Cultural Factors in Economic Growth

Ekonomska Misao i Praksa, 2017

Recently there has been a burgeoning empirical literature analysing how culture affects economic development. This field of research is currently developing further at the border between growth theory and institutional economics. This paper summarizes, and gives a detailed criticism of, this literature. Following the two major routes suggested by the critiques, the author proposes a possible path for further progress in the field.

The ties between cultural values and economic growth are examined. The achievement motive thesis developed by McClelland is utilized as a specific empirical point of reference. The theory is tested using the World Values Survey, a database of interview collected in many countries around the world. In this study, data are used for twenty-five countries, and strong evidence indicates that certain cultural values help to spur economic growth. Do cultural factors influence economic development? If so, can they be measured and their effects compared with that of standard economic factors such as savings and investment? This article examines the explanatory power of the standard endogenous growth model and compares it with that of two types of cultural variables capturing motivational factors-achievement motivation and post-materialist values. It is believed that it is not an either/or proposition; cultural and economic factors play complimentary roles. This belief is borne out empirically. Cultural factors alone do not explain all of the cross-national variations in economic growth rates. Every economy experiences significant fluctuations in growth rates from year to year as a result of short term factors such as technological shocks or unforeseen circumstances that affect output. These could not be attributed to cultural factors, which change gradually. A society's economic and political institutions also make a difference. For example, prior to 1945, North Korea and South Korea had a common culture, but South Korea's economic performance has been far superior. On the other hand, the evidence suggests that cultural differences are an important part of the story. Over the past six decades, the Confucian-influenced economies of East Asia outperformed the rest of the world by a wide margin. This holds true despite the fact that they are shaped by a wide variety of economic and political institutions. Conversely, during the same period most African economies experienced low growth rates. Both societal-level and individual-level evidence suggests that a society's economic and political institutions are not the only factors determining economic development, cultural factors are also important. Traditionally, the literature presents culture and economic determinants of growth as distinct. Political Economists and Political Sociologists view their respective approaches as mutually exclusive. One reason lies in the level of analysis employed and with this the underlying assumptions about human behavior. Another reason is that we have had inadequate measures of cultural factors. Previous attempts to establish the role of culture either infer culture from economic performance or estimate cultural factors from impressionistic historical evidence. Both factors could be important, but until cultural factors are entered into a quantitative analysis, this possibility could not be tested. By culture, we refer to a system of basic common values that help shape the behavior of the peoplein a given society. In most preindustrial societies, this value system takes the form of a religion and changes

Many parts of the world have been written off as resistant to development. We may think of most of Africa, parts of Latin America, the Middle East, and a few of the countries in Southeast Asia. Then there is the Pacific, which has shown disappointing economic growth rates over the past decade or two (Francis & Hezel, 2009). Of course, many of these countries still lack the reliable institutions, beginning with stable government and the rule of law, that are clearly a requisite for development. That is why according to today’s canon, differences in economic performance can only be explained by different economic institutions and public policies. On the other hand, considerable cultural differences do still exist and even today cultural diversity remains definitely significant among different continents, states and even regions and we believe it is must be taken into account, despite the processes of globalization and immigration. Thus, in our work we are going to critically analyze the limits of the traditional theory about economic development and - by describing what culture is and which are the prior beliefs and values shaped by it- we are going to study the channels through which culture had and has an impact on the economic growth of countries.

This paper stresses the importance of culture in understanding and, perhaps more accurately, predicting economic development. It's intended to initiate, or re-initiate, the discussion of culture as the core of economic development, stability and growth. My interest in the discussion of the economy is from a behavioral perspective, taking behavior as an outcome of culture, a factor that remains neglected in most economic literature explaining or forecasting the economy. It seems to me that because the existent literature in economics remains incomplete in terms of culture, predicting the success or failure of any economic model, applied within different cultural settings, may be inaccurate. Hence, the fundamental assumption presented in this document is that different regions in the world develop different economic levels due to cultural differences. I take example in East Asia in general and China in particular to explain cultural factors that have contributed to the economic development in the region. The following discussion has been divided into five parts, as follows: First, an introduction to the main arguments. Second, a short discussion of the definition of culture developed by several scholars in the past. Elaborating on those earlier definitions, I propose a definition that may best suit the economic issue at hand. Third, a review of some of the most important economists and their key arguments, upon which I elaborate from a cultural perspective. Fourth, a discussion of East-Asian countries and China's economic development from a cultural perspective. Fifth, my conclusions and a proposed model that includes culture as a factor in the decision-making process when choosing an economic strategy and its corresponding models.

Springer Texts in Business and Economics, 2014

The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. While the advice and information in this book are believed to be true and accurate at the date of publication, neither the authors nor the editors nor the publisher can accept any legal responsibility for any errors or omissions that may be made. The publisher makes no warranty, express or implied, with respect to the material contained herein.

2004

While neoclassical growth theories emphasize the role that diminishing returns to capital play in explaining these distinct patterns in economic and social development, Abramovitz (1994) expands these thoughts and introduces the concept of "social capability". While determining whether countries have the potential to increase productivity to catch up with more developed countries or even forging ahead of them, social capability encompasses productivity growth relevant factors, apart from capital and labor, which are not directly considered in neoclassical production functions. Thus, country specific factors, such as political and legal institutions as well as historical conditions and cultural values may also play a crucial role in determining a country's productivity growth. This thesis focuses on culture since recently, in light of the global financial crisis, the discourse on management earnings and a stereotyping fear of Islamic culture the public 1 "Religion and Economic Outcomes-Household Savings Behavior in the USA" presented at the Society for the

American Anthropologist, 1990

A Bank files on 68 completed rural development projects from all over the world.' My instructions were to assess the sociocultural variables that had affected such projects, most of which had been designed during the 1960s and early 1970:;, when planners were much less convinced than they appear to be now about the need fcr sociocultural expertise throughout the project cycle. Many of the projects I reviewed illustrated a tendency to stress technical and financial factors and to neglect social issues. I draw on that study here, along with my other development experience, in commenting on problems that anthropologists encounter and strategies we may use in sensitizing planners to the importance of culture. I also outline some general and specific cultural components of the development process. An issue that frequently emerges when culture and development are discussed is the relationship between cultural factors and the measurement and evaluation of project success. Sometimes a contrast is posed between quantitative evaluation in financial terms and qualitative evaluation of cultural impact: A positive effect on GNP may be accompanied by an adverse effect on the "quality of life." However, the rivalry between economic goals and cultural well-being need not be as severe as is often supposed. In my comparative study the average economic rate of return for culturally compatible projects (19%) was much higher than that of incompatible ones (less than 9%). In other words, attention to culture also pays off economically. (Parenthetically, I should mention that sociocultural compatibility was coded independently of economic rate of return, so as to avoid the possible tendency to identify projects as culturally incompatible once they were known to be economic failures. Only after the sociocultural coding was done were the rates of return, which were listed on separate data sheets, examined.

2011

We present empirical evidence that, among a variety of cultural dimensions, the individualism-collectivism dimension, based on Hofstede's (2001) data, is the most important and robustly significant effect of culture on long run growth. Other dimensions that have a significant effect, albeit less robust, are generally strongly correlated with individualism and convey similar information. We found no significant or robust effect on growth from cultural dimensions that are independent from the individualism-collectivism cleavage.

The purpose of this study is to investigate the effects of cultural dynamics on urban economic growth in Turkish economy. By employing confirmatory factor and regression analysis, it is found that focus on the future, secularism, wealth, rule of law, work ethic, individualism, religion, charity, relations to business environments and universities, and citizenry are the cultural factors which have significant influence on urban economic growth in Turkish economy. Accordingly, while the highest and the lowest positive impacts stem from individualism and religion; the highest and the lowest negative impacts arise from citizenry and secularism, respectively.

American Journal of Political Science, 1996

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact