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Trust and inter-firm relations in developing and transition economies

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  • John Humphrey
  • Hubert Schmitz

Abstract

The role of trust in facilitating economic growth has been highlighted in previous contributions to this journal. In order to take this debate forward, this article argues (1) that more attention needs to be given to the relationship between sanctions and trust, and (2) that it is worth distinguishing between the minimal trust for making markets effective and the extended trust required for deeper kinds of inter-firm co-operation to work. The article goes on to ask why minimal trust is lacking and so hard to construct in the republics of the former Soviet Union. It then examines how extended trust grows or can be made to grow in industrial supply chains and clusters in developing countries.

Suggested Citation

  • John Humphrey & Hubert Schmitz, 1998. "Trust and inter-firm relations in developing and transition economies," Journal of Development Studies, Taylor & Francis Journals, vol. 34(4), pages 32-61.
  • Handle: RePEc:taf:jdevst:v:34:y:1998:i:4:p:32-61
    DOI: 10.1080/00220389808422528
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    1. Gray, Cheryl W. & Hendley, Kathryn, 1995. "Developing commercial law in transition economies : examples from Hungary and Russia," Policy Research Working Paper Series 1528, The World Bank.
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