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Trust and Prosperity: A Conditional Relationship

  • Asongu Simplice

    ()

    (Yaoundé/Cameroun)

  • Oasis Kodila-Tedika

    ()

    (Kinshasa, Democratic Republic of Congo)

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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File URL: http://www.afridev.org/RePEc/agd/agd-wpaper/Trust-and-Prosperity.-A-conditional-relationship.pdf
File Function: Revised version, 2013
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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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  1. Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000. "Measuring Trust," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 811-846.
    • Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
  2. 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, Oxford University Press, vol. 114(1), pages 83-116.
  3. 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.
  4. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521608275.
  5. Asongu, Simplice A, 2013. "On the effectiveness of foreign aid in institutional quality," MPRA Paper 46649, University Library of Munich, Germany.
  6. 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).
  7. Yann Algan & Pierre Cahuc, 2010. "Inherited Trust and Growth," Sciences Po publications info:hdl:2441/432sbils8u9, Sciences Po.
  8. Berggren, Niclas & Elinder, Mikael & Jordahl, Henrik, 2007. "Trust and Growth: A Shaky Relationship," Working Paper Series 705, Research Institute of Industrial Economics.
  9. Oasis Kodila-Tedika & Julius A. Agbor, 2015. "Does Trust Matter for Entrepreneurship: Evidence from A Cross-Section of Countries," Working Papers 15/057, African Governance and Development Institute..
  10. Simplice A, Asongu, 2012. "Fighting corruption in Africa: do existing corruption-control levels matter?," MPRA Paper 36900, University Library of Munich, Germany.
  11. 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.
  12. Guido Tabellini, 2008. "The Scope of Cooperation: Values and Incentives," CESifo Working Paper Series 2236, CESifo Group Munich.
  13. Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1251-1288.
  14. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
  15. La Porta, Rafael, et al, 1997. "Trust in Large Organizations," American Economic Review, American Economic Association, vol. 87(2), pages 333-38, May.
  16. Okada, Keisuke & Samreth, Sovannroeun, 2012. "The effect of foreign aid on corruption: A quantile regression approach," Economics Letters, Elsevier, vol. 115(2), pages 240-243.
  17. Felix Roth, 2009. "Does Too Much Trust Hamper Economic Growth?," Kyklos, Wiley Blackwell, vol. 62(1), pages 103-128, 02.
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