The ability of trust to influence GDP per capita
-
DOIhttp://dx.doi.org/10.21511/ppm.18(1).2020.26
-
Article InfoVolume 18 2020, Issue #1, pp. 302-314
- Cited by
- 1121 Views
-
184 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
The article explores social capital and its impact on economic development. This paper aims to analyze the role of trust in the process of growth and economic development. The interdependence of GDP per capita and trust level as an element of social capital has been analyzed. The correlation between trust and GDP per capita in 43 countries has been reflected. World Values Survey (WVS) was used to obtain empirical trust data. To determine the relationship between confidence level and GDP per capita, the correlation model was built. The regression coefficient b = 0.834 shows the average change in the effective indicator. Thus, with an increase of 1 unit of trust, GDP per capita rises by an average of 0.834. The coefficient of determination indicates that 60.68% of cases of changes in trust lead to a change in GDP per capita. The result suggests that trust serves as a tool in assisting the economic growth and company’s value. The study examines the tools that help to build trust, as economic development as a whole depends on it.
- Keywords
-
JEL Classification (Paper profile tab)A13, M14, M21, M48, O11
-
References29
-
Tables3
-
Figures3
-
- Figure 1. The correlations between trust and GDP per capita
- Figure 2. The correlations between trust and GDP per capita in the European countries
- Figure 3. The process of developing trust between contractors
-
- Table 1. Effects of the composition of the sample on trust using EBA analysis
- Table 2. Sub-sample estimation of trust
- Table 3. Regression parameters
-
- Arrow, K. J. (1972). Gift and Exchanges. Philosophy & Public Affairs, 1(4), 343-362.
- Beugelsdijk, S., De Groot, H. L. F., & Van Schaik, A. B. T. M. (2004). Trust and economic growth: a robustness analysis. Oxford Economic Papers, 56(1), 118-134.
- Boele, R., & van Vlissingen, R. F. (2018). Social impact and rebuilding trust. KPMG Australia.
- Cheng, B., Ioannou, I., & Serafeim, G. (2014). Corporate social responsibility and access to finance. Strategic Management Journal, 35(1), 1-23.
- Cone Communications (1993). Cone/Roper Study: A Benchmark Survey of Consumer Awareness and Attitudes toward Cause-Related Marketing. Boston: Cone Communications.
- Dhaliwal, D. S., Radhakrishnan, S., Tsang, A., & Yang, Y. G. (2012). Nonfinancial disclosure and analyst forecast accuracy: International evidence on corporate social responsibility disclosure. Accounting Review, 87(3), 723-759.
- Edmans, A. (2011). Does the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity Prices (January 20, 2010). Journal of Financial Economics, 101(3), 621-640.
- El Ghoul, S., Guedhami, O., & Kim, Y. (2017). Country-level institutions, firm value, and the role of corporate social responsibility initiatives. Journal of International Business Studies, 48(3), 360-385.
- Engbers, T., Rubin, B. M., & Aubuchon, C. (2016). The Currency of Connections: An Analysis of the Urban Economic Impact of Social Capital. Economic Development Quarterly, 31(1), 37-49.
- Engbers, T., Rubin, B., & Aubuchon, C. (2013). Social capital and metropolitan economic development. SSRN Electronic Journal, 1-37.
- Flammer, C. (2015). Does corporate social responsibility lead to superior financial performance? A regression discontinuity approach. Management Science, 61(11), 2549-2568.
- Fukuyama, F. (1995). Trust: The Social Virtues and the Creation of Prosperity. The Free Press.
- Harjoto, M. A., & Jo, H. (2015). Legal vs. normative CSR: Differential impact on analyst dispersion, stock return volatility, cost of capital, and firm value. Journal of Business Ethics, 128(1), 1-20.
- Hasan, I., Hoi, C. K., Wu, Q., & Zhang, H. (2016). Social Capital and Debt Contracting: Evidence from Bank Loans and Public Bonds. Journal of Financial and Quantitative Analysis, 52(3), 1017-1047.
- Helliwell, J., & Putnam, R. (1995). Economic growth and social Capital in Italy. Eastern Economic Journal, 21(3), 295-307.
- Hilary, G., & Huang, S. (2016). Trust and Contracting (INSEAD Working Paper No.2015/42/ACC).
- International Monetary Fund (IMF) (2014). World Economic and Financial Surveys. World Economic Outlook Database.
- Knack, S., & Keefer, P. (1997). Does social capital have an economic pay-off? A cross-country investigation. Quarterly Journal of Economics, 112(4), 1251-1288.
- Legatum Prosperity Index (2019). Official web-site.
- Lins, K. V., Servaes, H., & Tamayo, A. (2015). Social Capital, Trust, and Firm Performance: The Value of Corporate Social Responsibility during the Financial Crisis (Finance Working Paper No. 446/2015). European Corporate Governance Institute (ECGI).
- Neira, I., Vázquez, E., & Portela, M. (2009). An empirical Analysis of Social Capital and Economic Growth in Europe (19980–2000). Social Indicators Research, 92(1), 111-129.
- Oh, Y., Lee, I. W., & Bush, C. B. (2014). The role of dynamic social capital on economic development partnerships within and across communities. Economic Development Quarterly, 28(3), 230-243.
- Peiró-Palomino, J., & Tortosa-Ausina, E. (2015). Social capital, investment and economic growth: some evidence for Spanish provinces. Spatial Economic Analysis, 10(1) 102-126.
- Putnam, R. D., Leonardi, R., & Nanetti, R. (1993). Making Democracy Work: Civic Traditions in Modern Italy. Princeton: Princeton University Press, NJ.
- Rudziewicz, A. (2016). Zaufanie wewnętrzne i zewnętrzne w przedsiębiorstwie [Organizational trust and consumer trust in an enterprise]. Studia Ekonomiczne. Zeszyty Naukowe Uniwersytetu Ekonomicznego w Katowicach, 255, 261-269. (In Polish).
- Tocqueville, A. (1864). Democracy in America. Cambridge: Sever and Francis.
- Whiteley, P. F. (2000). Economic growth and social capital. Political Studies, 48(3), 443-466.
- World Value Survey (WVS) (2014). Longitudinal Multiple-Wave Documentation.
- Zak, P. J., & Knack, S. (2001). Trust and growth. Economic Journal, 111(470), 295-321.