from the European Values Survey at the regional level. We find that racist attitudes are negatively associated with growth across subnational regions even after controlling for country fixed effects to eliminate concerns that the association is driven by the omission of country-specific fixed factors. We posit that lack of trust is driving the association between racist behaviors and economic growth. In support of our mechanism, in an individual-level analysis using the WVS data, we show that respondents who have witnessed racist behaviors in their neighborhood are less likely to agree with the statement that “most people can be trusted.”