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Culture, Diffusion, and Economic Development: The Problem of Observational Equivalence

Author

Listed:
  • Ani Harutyunyan

    (LICOS - Centre for Institutions and Economic Performance at KU Leuven)

  • Ömer Özak

    (Southern Methodist University)

Abstract

This research explores the direct and barrier effects of culture on economic development. It shows both theoretically and empirically that whenever the technological frontier is at the top or bottom of the world distribution of a cultural value, there exists an observational equivalence between absolute cultural distances and cultural distances relative to the frontier, preventing the identification of its direct and barrier effects. Since the technological frontier usually has the ``right'' cultural values for development, it tends to be in the extremes of the distribution of cultural traits, generating observational equivalence and confounding the analysis. These results highlight the difficulty of disentangling the direct and barrier effects of culture. The empirical analysis finds suggestive evidence for direct effects of individualism and conformity with hierarchy, and barrier effects of hedonism.

Suggested Citation

  • Ani Harutyunyan & Ömer Özak, 2017. "Culture, Diffusion, and Economic Development: The Problem of Observational Equivalence," Departmental Working Papers 1702, Southern Methodist University, Department of Economics.
    • Handle: RePEc:smu:ecowpa:1702
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    Cited by:

    1. Cyrille Bergali Kamdem & Thierry Mamadou Asngar & Bruno Emmanuel Ongo Nkoa & Blaise Ondoua Beyene, 2025. "Cultural Diffusion and Happiness: A New Evidence in Sub Saharan Africa," Journal of Happiness Studies, Springer, vol. 26(5), pages 1-24, June.
    2. Andrew Dickens, 2018. "Population relatedness and cross-country idea flows: evidence from book translations," Journal of Economic Growth, Springer, vol. 23(4), pages 367-386, December.
    3. Ying Bai & James Kai-sing Kung, 2022. "Surname distance and technology diffusion: the case of the adoption of maize in late imperial China," Journal of Economic Growth, Springer, vol. 27(4), pages 569-607, December.
    4. Goran Maksimović & Srđan Jović & David Jovović & Marina Jovović, 2019. "RETRACTED ARTICLE: Analyses of Economic Development Based on Different Factors," Computational Economics, Springer;Society for Computational Economics, vol. 53(3), pages 1103-1109, March.
    5. Jaeggi, Adrian & Legge, Stefan & Schmid, Lukas, 2018. "Dyadic value distance: Determinants and consequences," Economics Letters, Elsevier, vol. 165(C), pages 48-53.
    6. Qin, Yu & Ruan, Jianqing & Wang, Ling & Yan, Jubo, 2022. "Genetic distance and intra-national variation in preferences and behaviours," Journal of Asian Economics, Elsevier, vol. 83(C).

    More about this item

    Keywords

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    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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