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Trust and Prosperity: A Conditional Relationship

Author

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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.

Suggested Citation

  • Asongu Simplice & Oasis Kodila-Tedika, 2013. "Trust and Prosperity: A Conditional Relationship," Working Papers 13/024, African Governance and Development Institute..
  • Handle: RePEc:agd:wpaper:13/024
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    References listed on IDEAS

    as
    1. Asongu, Simplice A., 2013. "On the effectiveness of foreign aid in institutional quality," European Economic Letters, European Economics Letters Group, vol. 2(1), pages 12-19.
    2. Oasis Kodila-Tedika & Julius Agbor, 2016. "Does Trust Matter for Entrepreneurship: Evidence from a Cross-Section of Countries," Economies, MDPI, Open Access Journal, vol. 4(1), pages 1-17, March.
    3. 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.
    4. Peiró-Palomino, Jesús & Tortosa-Ausina, Emili, 2013. "Can trust effects on development be generalized? A response by quantile," European Journal of Political Economy, Elsevier, vol. 32(C), pages 377-390.
    5. 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.
    6. Niclas Berggren & Mikael Elinder & Henrik Jordahl, 2008. "Trust and growth: a shaky relationship," Empirical Economics, Springer, vol. 35(2), pages 251-274, September.
    7. Guido Tabellini, 2008. "The Scope of Cooperation: Values and Incentives," The Quarterly Journal of Economics, Oxford University Press, vol. 123(3), pages 905-950.
    8. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731, April.
    9. La Porta, Rafael, et al, 1997. "Trust in Large Organizations," American Economic Review, American Economic Association, vol. 87(2), pages 333-338, May.
    10. Felix Roth, 2009. "Does Too Much Trust Hamper Economic Growth?," Kyklos, Wiley Blackwell, vol. 62(1), pages 103-128, February.
    11. Simplice A. Asongu, 2013. "Fighting corruption in Africa: do existing corruption-control levels matter?," International Journal of Development Issues, Emerald Group Publishing, vol. 12(1), pages 36-52, April.
    12. 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.
    13. Yann Algan & Pierre Cahuc, 2010. "Inherited Trust and Growth," American Economic Review, American Economic Association, vol. 100(5), pages 2060-2092, December.
    14. repec:hrv:faseco:30726298 is not listed on IDEAS
    15. 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.
    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. 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.
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    Cited by:

    1. Oasis Kodila-Tedika & Julius Agbor, 2016. "Does Trust Matter for Entrepreneurship: Evidence from a Cross-Section of Countries," Economies, MDPI, Open Access Journal, vol. 4(1), pages 1-17, March.
    2. Simplice Asongu & Rangan Gupta, 2016. "Trust and quality of growth: a note," Economics Bulletin, AccessEcon, vol. 36(3), pages 1854-1867.
    3. Kodila-Tedika, Oasis & Asongu, Simplice & Azia-Dimbu, Florentin, 2016. "The Sensitive Nature of Social Trust to Intelligence," MPRA Paper 70523, University Library of Munich, Germany.

    More about this item

    Keywords

    Trust; Growth; Conditional Effects;

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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