Cultural impact on national economic growth

Abstract

Following Fukuyama's (2001) postulation for future research in economic development, this paper examines the cultural hypothesis regarding national economic prosperity. Culture is found to affect economic performance through two channels; cultural traits that stimulate individual motivation, and traits that develop social capital in the population. Culture is defined as a society's beliefs and value system and operationalized through the use of variables from the World Values Survey (WVS). The analysis controls for factors commonly recognized in the economic growth literature. The results are sustained through a sensitivity analysis using a variant of extreme bounds analysis (EBA). Compared with previous empirical studies, this research deepens the cultural analysis, increases the number of observations, and lengthens the time period studied.